Strategies for Stocks
One of the ways to trade binary options on the market is with the help of profitable stocks. Yet remember that even a stock has certain strategies and requirements to follow in order to win and get so desirable reward.
The stock has the following 2 characteristics:
– limited time with overnight break – unlike currencies and commodities that are traded without breaks and all week long, stock is traded at its home stock exchange and when it is time to close, all the trading process stops. The time given for a break, enables traders to think over new strategies as well as concepts to make the profit larger.
– supply and demand determine the price – stock’s exchange price always depends on how many traders wish to sell or buy the stock. Another situation is with commodities and currencies. Unlike the stock, their price is made outside the stock exchange.
When trading stocks with binary options, the majority of professional and advanced traders usually use the following specialized stock strategies.
Trading Overnight Gaps
As it was written above, it is possible to trade stock only when the stock exchange is opened. Yet it doesn’t mean that traders are not capable of placing new positions when the stock exchange is closed. As soon as the stock exchange opens, these positions will become effective.
The word “Gap” refers to considerable surplus in demand or supply which was made by the traders by placing orders in the same direction. This makes the market jump and further leads to the so-called gaps.
There exist a few types of gaps: closing, breakaway and runaway gaps. Each of these gaps has its own strategy with signals that generate during the day.
Using this strategy it is possible to make high profit nonetheless.
Trading Closing Gaps
By the end of a trading day, the trading volume reduces as almost all traders closed their positions and will open new ones only the next day. This environment would be ideal for exhaustion gaps as they are the only ones that might close. Moreover, this type of strategy can be used to trade a touch option where the payout percentage is 500%.
Trading Chart Patterns
Trading chart patterns such as reversal or continuation pattern take a very long time to form. Perhaps that’s the reason why they are so exclusive on the stock market. But in case if these patters is exactly what you are looking for to trade, then always do it with stocks.