Introduction
Binary options are financial instruments that allow traders to speculate on the price movement of underlying assets. A range binary option is a type of binary option that requires traders to predict whether the price of an underlying asset will remain within a specific range during a specified time frame. In this article, we will explore the range binary option trading strategy and how it works.
What is a Range Binary Option?
A range binary option is a type of binary option that requires traders to predict whether the price of an underlying asset will remain within a specific range during a specified time frame. This type of option is also known as a boundary option. Traders have to decide whether the price of an asset will remain within a range or break out of the range.
How Does the Range Binary Option Trading Strategy Work?
The range binary option trading strategy is based on predicting whether the price of an asset will remain within a specific range or break out of the range. Traders have to determine the upper and lower bounds of the range and then place their trades accordingly.
Step 1: Determine the Range
The first step in the range binary option trading strategy is to determine the upper and lower bounds of the range. Traders can use technical analysis tools such as support and resistance levels to identify the range.
Step 2: Place the Trade
Once the range has been identified, traders can place their trades. If they believe that the price of the asset will remain within the range, they can place a “call” option. If they believe that the price of the asset will break out of the range, they can place a “put” option.
Step 3: Monitor the Trade
Traders need to monitor their trades closely to determine whether they are profitable or not. They should set stop loss and take profit levels to minimize their losses and maximize their gains.
Advantages of the Range Binary Option Trading Strategy
The range binary option trading strategy has several advantages. Firstly, it is simple to understand and implement. Secondly, it provides traders with a fixed payout if their trades are successful. Thirdly, traders can limit their losses by setting stop loss levels.
Disadvantages of the Range Binary Option Trading Strategy
The range binary option trading strategy also has some disadvantages. Firstly, it requires traders to identify the range accurately. Secondly, it may not be suitable for volatile markets. Thirdly, traders may have to wait for a long time before the range is established.
Conclusion
The range binary option trading strategy is a simple and effective way to trade binary options. Traders need to identify the range accurately and place their trades accordingly. They should also monitor their trades closely to minimize their losses and maximize their gains. While this strategy has some disadvantages, it can be a profitable way to trade binary options if used correctly.
