In my previous article I talked about my experience in a binary options exchange.In this article I will go on and I will explain more things which you should now before trading in a binary options exchange.I said about price of the assets(buy or sell), strike price and how you can calculate your profit.Now I am going to talk about the advantages.
Close your position before the expiry
For me, one important advantage of a binary options exchange is that you can close your position every time you want. Let’s remember the example of the previous article. We have a product “EURUSD 5 min UP” with 5 minutes expiry which opens at 9:00 and strike price 1,29000. The price to buy the product at 9:00 is 51 euro and the price for sell the product is 49. We believe that the Euro will rise the next 5 minutes so we buy a contract for 51 euro. If our prediction is right our profit is 100- 51= 49 if not we will loose 0- 51 = -51. At 9:03 EURUSD has already rise at 1,29070 after 3 minutes and now the price of the asset is 83 to buy the pair and 81 to sell the pair. Two minutes left for the expiry.We have the choice to keep our contract until the expiry because we believe in our initial prediction or we have the choice to close our position and sell our contract in the market price at 9:03( which is 81 euro) because for example the price is near a big resistance and we don’t want to risk our initial position.So, if we will sell our contract our profit is: 81(market sell price now)- 51(price we bought the contract at 9:00)= 30 Euro.
You have the choice to put a stop Loss or a stop Limit order to your contract. This is a big advantage ,for sure , and it can protect you from unpredictable moves of the market and it’s also a time saver because you don’t have to sit in front of the monitor all the time.
Except High/Low, Touch/Now Touch options you have another one you can trade. It called ladder and there are 5min, 20 min, 1hr, 2hr, 4hr and daily expires. Let’s see a screenshot.
We have a 5min chart and the red horizontal line is our resistance. Look at the beginning of the blue box. The price after a reversal in the resistance hit again this spot. So, we believe that the price will make again a reversal but we are not so sure about how big this reversal will be. So, we buy a “EURUSD 20 min ladder below 1,30330”contract. 1,30330 contract is the price in the cyan line I drew in the chart. Our entry candle is the first in the blue box(1,30312), 20 min expiry, we are waiting for a reversal and our strike price is about 20 pipettes away. This is a risk free trade for me. Of course the payout will be smaller than other cases for example you can buy such a contract about 75 euro for a profit of 25 euro at the end but you have the choice to fix your trade as you want, to close your position every time you want, to put a stop loss/limit order, to buy many contracts to maximize your profit but you should always calculate the risk before every trade.