What Are Options Strategies?

As with all trading, the trader must have a good knowledge of the markets and what the signals and charts might be indicating and a firm understanding of a batch of strategies. If they don’t have sufficient knowledge, then their trading will be the result of guess work and random luck a certain recipe for financial ruin.

Although luck is always an element of trading, having knowledge of the markets and having defined strategies that you have tested thoroughly before you risk any money in the markets will significantly enhance your chances of making a profit. Trading must also be viewed as a long term pursuit. You cannot expect to make a reasonable profit in the short term.

Here are some binary options strategies to consider:

60 Second Binary Option Strategy

Most strategies require fairly long time frames – hours, days or sometimes months.

The 60 Second strategy is a very quick strategy that is best used in choppy unstable markets. It is a quick turn around strategy that some traders consider to be scalping. Because it is so quick and used in rough markets where the prices change direction without warning, it is also a very high-risk strategy.

It is not a good or safe strategy for beginners.

The strategy is based on the opportunity to make a profit from a stock’s change of direction – literally from a peak to a trough. In choppy markets, this happens frequently in short spaces of time.

Cobra Strategy

Unlike the 60 Second Strategy, the Cobra trading strategy is much safer and is used in trending markets when share prices have developed a direction and have momentum.

The Cobra also uses a batch of signals and indicators to ensure that the market is doing what the trader wants it to do before placing a trade. All this goes to making it a safer trade with reduced risk.

Double Red Strategy

Another high risk strategy Double Red Strategy, this one is also a scalping strategy and best not used by newbies.

It is a short term strategy and suited to ranging markets where the action would otherwise be flat and profitless.

Elliot Waves Strategy

Ralph Nelson Elliot was the father of “The Wave Principle”. In a book he wrote in 1938, he was propounding a theory that helped explain the behavior of people when they gathered in a mob. He discovered that this behavior occurs in a predictable way and that it happens in waves. Going into more detail, he found that each wave was made up of smaller waves and that this pattern could be broken down to infinitely small segments or fractals.

Stock traders of his time were quick to realize that the Wave Principle could be applied to trading and the stock markets. This trend had become even more relevant with today’s high speed computers, and it is used to anticipate what the markets might do in the near future.

Gold Strategy

Gold has always been a safe haven for countries, companies and people with high personal wealth. It is always seen as a safe commodity to invest in when the markets or the economies of the world are fairing badly.

Economic stress can be caused by impending war, the outbreak of a plague like Ebola or the failure of a nation’s agricultural sector. When these things happen, investors always turn to gold.

Gold strategy is useful for traders, because when they see the signs of stress one of the world’s economies, they can start paying attention to the gold price and get ready to trade shares in it when conditions are favorable.

Hedging Strategy

Hedging is a strategy designed to limit the risk and potential losses and boost profits when trading in uncertain markets.

When using the hedging strategy, the trader takes Puts and Calls on the same stock to run at the same strike price.

When he sees which way the market is breaking, he will cancel the trade that is against the trend. So, if the price of the stock increases, the trader will cancel the Put option he took and keep the Call option running to maturity..

MACD Divergence Strategy

MACD stands for Moving Average Convergence / Divergence. It is used to measure the momentum of the market when it is moving up or down. Traders can see if the move is strong and likely to last for a long time, or if it might fade and turn in the other direction.

The MACD is a combination of statistical information gathered from the closing prices of the period it relates to. It takes the convergence and divergence of two exponential moving average indicators, or EMAs.

Revolt Strategy

When the markets are trending, either the Bulls or the Bears are gaining ground at the expense of the other group. But nothing lasts for ever, so the other group knows that the tide will turn and they will be able to fight back and regain the ground they lost. The Revolt strategy is designed to try and anticipate when the party that has had the upper hand is likely to start losing it. There are indicators and patterns that can be found in the movement of the candles that give a fairly clear idea of when the prices might start to go in the other direction which is when a trader using the Revolt Strategy would place the appropriate trade. This is a long term strategy which might run for days, weeks or even months.

Straddle Strategy

The Straddle Strategy is similar in concept to the Hedging Strategy. It is used when the trader is not certain of which way the market is likely to go, so he covers both eventualities. For this strategy to be worthwhile the potential move must be big. For this reason, traders are likely to use the Straddle Strategy when they are anticipating that the markets are going to go from ranging into a trend, in either direction.

Trend Line Strategy

This strategy involves basic analysis of the markets and the need to identify trends of either bullish or bearish markets. Because of this need for basic analysis, this strategy is a very useful place for new traders to cut their teeth.

A trend forms in the markets when prices move predominantly in one direction. There will be a bullish trend or a bearish trend.

During the trends, the prices will fluctuate, but their overall direction will be either up or down. To see if a trend is running, the trader will look for peaks or troughs in the charts.