Trading Binary Options In Range

Trading Binary Options In Range.
Usually, price range levels are put on a chart using support and resistance lines. They may appear differently for each trader and are only applied to help analyze price movement based on the range created by support and resistance levels. However, there is a unique trading type in binary options that positions price range not only as an analysis tool, but also a determinant in executing your options.
The trading type is often called as in/out or boundary options. It is originally meant for just a variation from high/low options to make trading more interesting. But, it can also become a necessity when you want to be an active trader in every market condition. Unlike touch options that are more suitable for a high volatile market, boundary is said to be useful when applied in range market. By acquiring this knowledge, it's safe to say that binary options trading types are actually helpful to assist you in benefiting from different market conditions.
The reason why boundary options can be a good match for sideways market is their condition that apply price range as the main reference for you to open an option. They are comprised of two choices, in and out option, with in option as the obvious type to seize chance in a ranging condition. But what about an out option? To put it simply, the option is in-the-money when price goes out of the range. So, it is another alternative for you to have a chance when there is a potential breakout.
The ability to pick between in or out options thus provide you with the chance to apply for two strategies: the one that is used to predict price breakout and the one that functions in sideways market.
Predetermined Or Self-Customized Price Ranges?
Most binary options brokers only give an option to choose between in or out option without offering a any chance for traders to set their own price range. This is not exactly a negative aspect when you see from its simplicity. You just need to adjust the price range given by broker with your own analysis on support and resistance levels.
Meanwhile, brokers offering customized price ranges are very few. One example can be taken from Binary.com. Through its proprietary platform, this broker provides barrier columns for clients to place their customized price range. This way, you can put an in or out option based on your determined support and resistance levels.
An example of trading platform with customizable price range.
So, which one is better? Every type of price range has its pros and cons. You can pick your own preferred type by considering from the point of view of trading style and broker specifications . If you prefer to trade boundary options without having to be bothered on deciding the price range first, then predetermined price range by broker is the one for you. After all, there are still two choices (in or out) that you can decide on, so it's not like you are trapped by the set price ranges.
On the other hand, choosing a broker with customizable price range can be an alternative if you prefer to have more freedom in deciding your own range. Surely, you need to prepare more analysis on getting the right ranges. But if how you usually analyze the price before you trade, then looking for price range would not be a burden for you.
Aside from your trading method, you also need to include the broker's trading condition into your consideration. It won't be a good thing if you choose a broker based only on the type of price range in boundary options. Therefore, you also need to reflect on the broker's quality which can be inspected from aspects like payout, instrument choices, variation of trading types, and platform interface. Ensuring those specificationw to meet your trading skill and necessity is important for the future of your binary options trading.
It's Not All About In Or Out.
Boundary trading is not only dealing with range and where price will end up at the time your option expire. In fact, there are some varieties in which you can take an advantage of if you really know how to. Such varieties came from High Yield Option and the chance to still be in-the-money even when price doesn't end up in the right position when expiry time comes.
High Yield Boundary.
This type of boundary option offers high return, just like its name. If normally you can get a 70% to 90% payout, you will have the possibility of getting a payout as high as 100% to 500%. However, it is important to note that the higher the payout is, the slimmer the chance you will get. You will get a much tighter range from your broker in this kind of option, making it all the more difficult for you to predict carefully. To make it even harder, High Yield Options are only activated at the time when the price is most volatile.
An example of high yield boundary with 200% payout.
Choosing this High Yield Option merely as an alternative to get better profits without any experience to back you up will only direct you to gambling. It is much more preferred for you to never take this kind of option seriously unless you are equipped with advanced trading skill, experience, and well-thought analysis.
Stays In/Goes Out.
This option type allows you to profit even when the price is not inside the range at the time your option expires. This is made possible by this rule: your stays in option is in-the-money as long as the price moves, even only once or for a very short time, inside the range during the trade.
The stays in/goes out is a term established by Binary.com to offer this type of boundary trading. It seems easier, but every plus has its minus. The goes out is after all not available since it is provided with 0% payout rate. Not many brokers offering a boundary options with this kind of flexibility. The condition can be different in each broker, so it is best for you to immerse yourself in understanding broker's rules, terms, and conditions, before applying for a real account and trying out this kind of boundary options.
Range Trading Strategy.
Presumably, you can simply use boundary options every time you want to trade range market. However, there are some strategies that you need to apply so that your winning chance is more assured. They may be not much, but it has the possibility to make your trade easier and give the assurance either technically, fundamentally, or even both.
Technical Analysis.
Bollinger Bands is one technical indicator effective for guiding you to find the right signals for trading with boundary options. This tool consists of 3 channels that contract and expand based on price volatility. If you plan to trade in boundary options, you can look for when the bands tend to move sideways, not going upward or downward.
Binary options range trading with technical analysis Source: www.binaryoptions.net.
Simple horizontal lines are also helpful to define the upper and lower ranges. If you put on those indicators just like how they are applied in the chart above, it will be easier for you to get the significant piece of information that helps you decide in choosing between in or out options. Even better, the upper and lower ranges provided by this strategy can be written as your own barriers if you trade in a platform like Binary.com's.
Fundamental Analysis.
There is not much to prepare from fundamental side. Since you need to ensure that you enter in ranging market, you only have to learn about news schedule and make sure to avoid trading when there are high-impact news released. But, this condition can trigger questions like Why we still need to sidestep when we have an out option? and Isn't it provided for a breakout possibility?
When the price is highly influenced by news releases, you will find yourself trading in a very volatile market. Price can go up and down in a very short time, and analyzing its movement based on a couple of ranges will be very difficult. It can go inside or outside the range unexpectedly so you'd better wait for some time until the price movement is more settled.
Know Your Risks.
It has been a popular belief that every trade has risks. Whichever trading type that you use will always have a chance to fail. Therefore, it's important for you try it out in a demo account first and use small capitals to limit the number of your potential loss. For starter, you may want to look for brokers offering free demo account and how much is their minimum investment per trade. Choosing from the brokers' policy in range setting can be significant too if you feel like it will be better to either just go with the set range or determine your own range.
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