Trading Binary Options On Choppy Days

Every day brings a different trading atmosphere. Some days are slow, like watching paint dry. On other days, the market moves so fast that trades cannot be placed fast enough to keep up with the movement. Then there are the choppy days. Some traders avoid these days, finding something else to do and stay away from trading altogether.

Provided there is volume on choppy days, traders can do a strangle strategy when trading binary options. What is a strangle? It is a trade used in a volatile market. It uses two contracts, out of the money (OTM) strikes on both sides. This is a low risk trade and requires no stop loss. The goal is a 1:1 risk/reward minimum. Set up a strangle strategy by buying an upper binary contract and selling a lower binary contract.

This strategy is used when movement is expected; the direction of the move is unknown. If there is no move, the trade will decay in time. Expect one side of the trade to lose, while the other side profits. Plan to have enough profit to cover the loss of the losing side. There is also the chance that the losing side could profit if there is a retracement in the market.

This is a great strategy to implement with 20-minute binary options. The advantages are quick trades with low risk. This is great for part-time traders as it provides plenty of opportunities, especially utilizing the narrow strikes, and there are even more strikes offered during lunchtime trading.

Remember, where the market is currently trading is always worth approximately $50. If an OTM strike worth $17 is bought, and later the market moves up to this strike, it would then realize a profit of $50. The opposite happens when selling a lower strike. If an OTM strike worth $83 is sold and later the market moves down to that strike, it would then be worth $50, making it profitable.

This is not a strategy to be held until expiration. Exit when profitable. Take advantage of the trade when it is at the peak of profit. When is that? If $30 has been risked to make $30, don’t exit immediately when there is $30 profit on one side. Remain in the trade until an additional amount is made to cover whatever is lost on the losing side. Then exit at the peak of profit.

The basic goal of this trade is to risk around $20 on each side with a 1:1 risk/reward ratio. Pay attention to any news that may be coming out, as this is an excellent strategy to use when news is released and the direction of movement in the market is unknown. Demo this strategy first. Get it down. Understand the rules and then take it live.

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