The world of Binary Options Trading is exploding and many are being pulled in by the promise of quick, maximum ROI. The Trading pros over at WMoption believe that absolutely anybody can enter the market, provided they are properly equipped and have done their homework. In this article, we provide some great information that will help you get trading binary options with High/Low strategy like a pro in no time.
To begin with it’s worth noting that there are two aspects of successfully trading binary options. The first is either a good understanding of financial markets or at the very least a willingness to learn as you earn. The second is a sound strategy, in which the guys at WMOption can boast years of experience and expertise. Predicting what will happen in the market is an important factor for continued success, but there are also several tried and tested strategies that can be used straight away in binary option trading. Having a basic strategy is a simple and effective way to minimize capital risks and increase the chances of winning. Hunch trading is best left to the billionaires!
The simplest strategy has been developed by German traders and it’s known simply as “High / Low”. This kind of strategy can be used extremely effectively as the market develops (hopefully in the direction that you have predicted.)
If you don’t have time to follow all the market news but still want to earn then this strategy might be just the thing for you. To begin with, we must understand the nature and meaning of the word “Momentum”. Momentum as we understand it is based on the simple assumption that assets that have recently outperformed will at the very least temporarily continue in that vein while assets that have recently underperformed will likewise continue to do so. Be aware that as with any gambit, that there is a risk involved with this strategy. The risk is that if High-Low trading were 100% accurate 100% of the time traders would continue to exploit it until it was arbitraged away. This is true of any strategy, but High/Low does have its rightful place in great trading strategies, so here is a brief rundown of how it works.
So, here’s Joe Trader sitting at his desk about to execute a High/Low trade. First, he determines the asset he wants to trade. He will probably look at the trends for the past day or two to get an idea of how predictable the trade might be by analyzing the trends on display. Next he works out the strike price that will be used as a benchmark. “But what is a strike price?” I hear you cry. It’s simply the price at which a put or call option can be used. “But what are ‘put’ and ‘call’ options?” you ask. Well that’s simple. A “Put” is exercised if Joe Trader believes the price will finish below the strike price and a “Call” is exercised if he believes it will finish above the strike price. Once this is all worked out, Joe Trader now chooses an expiration period and then executes the trade.
So what’s happening here? Joe Trader is buying a “Put” option if he believes the price of the asset will finish above the strike price or a “Call” option if he believes it will finish below the strike price after the trade expires. Most binary options trading software vendors have this type of trade built into their platforms and is generally easy to set up. So for example if Joe Trader decides to move on an asset, a High/Low trade will attempt to guess whether the price after a specified interval will finish above or below its price at the time of execution. After selecting the price direction, the trader is usually prompted by most trading platforms to enter his bet. Let’s say JT’s bet is $1000. If the expected payout of the trade is 75% and his bet finishes “in-the-money” then he will make $750 plus the initial $1000 staked. It’s a good strategy and easy to execute, especially for beginners to the diverse world of binary options trading.
Analysts argue the toss over the best way to research for this strategy, but most actual traders believe that following news releases is a critical indicator of how the options perform. Using this strategy can be sound enough in that it should be based on some solid research of at least a day’s trends and is basic at its very best, but it’s still much more reliable that “hunch trades,” an extremely dangerous and impractical way of simply guessing the outcome of a trade. There are many more complex trading systems in existence than High/Low but if there’s one thing our friends in Germany understand, it’s simplicity in design and effectiveness of execution – and High/Low trading allows exactly that.