Binary Options: Strategies for Directional and Volatility Trading

CHAPTER 12

Systems with Binary Options

Some people do not understand what binary options are. Due to the two possible fixed payouts at expiration, people automatically assume that trading binary options is almost like gambling.

This could not be further from the truth. As this text has already covered, binary options are a tradable instrument. You can trade in and out of your positions anytime up until expiration. There are multiple strike prices and expirations, and you can trade binaries on a plethora of underlying instruments.

The fact that there are two possible outcomes at expiration actually provides binary options with a unique attribute that is not available with most other trading products.

The “binary nature” of binary options makes them act in a certain way as expiration approaches. This attribute can actually provide intermediate and advanced traders with unique trading opportunities. However, for beginner traders it serves another purpose. It actually allows the traders to enter into the market with a controlled instrument that can mitigate the two biggest enemies of any trader, fear and greed.

FINDING YOUR EDGE

Just as with all instruments, when trading binary options, you need to find an edge in the market and create a system around it. However, unlike many instruments, binary options allow for many different types of trades. As you know, you can use binary options to speculate on ranges, breakouts, economic events, and all other kinds of trades.

Finding an edge ...