One of the most common strategies for binary options trading is called the binary option price action strategy. This is where the trader decides what to do:
- Before the trade;
- During the trade;
- After the trade.
You might think that this sounds easy. It is but if you do not know what you are doing, then it is very difficult. The strategy has been used by professional traders for years. Many new traders jump on the binary options bandwagon without first understanding how to do it.
Options price action strategy
The binary option price action strategy revolves around the binary option’s terms ‘closing price’ and ‘closing time’. This is where the trader determines what they will do before, during and after the trade. This is known as the binary option strategy. The most common way this is done is to determine how much money the investor will make on a certain level before the expiration date. There is also an off-set strategy that is used in binary options.
Main components of strategy
The two major components of the binary option price action strategy include the:
- ‘Divergence Factor’;
- ‘Rational Edge’.
The Divergence Factor analyzes the difference between the opening and closing prices. This is a positive value. It means that there is considerable price movement in the market. The Rational Edge is the opposite, where the difference between the high and low price is negative.
Many beginners go for the Divergence factor analysis. Unfortunately this is not a very good indicator of how the price will behave. When the price moves in a predictable pattern, you can easily predict its direction, assuming that the price will always go up or down. But when the price changes with no apparent reason, the binary option price action strategy games become difficult.
The best way to find out whether a particular price will change direction is by looking at the various strategies that use the Divergence Factor and the Rational Edge. If the price action binary options strategy games do not use these two crucial indicators in their strategies, they are useless. You must be able to determine how good your strategy is. You should check whether the strategies you are using can help you make a good profit or not.
Some of the best binary option price action strategy games are those that are based on the divergence and rational edge indicators. This is because these indicators are the easiest to use. All you need to do is put a stop-loss figure on the trading strategy and then you can be sure that you can get the best out of the strategy. You can find many good price action binary options trading strategies online. You just need to spend some time searching for them.
Wrong and right investments
If you have decided to go for the price action strategy games, you must keep in mind that your trading must be based on the binary option price. This means that you must only deal with the price of the particular option that you are dealing with. Do not think about other underlying options and their prices. This could lead to serious financial problems for you as you may lose lots of money from your investment.
In order to use the price action strategy in binary option price action games, you must be very sure about your breakout or the break-out of the price. This is because the price movement of the underlying asset is affected by many factors including:
- Supply and demand;
- Political events;
- Changes in the world and e.t.c.
To determine the breakout, you must look at the daily chart of the price. If you find the price pattern has a distinct upward or downward trend, you must be sure that the price action strategy you have selected is right for you.