I am sure that every trader is familiar with hedging when you buy and sell two or three assets in order to not lose on the value of any of them. In other words, opening trading positions in different directions in order to reduce the losses in case of one asset decreases or increases in price compared to another one (for example, the USD vs EUR). Hedging helps you preserve the value of an asset and avoid losing its value compared to the second one. Sounds a bit confusing, but in practice it is much easier.
Today we will talk about a binary options trading strategy called “Hedging”, which is the best when trading through a broker StockPair. Why is it the best through this broker? Let’s take a brief look at its main advantages:
StockPair is a binary options broker that provides a simple but functional binary options trading platform. It allows you to quickly choose different assets from the left window, set up and open your trades in seconds.
The company is around since 1990 and is licensed in the EU
As part of the Cyprus Securities and Exchange Commission.
StockPair provides a very comfortable trading environment, a large variety of trading tools, a minimum requirement for a deposit is only $200 and with an option for a welcome bonus of up to $500.
Want to learn more about StockPair? Watch this short video:
The “Hedging” Binary options strategy:
The principle of this trading strategy is following: a trader buys two opposite options for the same asset and waits that by the end of the expiry time (the end time of the contract) the price is between them. You should buy the Call Option as low as possible, and the option Put as high as possible. After all, the wider the price range, the greater your chances for making a profit.
If one of the options does not win, the other will be a winner at any price movement. Thus we lose 100% of one option, but win up to 85% of the other. As the rates are the same, your loss will be only 15% of the rate. Please note, that you should calculate it taking into account the amount of your trade and not the amount of your deposit. Thus you lose the minimum amount. If you win in both options, you get a profit of 95 + 95 = 190% of your starting amount. This gives you a great potential.
You can buy options both during the flat market and during a trend movement. During the flat market you buy a Put option on the top border and the Call option on the bottom. If there is a trend movement the first contract is purchased from the opposite side. For example if there is a down trend and the price rose, you buy a Put option, when the price falls, you buy a Call option.
Trading takes place in a Turbo mode – 60 seconds trading. Although it is also possible to use this binary options trading strategy on a normal 15 minutes mode as well. The time frame you are choosing is not that essential here. But the shorter time frame allows you to make quicker profits and catch good price movements.
That’s the whole strategy. The main task of a trader is to choose the buying time correctly. You should take to your consideration the low volatility of the flat market and high volatility during a trend movement. You should choose the right moment to enter the market as this is exactly what gives you a better chance to success.
Use Hedging strategy to trade binary options with StockPair and the profits will be yours. I wish you successful trading and remember your trading success depends on the broker you choose.