Strategies for Currencies

If you intend to invest in binary options that have currencies as their asset, there are several strategic considerations you need to be aware of. Learn all about Strategies for Currencies right here.

Currencies are very popular among binary traders, and you can invest in options pertaining to currencies with most binary brokers.

Strategies for Currencies: Two overall considerationsStrategies for Currencies

However, there are some unique qualities that set these assets apart from the rest. In particular there are two aspects to currency trading that requires strategic decision-making on your part as a binary trader. The strategies for currencies are:

  1. Currencies are traded all over the world, all the time
  2. The price of a currency is influenced by more factors than most assets

The consequence to you of point number 1 is that you can always trade in this sort of an option. Because, for example, the US dollar is traded in China, as well as Europe and America, its value compared to other currencies will fluctuate around the clock. You as a trader need to take this into consideration.

Remember that this is an asset that you can make money on all day and night long.

The second point is even more important from a strategic point of view. Whereas the price of a stock listed on a stock exchange is simply determined by supply and demand among investors, the price of currencies are influenced by a number of fundamental factors.

For example, things like interest rates, the volume of money printing, a country’s budget and trade balance can all have major impacts on the price of a currency. This means that there are more things to consider when making predictions about a currency’s price movement. A smart trader will know that a major news event – for example the announcement of a change in government fiscal policy – will cause a major market movement. You will not know in which direction, but you know that the movement will be strong.

The smart strategic choice in such an instance would be to invest in a boundary option. This means that you predict the price of the currency will move beyond its target prices – either up or down.

High / low options are the ideal binary option type for new traders. Allowing for the easiest predictions of all binary options types by simply requiring you to predict whether the market will rise or fall over a given period of time, high / low options enable you to win the highest percentage of your trades of all binary options types while also providing payouts of up to 90 percent.

To maximize your profits, you need the right strategy, though.

What are good strategies to trade high / low options

To win a high / low option, you only need to predict whether the market will rise or fall over a given period of time. If the market has moved in the right direction, it does not matter how far the market has moved. You win your option even if the market has moved by the smallest possible step.

This special characteristic allows you to trade strategies that are a perfect fit for high / low options. The best of these strategies are:

Trade the breakout

The breakout is the perfect opportunity to win a high / low options. A breakout is a short, strong movement that occurs after the market has completed a chart formation, for example continuation pattern, a candlestick formation, or an event in a trend.

At these point, numerous stop orders or limit orders of traders of conventional assets wait to be triggered, all pointing in the same direction. Once the market reaches the price level of these orders, they combine to create a sudden surge in supply and demand (depending on the direction of the orders), thereby strongly pushing the market in one direction – this movement is called the breakout.

As a binary options trader, anticipating breakouts can lead you to an endless reservoir of highly profitable trading opportunities. By monitoring a few assets on different time scales, you will at least find 5 to 10 perfect breakouts every day. With a short expiration time and high / low options, you should be able to win a high percentage of your trades, thereby creating a nice profit by the end of the month.

Trading moving average crossovers

Moving average crossovers are a sophisticated yet simple way of creating signal for high / low options. All you need is a software that can draw multiple moving averages into a price chart such as Meta Trader, and you can create definite signals.

To trade moving average crossovers, you need two moving averages:

  • A slower moving average, using a higher number of periods for its calculation.
  • A faster moving average, using a lower number of periods for its calculation.

By plotting both of these moving averages in one chart, you will two lines that constantly cross each other. When the market changes direction, the fast moving average will be quicker to react than the slow moving average, therefore crossing the slower moving average in the market’s new direction.

This event creates a signal that you can trade with high / low options:

  • If the fast moving average crosses the slow moving average upwards, the market must have recently turned upwards, which means that you should invest in a high option.

  • If the fast moving average crosses the slow moving average downwards, the market must have recently turned downwards, which means that you should invest in a low option.

This way of creating signals is so easy to understand that even complete newcomers to binary options can employ it immediately. To maximize your returns, only employ the moving average crossover technique while the market is in a trend. When the market is in a sideways movement, it will create many false signals that reduce your winning percentage unnecessarily.

To completely eliminate optical trend analysis from your trading, you can use a third moving average in the three moving averages crossover technique and only create a signal when both faster moving averages have crossed the slow moving average.

Swing trading

Swing trading allows you to maximize your returns from a trend. Swing traders do not only follow a trend as a whole, they trade every single swing from high to low and vice versa – an approach that is perfect for binary options.

When you recognize a weakening swing, you can invest in a high / low option into the opposite direction. The market will turn around and close on the right side for you to win your high / low option.

To find weakening swings, there are a number of different possibilities. The two most common techniques are:

  • You can look for divergences in momentum indicators such as the relative strength index.
  • You can look for candlestick formations such as dojis.

With both strategies, you should be able to find plenty of opportunities to win a high / low option.

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Strategies for Currencies
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