forexThis article discusses the forex binary options strategy, which refers to utilising binary options for hedging risk in forex trading. Binary options are popular for both trading and hedging purposes. Because of the inherent high risk of binary options, the return is also very high, sometimes reaching up to 600%.

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Characteristics of Binary Options

Binary options, like the binary number system, have payoffs of zero or a gain. Any successful betting leads to multiplication of investment. On the other hand, any unsuccessful betting leads to loss of investment. However, there are several advantages that make a binary option popular.

First of all, unlike conventional vanilla options, binary options can be exercised on rise or fall of the market, high or low of an asset’s price, within 60 seconds (Read More About 60 Seconds Trading), a few hours etc. Binary options are also available for a wide range of underlying assets, like commodities (gold, crude oil etc.), stocks of companies, market indexes, and forex. Therefore, it offers a lot of flexibility. It is also much simpler to understand and use in comparison with vanilla options.

Why Forex Binary Option Strategy ?

The value of currencies depends on various macroeconomic factors. Investors’ sentiment and industry news may also affect the currency value on a regular basis. Therefore, it is easily understood why currency values fluctuate. However, one may note that currency values remain relatively stable over a long period like a week, as against a few minutes. Making money in forex depends on the ability to act on opportunities as and when they arise.

Like any other trading, trading in forex also requires proper planning, which can be developed over a period of time; not to mention, a proper hedging strategy like a forex binary options strategy. This is because, before one learns the tricks of the trade, one may face losses for a while. And if this risk of losing money is not properly addressed, one may find it difficult to continue trading.

The combination of foreign currencies trading and binary options trading makes a lot of sense, as binary options can not only hedge the currency risk, but also maximize profit. The shorter durations available for binary options, such as 60 seconds, allow a trader to get fast results. Therefore, in the event that the forex binary options strategy fails or succeeds, a trader can modify positions. Binary options, as mentioned earlier, are also easier to manage and understand.

The Proper Forex Binary Options Strategy

A typical way of using binary options for hedging in case of forex, is to find currency pairs that normally move in opposite direction. This means that if one currency pair shows upward tendency, the other pair will show a downward tendency in the same time frame. The idea is to trade two binary options, say a rise/fall, for each of these currency pairs in the same direction. One of them will move up.

Another forex binary options strategy would be to opt for a straddle. In this case, instead of opposing currency pairs, one selects a particular currency pair and trades two options, say one touch options, in opposing directions. Unlike the earlier forex binary options strategy, this strategy is more difficult to implement, as it requires identifying two positions one in the higher direction and one in the lower, which have higher probability of occurrence. The value of the currency pair may go up or down resulting in one loss and one win.

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It may also go up and then down or vice versa during expiration, resulting in both wins. But, if the levels are not correctly predicted, both trades can end up as losses.

Patience is the Key to a Winning Forex Binary Options Strategy

One must understand that both forex and binary options trading involves high level of uncertainty. Even with a solid strategy, one may not win all the time. And there could be different strategy requirements in different market conditions. A new trader might start with making losses. And after receiving the first profit, may want to withdraw from the process with a small profit, whereas staying would have resulted in much larger one. Patience, therefore, is the key to develop a solid forex binary options strategy.

How to Choose Binary Broker?

right choiceIn order to start trading online you need to open an account with legit and trusted broker. In this field there are numerous non-regulated brokers, most of them with shady reputation.

Still, we are struggling to find the good ones and provide you with their unbiased reviews and customer feedbacks. Trading binary options is not absolutely free of risk but we can help you minimize it.

By researching the market daily and following the financial news, the team at Top10BinaryStrategy is always up to date with the latest alerts, and upcoming launches of trading systems, and brokers.

We advise you to Open Account with Top Rated Broker OR Choose from Our List.