One thing any seasoned trading veteran will tell you is that you need to diversify your portfolio in order to alleviate risk and increase profits. When it comes to binary options, though, how do you create diversification, especially when your trades are not open for very long? In a marketplace where specialization is the key to success, diversifying your trades can be a bit difficult–but that certainly does not mean that it’s not possible. With some creativity and effort, you can add diversity and take charge of your profit making potential in a way that most other binary traders will never do.
When you go with the right broker, though, diversifying becomes a lot easier. Think about it from the viewpoint of someone who only trades in the binary options market. What can you do differently within this context? There are more than one type of binary trade–and utilizing more than one can help add diversity to your trading routine
. So start with that one asset that you feel the most comfortable with. You probably are used to the call and the put options already, but now try looking at an exotic trade or two. Start with a boundary trade, if you can. This is basically a prediction of whether the asset
will stay within a certain range at the end of the expiry, or if it will be outside the range. This can be tough at first, but once you get a feel for your favorite asset’s behavior, this will be easier. You can even start looking at high yield options for boundary trades, too. These return a ton more in cash to you–sometimes over 500 percent, depending upon your broker–and although they’re tough to hit, when you do, it’s a big boost to your account.
Next, check out the Timing with a Broker. In today’s state of the industry, many brokers offer a lot of choices between 60 seconds before expiration all the way up to 30 days. Some go even longer, but this selection incorporates the vast majority of brokers right now. Since they’re offered to you, take advantage of them. If you know something about an asset that will give you information on how the price will look 15 minutes from now, you probably know something about the time before and after that 15 minutes, too. So trade them. It might take a few tries to get the feel for the different sets of knowledge that you’ll need, but the difference will only be slight–maybe a different denomination on your charting package, or at most, a second opinion from an analytical news site. Once you can trade a stock, index, commodity, or Forex currency pair at a certain timeframe with a good deal of success, branching out to different timeframes will be very easy for you. Differing up your expiries adds a huge element of diversity to your portfolio and it’s almost effortless for you to do.
Finally, try different assets. It seems like common sense, but this actually needs to be approached with caution. You don’t actually need to do this with binary options as you would with the stock market, for example. In stocks, trading one way is a lot easier. Selling a stock short can be very costly. But when you’re in the binary market, it is just as easy and costs the same regardless of which direction you’re trading. So you can specialize in just one asset with great success if you follow the above rules. However, you don’t need to do this. Start with what makes sense. If you’re trading a stock, try trading the index it’s connected to, too. Or if you want to go a bit more advanced, look at the major players in a commodity you have knowledge of. If you’re trading crude oil, for example, look at oil producing company stock–such as Exxon Mobil. Or if you’re trading gold, look at a currency that is behind a lot of gold production, such as the Australian dollar. There are tons of connections like this that you can discover, and without having to extend yourself too much, you will see that assets do not act alone. Many are closely related and when one moves
, the other is affected in a big way. Diversifying the number of assets you trade will help increase your profits and it only requires a small amount of research on your part.