Finding a reliable binary options trading strategy is half the struggle when it comes to trading binary options successfully. The other fifty percent is composed of luck, knowledge, experience and timing. If you don’t utilize a reliable and accurate trading strategy then your chances of becoming financially independent significantly diminish. The purpose of today’s article is to provide traders with a reliable binary options trading strategy that focuses on decreasing your risk so you can become a more successful binary options trader. Moving forward we will cover the basics and implementation of the risk reversal binary options trading strategy.
As you continue to increase your knowledge about the fundamentals of trading binary options along with gathering the use of many trading strategies you will realize how this strategy is different apart from the others. This binary options trading strategy calls for two trades to be placed on the same asset. For example, lets say if we want to place a call trade on the stock Apple we place our call trade while placing a put trade when an appropriate time is presented. Now this may sound like a crazy idea and why would we want to use this? Well using this strategy can become rather effective when the asset we are watching is fluctuating in value quite a bit or if the asset has a high level of volatility. This binary options trading strategy is more of a stop loss trading strategy used to minimize possible losses that can occur during trading.
An important note to make notice of that when applying this strategy we don’t want to use it on trades that we plan to have a short expiry time unless you know for a fact that the asset will go in the opposite direction and you want to minimize your losses. Ideally, an example of how this strategy would work out would be if we place a trade with a week long expiry on the stock Apple. About 5 days into the week we notice that the stock isn’t performing quite the way we predicted it so we will wait another day to see if the asset continues to go against our original trade. The last day on which the asset is expiring we notice that it still isn’t going the way we thought it would so we would place our risk reversal trade where we would place a trade in the opposite direction for either a hour or daily expiry time. It all depends on the time that you have left but this is a great strategy to use when trading with longer expiry times and the asset is going the way you predicted.
When applying this strategy it is important that we trade with expiry times consisting of longer periods of time. Ideally, you can do this on any expiry time but research has shown that trading binary options with longer expiry times often result in a high winning percentage. If you have any questions or comments about the implementation of this strategy please feel free to leave them below.