Binary Options Trading Examples with Different Trade Options

Now that you are reading through this, we assume that you are comfortable with the basic Binary Options strategy of trading and you want to learn more about other trading strategies you can use. Welcome aboard! Here we will learn in details about the other strategies you can use to trade in order to earn some extra cash! The trading strategies we will discuss here are:

60 Seconds
Option Builder
One Touch
Pro Trader
Ladder Trading
Dynamic Touch Trading

But, before we start explaining each one of them in details with different binary options trading examples, we will like to inform you that we will very often be using the same base example we have used above to explain the basic Call and Put Binary Options Trading Strategy or we shall simply refer to the example. The reason we will do this is to standardize one example that will help you to understand the concepts easily. Using different examples each and every time will only confuse you. The funny thing about options trading is that what you learn with one example can be extended to all asset types you can deal with. It is very straightforward and intuitive in nature. This will also save us from the pain of typing the same thing again and again.

60 Seconds: 60 Seconds trading strategy is exactly the same as the Call and Put Binary Options trading strategy on all aspects but one! The only difference between the two is the expiry time. In the basic Binary Options strategy, the minimum expiry time allowed is 5 minutes but you can also select greater expiry periods like 15 minutes, 30 minutes, 1 hour etc. In 60 Seconds trading strategy, there is one and only one expiry time that can be used and it is 60 seconds or 1 minute. You trade will expire in just 60 seconds! That’s all! Let us explain this with the same example above and so, you can experience some déjà vu.

Example:

You enter the market and select to trade in a stock.
After your market analysis, you predict the price will increase or decrease. You select the Call option if you thing the price of the stock will increase or if you think that the price of the stock will fall, you select the Put option.
Whether you select Call or Put, the existing market price of the stock will be locked as strike price. Let us assume that the prevailing market price of the stock when you selected Call or Put was $10. So, $10 becomes the strike price.
Now you select the amount you want to invest from the dropdown menu you see on the screen. We assume that you select $10 investment from the allowed investment amounts of $5, $10, $25, $50, $100, $250 and $500.
There is one and only one expiry time and hence, there is no choice available for selecting the time frame. Your trade will automatically end after 60 seconds of trading.
Now you click on ‘start’ or ‘apply’ and your trade starts at say exactly 10:00 AM EST with the following parameters: Expiry Time = 60 seconds or 1 minute, Strike Price = $10, Investment Amount = $10, Option = Call or Put.

The trade will automatically will be terminated after 60 seconds. So, the trade ends at exactly 10:01 AM EST. If you selected Call option, the price of the stock you were trading in should end above $10 strike price after 60 seconds of trading for you to win the trade. If it falls below the strike price after 60 seconds of trading, you will lose.

If however, you selected Put option, the price of the stock you were trading in should end below the $10 strike price after 60 seconds of trading for you to win the trade. If it ends above the strike price after 60 seconds of trading you will lose.

Let us assume that the predefined payout percentage for winning trade was 80% and the payout for losing trades was 0%, So if you win, your profit according to the above example will be 80% of $10, which is equal to $8. So your total payout will be $10 (your initial investment) + $8 (your profit) = $18. If you lose, you get 0% payout which means that you will lose all the money you invested. In this case, you will lose $10 invested amount in case you lose your trade because of incorrect prediction. Also, you should not be concerned about the magnitude of the price change. Whether the price change is of 1 cent or 1 dollar, it hardly matters.

Advantage of 60 Seconds Trading: The only and perhaps the best advantage is that you get to earn profits in just 60 seconds. It is meant for those who do not love to wait too long for gaining returns on their investment. Well, there are other advantages too!

Because the trade takes place for just 60 Seconds, you can take full advantage of market volatility. Instead of waiting for 5, 15, 30 minutes or more for one single trade, you can actually place multiple back to back trades and arrest all profit making opportunities that you get. Also, because you trade back to back, you can actually compensate for any loss you incur in one trade immediately by placing another trade and winning it.

Anyone new to binary options trading can also use this trading strategy. No significant market analysis is required and traders can simply use the Trader’s Choice tool and follow the crowd!

Option Builder: Option builder trading strategy is meant for those traders who are experienced and love to have greater control over their trades to suit their personal trading styles and risk appetite. One thing that you need to understand clearly is that the starting point for all trading strategies in binary options trading remains the same and there are only a few differences that make all the difference. As with basic Binary Options trading strategy, in Option Builder you need to do the basic things which include:

You enter the market and select an asset.
You predict the direction in which the price will move. If you think it will move up, you will click on Call and if you think it will move down, you will click on Put.
The moment you select Call or Put, the prevailing market price of the asset is locked as the strike price.
Now you select the amount you want to invest from the predefined set of investment amounts given by the broker.

The differences come in from step 5 and this is what makes Option Builder different from the basic form of trading. So, here is what you do in step 5:

Instead of selecting the expiry time for you trade from a predefined set of time frames, you get the freedom to determine the expiry period as per you choice. So, if you think that the trade should expire in 12 minutes instead of predefined 15 minutes, you are free to enter 12 minutes as your preferred expiry time. So, you trade will automatically expire in 12 minutes. You can simply select any expiry time YOU WANT. The broker will not tell you what can be used and what cannot be.

There is one more flexibility you earn in Option Builder strategy and that is the freedom to select the rate of return you want on your investment and the insurance you want for your investment. So, if you think that you analysis of the market will hold well for your selected expiry time, you can go for 80% return on your investment with 0% insurance. This means that if you win the trade, you will earn 80% profit but if you lose, you will lose all your money. However, if you not sure about the market and you think that the position can change any moment, you can opt for 60% profit and 20% insurance or 50% profit and 30% insurance or 40% profit and 40% insurance. You are free to select the combination. [Here there is a small assumption that the maximum profit allowed by the broker for a single winning trade is 80% and so your profit and insurance ratios should never collectively exceed 80%].

A Binary Options trading example will explain this trading strategy better:

You enter the market and select to trade in a stock.
After your market analysis, you predict the price will increase or decrease. You select the Call option if you thing the price of the stock will increase or if you think that the price of the stock will fall, you select the Put option.
Whether you select Call or Put, the existing market price of the stock will be locked as strike price. Let us assume that the prevailing market price of the stock when you selected Call or Put was $10. So, $10 becomes the strike price.
Now you select the amount you want to invest from the dropdown menu you see on the screen. We assume that you select $10 investment from the allowed investment amounts of $5, $10, $25, $50, $100, $250 and $500.
The expiry time you want is all your choice. The broker will not tell you what you can select. So, let us assume that you select an expiry time of 12 minutes.
It is time you select the risk-reward ratio. If you think that your prediction will hold strong, you can go for 80% profit and 0% insurance with the assumption that the broker will not allow anything greater than 80% profits for in-the-money trades. For the sake of this example, we assume that you think the market can change any moment and your speculation can go wrong. So, you want some protection for your investment. So, you decide to go for 50% profit and 30% insurance. This means that if you win the trade, you will win 50% profit on your investment and if you lose the trade, the broker will return 30% of your investment in your account and forfeit the remaining amount.
You click ‘start’ or ‘apply’ exactly at 10 AM EST and your trade begins. The trade will continue for 12 minutes (that is the expiry time you selected) and then the trade will close automatically.

Now there are two possible scenarios:

You selected Call option: Assuming that you win the trade, the stock price ends above the strike price at which the trade started and hence, the stock price is now above $10. Since you win, you will get 50% percent profit because that is what you selected in the risk-reward ratio. So, you will win 50% profit on your investment of $10 and hence, your total profit will be $5. The broker will give you $15 ($10 you invested and $5 you earned as profit). What happens if you lose? For you to lose, the stock price needs to end below the strike price at which the trade started. If that really happens, you will get back $3 from you investment and the broker will forfeit everything else. This is because you selected 30% insurance on your investment before you started trading.
You selected Put option: Assuming that you win the trade, the stock price ends below the strike price at which the trade started and hence, the stock price is now below $10. Since you win, you will get 50% percent profit because that is what you selected in the risk-reward ratio. So, you will win 50% profit on your investment of $10 and hence, your total profit will be $5. The broker will give you $15 ($10 you invested and $5 you earned as profit). What happens if you lose? For you to lose, the stock price needs to end above the strike price at which the trade started. If that really happens, you will get back $3 from you investment and the broker will forfeit everything else. This is because you selected 30% insurance on your investment before you started trading.

Just as in basic Binary Options strategy, you will not at all be concerned about the magnitude of the price change.

One Touch: One Touch binary option strategy is the only strategy that will lead to 400 to 500% profits for winning trades but these trades can be executed only during the weekends and the trade will continue for next 5 working days. The basic are same as described in the previous two strategies. The idea in One Touch trading is that the traders will have to be concerned about the magnitude of the price change. The traders need to speculate whether the price of the asset will reach a certain price level at least once anytime during the lifetime of the trade or not. If it does, the trader wins.

A quick example: Suppose the strike price of the stock is $10. You need to speculate whether price of the stock will touch the level of $10.50 (Call option) at least once during the whole week or not. Alternately in case of Put option, you need to speculate whether the price of the asset will touch the level of $9.50 at least once during the whole week or not. If the price touches the defined price level, you win and if not, you lose completely.

Features of One Touch:

It is a classic example of All-or-Nothing trade. Either you win or you lose everything. There is nothing in between.
The price can touch the specified price level any time during the trading life. It can touch the level right on the first day (i.e. Monday). It can touch the price on Tuesday or Wednesday or Thursday or Friday. Whenever it touches you win.
The price need not be above or below the specified price level at trade expiration. This means that in case of a Call Option, the price of the asset may be at $9.80 when the trade expires but if anytime during the trading life, the price manages to touch the level of $10.50 at least once, you will win. Same for Put option! If the price of the asset at the end of the trading period is above the specified price but touches it at least once during the whole life of the trade, you will win.
The market price of the asset is compared to the target price only once every day and that is when the market closes.

Benefits:

Very high returns for winning trades.
Can be traded during the weekends. Actually, can be traded only during the weekends.

Pairs: Trading in Pairs is actually another form of binary options trading and we will explain this by straightaway moving into an example. Suppose you are watching World Cup soccer and Argentina is playing against Brazil. You will generally predict which team will outperform the other and win. This is exactly how the pairs work in binary options scenario. You simply need to decide which asset will outperform the other in a given asset pair.

It can be Google stocks vs. Apple stocks or it can be gold vs. silver or it can be just any two assets in the same asset class. In order to trade, you will not work with Call and Put but instead, you will have “This Asset and That Asset”. You will have to decide a time frame during which the performance of the two assets will be reviewed and you need to invest from a predefined set of investment amounts. If your prediction is correct, you will earn profits on your investment and if your prediction is wrong, you will lose your investment.

Pro Trader: Another form of binary options trading strategy is the Pro Trader. We really don’t need to explain this in details. A simple equation will help you to understand what it means:

“The Classic Binary Options trading + a few extra features = Pro Trader”

In Pro Trader, you have everything you find in the classic Binary Options trading. You select the asset, the expiry time and the investment amount and predict the direction of the asset price during the trading period. The extra features that you get here are:

A more polished graphical interface that will allow you to see the trading history of the asset over specific time intervals like 15 minutes, 1 hour or 5 hours. This will allow you to do a better analysis of the market.
With Pro Trader, you can simply double your profits any time before the trade expires with a single click of a button that will double your investment amount automatically. So, if the trade ends in money, you win or you will lose. You can do this if you think your predictions will hold well during the whole trading period.
You can minimize your loss by prematurely selling the option any time during the trade option if you think that your prediction will not be correct.
The improved graphical interface allows greater accuracy in decision making by allowing real-time decisions that can vastly improve the profits earned.

Ladder Trading: The concept of this form of trading was borrowed from a ladder. Ladder trading is designed specifically for very experienced traders who like to customize all aspects of their trading. The concept that works here is that the traders need to speculate whether the price of the underlying asset will move up the ladder or move down the ladder. In order to trade using this strategy, the traders will have to speculate three different prices with three different expiry times. For Call option, all three speculated prices need to be above the strike price and for Put option, all three speculated prices need to be under the strike price.

A small example: Let us assume that the strike price of the stock is $10 at 10 AM in the morning.

For Call option the trader makes the following speculations:

The price of the stock will be $10.25 at 10:10 AM
The price of the stock will be $10.45 at 10:20 AM
The price of the stock will be $10.65 at 10:30 AM

For Put option the trader makes the following speculations:

The price of the stock will be $9.75 at 10:10 AM
The price of the stock will be $9.55 at 10:20 AM
The price of the stock will be $9.35 at 10:30 AM

Whether it is Call or Put option, any forecast that turns out to be correct will lead to profits and any that fails will lead to losses.

Important points to remember:

The farther the speculated price from the strike price, the greater are the profit ratios.
The farther the speculated price from the strike price, the greater will be chances of wrong speculations.
The closer the speculated price from the strike price, the lower will be the profit ratios but the speculations will be more realistic.
Unless you have very good understanding of the market, you cannot use ladder trading because making 3 back-to-back speculations is very difficult especially when markets are very uncertain.

Dynamic Touch Trading: This strategy is relatively new in market and is available with very few brokers. It is very much like the One Touch trading with two basic differences:

While One Touch can be traded only during the weekends, Dynamic Touch Trading allows daily trading.
In One Touch the traders get to speculate the price that needs to be touched by the strike price of the selected asset. In Dynamic Touch Trading, the brokers set the price targets and the traders only need to speculate whether the strike price will touch the set price within the expiry time or not.

An example: The strike price of the stock is $10. The broker says that for Call option, the strike price needs to touch the price level of $10.80 and for Put option, the strike price needs to touch the price level of $9.20. The trader will have two options to trade:

The trader selects a time frame (expiry time) and says that the strike price will touch the target price at least once within the expiry time. If that happens, the trader wins and if not, the trader loses. This is Dynamic Touch trading.
The trader selects an expiry time and says that the strike price will not touch the target price even for once within the expiry time. If that happens, the trader wins and if not, the trader loses. This is called Dynamic No Touch trading.

The advantage of this form of trading is that you get to trade every day unlike the One Touch options which can be traded only during the weekends. The downside however is that the rates of return are not as juicy as that in One Touch. The Dynamic Touch Trading provides same payout as in simple binary options trading.