One Touch Binary Options Hedging Strategy
Within most binary options platforms, One Touch trades are high-yield options that come with more inherent risk. For this reason, some traders choose not to make use of this type of trade. However, there is no denying the appeal of return rates of 200-600% . so these trades should not be completely overlooked. Instead, they should be executed when market conditions are ideal and should be used along with a solid strategy .
The importance of analysis cannot be overstated. Youll only want to select assets that you feel strong will increase or decrease enough to reach the target price. With One Touch binary options trades. the price of the asset must touch or exceed the target price while the trade is live. If it does not, the investment amount is lost. The great thing about these trades is that they typically have expiry times of one week . allowing plenty of time for a touch to occur.
Hedging with One Touch trades is slightly different than hedging with basic trades. With other trade types, hedging often involves the selection of opposing positions, with the goal being for one of the trades to finish in the money and provide some profit after the loss amount of the second trade has been subtracted. With touch trades, youll be counting on strong price movement in a single direction, so purchasing opposing positions would not make sense.
One Touch hedging involves purchasing two different positions, both with the price movement prediction that you have derived via analysis. They could both be upward touches, downward touches, or one of each. The selection must be made in accordance with the results of your analysis. Additionally, you must have been able to establish that strong price movement is forthcoming . The goal is the exact same as standard binary options hedging, for at least one of the two to finish in the money. However, you do run the risk of a dual loss, but could perhaps have both positions finish in the money.
An example of a one win, one loss situation would be two positions that each offer 400% payouts. Assuming that the investment amount is $100 on each, one of the trades would pay $400 and the other would pay nothing. The total amount invested into the two trades would be $200 . Once this amount has been subtracted from the $400 win, a net profit of $200 would be your earnings. Should both trades finish in the money, the profit amount would be $800. Should both finish out of the money, youve lost $200.
Typically, hedging is going to carry less risk when it is executed along with standard binary options trades. Even so, it can certainly help with One Touch trades so long as your analysis skills are strong. There are three potential outcomes one win, one loss, dual win, or dual loss. Two of these three are going to provide you with profits, so keep hedging in mind the next time youre considering utilizing One Touch binary options trades.