Volatility within the marketplace is something which is often feared by those who trade binary options. This fear is for the most part unfounded, because this form of trading allows trader to profit from all types of price action. There isn’t any need to be worried about falling prices or when to get out of the market. Excessive volatility can make it more difficult to forecast the upcoming price movement, but there are ways to deal with this issue.
Volatility is the word that is typically used to describe inconsistent price movement. This is generally upward and downward price movement, with no definite trend in place. Binary options traders like to trade together with a trend, and with good reason, as price trends can generate incredible profits. Even so, there are some very distinct and effective ways to bring in nice profits when prices are volatile as well. Often, the key is to select the best possible expiry time.
The most effective strategy is to meticulously select your expiration times whenever volatile price action is occurring. There are two principal options. Either initiate a long-term trade which will allow the asset price time to balance itself, or choose a short-term trade which is based upon the most current price movement. Sixty second trades are a suitable choice when price movement is volatile. These quick trades can provide profits from brief upward or downward price movements.
It’s vital to note that some underlying assets and asset classes have a tendency to be more unstable than others. Currency pairs are one example. The total number of Forex trades that transpire each day is enormous, which means that balance can be difficult to find when trading binary options with currencies. Some pairs are more volatile than others, but extremely dynamic price action is not at all uncommon when the major markets are open, especially when major economic status reports have been recently released.
Analysis should promptly tell you precisely how erratic price movement is at the moment, along with how erratic it has been in the past. Generally speaking, it’s wise to examine the past 12-24 hours of price action to determine how stable or volatile the movement was. There will be times during which price movement becomes volatile for a time, but then returns to a more typical movement pattern shortly thereafter. This often happens when economic or earnings reports are released.
Price direction forecasting can be difficult when the markets are volatile, but this does not mean that traders should avoid trading altogether under such circumstances. There are plenty of instruments and expiry times that can be used to come out on top when price movement is erratic. Additionally, many brokers now offer optional trade features such as Sell, which allow traders to sell open contracts back to them. The bottom line is that when trading binary options, there are a number of tools which can be used to boost your earnings when volatile conditions are in place.
We make it our mission to not recommend anything but the best – which, according to industry experts, is IQ Option, the top regulated broker for your country with a minimum deposit of ONLY $10!
Between 74-89 % of retail investor accounts lose money when trading CFDs