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trading:binary-options-trade

Binary options trade

A lot of people treat the binary options as a type of gambling. They could be right to some extent, but I think this is based on ignorance or lack of sufficient knowledge. Actually, our life could be gambling if we don't think and don't comply with some simple rules. If you spend some time in learning how the markets operate and what exactly are the options (plain vanilla and binary) and how they work, you may add a very powerful tool to your trading arsenal.

My trading strategy for the spot market is based on the following of the current trend (defined by EMAs). Entries are made after a pullback towards the EMAs. Unfortunately, the volatility declined substantially during the last few months and the risk/reward (R/R) ratio deteriorated. Binary options provided me with the opportunity to trade with much better risk/reward ration compared to the spot positions. On the chart below, you can see an example of a recent trade. Position was open in two parts. Risk/reward ratio was 1/5. Options expired in-the-money providing 100 points payout. If I had to achieve the same R/R ratio with a spot position, my stop should be 2.5pips.

Of course, there is a catch with the binary options. First, you must choose the right broker. Second, when you have a set up, you must find the right option and sometimes there may be no strike or expiry available.