Potential South African traders who are looking to trade binary options will be faced with various aspects that process includes.
Among those will also be different binary options strategies which may be used to boost the overall trading results.
However, different binary options strategies are suitable for various types of traders. Some are not suited for beginners while some will simply not fit with the overall trading style of a certain trader.
Because of that, we at tradingbinaryoptions.co.za will present interested South African traders with descriptions for several different trading strategies.
In this article, South African will be able to read about five of the most commonly used binary options strategies which are suitable for beginners but may also be sued by more experienced traders too.
Each of these strategies is unique and has a particular basis on which the entire system of the strategy is built.
The Trend Strategy – Binary Options
The Trend strategy is probably one which is most commonly used by beginner traders. As it can be deduced from the very name, this strategy is based on the price trend which prevails on the market at a certain point.
Those traders which monitor the market carefully and consistently will be able to notice certain patterns when it comes to the movement of price in underlying assets.
The trend can either be moving upward, downward or it may even remain more or less stable.
The key to the Trend strategy is to observe the trend line carefully and then carry out a trade which is based on the info provided. In this case, it is the direction of the underlying asset average price.
In observing the progress of the underlying asset average price during a specific time period, traders are supposed to execute their binary options trade once they spot the direction of the average price and place a trade for the opposite direction.
The Fundamental Analysis Strategy
Among different binary options strategies, the Fundamental Analysis strategy is fairly well-known and frequently used one.
The basis of this analysis is induction, which seeks to look at a particular element and then, based on that, make a conclusion about the overall underlying asset performance. This strategy may be very useful for stock trading.
What South African traders may achieve with Fundamental Analysis strategy is centred on careful observation of the financial performance of a certain organisation and then proceeding to make an educated guess about the price direction of the underlying asset.
The key in using this binary options strategy is the traders’ ability to correctly interpret various financial data. That means that this strategy would be a good fit for those South Africans which have some basic skill when it comes to financial report interpretation.
The Pinocchio Strategy
The core of this strategy is its simplicity. The Pinocchio strategy is usually used if the trader expects that drastic increase or decrease in the price of the underlying asset in the opposite direction.
This strategy is depicted via candle bar diagram and the longer the wicks are, the more likely it is that the market could be lying just like Pinocchio’s nose grew when he told lie.
Considering the information provided by the length of the wicks, traders are supposed to carry out trades in the direction opposite of the one indicated by the wick.
Again, this is one of the different binary options trading strategies which may be very suitable for novice traders.
The Straddle Strategy
The hallmark of this trading strategy is its suitability during high volatility on the market. The reasoning behind the Straddle strategy is the assumption that important events or breaking news will trigger violent changes when it comes to underlying asset prices.
If this does happen, the Straddle strategy indicates that both put and call options are placed on the same underlying assets. South Africans who wish to use this strategy in their binary options trading should first place one portion (either put or call) and then, once the change happens, go in with a different option.
The Hedging Strategy
The last one we shall present in our different binary options strategies is called the Hedging Strategy which had been designed specifically to safeguard traders from crippling losses.
This strategy requires that traders set up the accounts which could counteract the loss traders could face.
This is another strategy which could be very beneficial to newbie traders to protect them against major loss of funds.
In conclusion to this article, we would like to urge South African traders who consider binary options trading or who are already trading binaries, to be aware of the risks involved.
One way to control that risk is by going into this online trading venture armed with as much information as possible, both about the trading process itself as well as other segments.
Our article on different binary options trading strategies is certainly a step in the right direction.
By learning more about trading strategies, South Africans will be in a better position to not just boost the potential for profits but will also be able to minimise the risk factor. All the strategies we have presented here may be sued effectively in binary options trading, but traders have to find the one that will suit them the best.
They also have to be able to understand the way a certain strategy functions and then proceed to use it to the best of their abilities.
A good additional tip would be to find a broker which offers a demo account, IQ Option or 24option could be good choices, and then test some of these strategies in a risk-free environment.
This is possible due to the fact that with demo account traders are not in danger of losing funds since all funds are virtual rather than real.