Binary options take on many forms and offer a choice of variety that grows every day. One of the strategies or types introduced by a few brokers by now is the In/Out or boundary trading option. Using this option, traders have to predict whether the price of a chosen asset will stay within the given price range (representing In) or surpass that range (end up Out of the range) within a predetermined timeframe. The major idea is to predict if the price movement is a trend or is it consolidating, or to decide to go In or Out. The upper and lower end prices are determined by the broker, while the trader chooses the expiry time and, of course, the asset.
How It Works
Traders simply select the asset they want to trade and choose between the In and Out option. As already said, the option In is clicked when the trader believes that the price will not exhibit any changes and that it will not leave the specified price range. The trader clicks Out, on the other hand, when he believes that the actual asset price will end up outside the range (either drop below the lower end line or surpass the upper-end line) before the trade expires.
In/Out Binary Options Example
Let’s suppose that you have chosen gold among the commodities to trade. The actual price of an ounce of gold is $2.4356, while the strike price on the upper end is set at $2.4360, and on the lower end 2.4352. The trade expires in 15 minutes, and the return rate is at 70% on the $100 you have invested. Based on your knowledge and experience, you think that gold prices are steady at the moment, and you think that no major changes will happen during the 15 minutes. If the actual gold price does not climb to $2.4360, or drop below 2.4352, you have won this trade. In addition to your $100, $70 is added to your account. This example shows a narrow range and represents, therefore, a risky trade. For medium-term trades lasting for a week, one of the favorite trading assets among investors are stocks of famous companies and corporations. These include Facebook, Google, and Twitter stocks, etc. Imagine that your broker displayed a range for Google stocks between $7 and $10. You decide to place a trade on this with an expiry time of one week. The same rule applies as in the example above. If you opt for option In, the stock should not fluctuate below or above the determined range and vice versa.
Acquiring Trading Skills
Binary options traders can be listed in three categories:
- beginners
- casual traders
- devoted traders
Beginners should not walk into the trap of trading without a basis. Also, casual traders might need additional knowledge to turn trades into profits. Probably the experienced and professional traders are the group that can make a stable and frequent-enough profit to be counted to successful traders. Binary options are a business and need to be approached that way. Applying relevant strategies will improve your trading skills. Staying in the loop with the market events and the price movements of assets will enhance your trading skills and your winning rates. When you learn the strategies, you will learn some additional tricks that can help you make more accurate predictions. The news and economic analyses can work to your benefit. Always look for sources that contain information on assets and their prices. That is what some of the most successful binary options traders do. Equipped with relevant knowledge, you will guess easier if the price will be in or out of the given range.
Profitable Trades and Risks of In/Out Binary Options
Do not forget that the binary options market is highly risky, including this In/Out or boundary strategy. The highest payout rates are accompanied by the greatest risk factors. Learn how to identify risks that are not worth a try. You will be able to identify them by thoroughly studying the market. For example, study the history of trading assets and their price movements, look at the history of successful traders, and try to figure out the strategies they employed. Assets with a 90% payout rate will probably have a very narrow range. This means that your chances to win are very small, and the risk outplays the profit here. Another important tip is to distribute your investment on multiple trades, rather than placing large amounts on the single trades. This way, if you lose, for example, on two trades, you still have money left for a couple of more trades where you can regain your investment or a part of it. It takes time, experience, and background knowledge to develop skills and strategies, so be patient and always keep improving.
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