Trading the strangle strategy on binary options
Someone just cut you off while driving, took the parking place that you thought had your name on it or grabbed the last item off the shelf that you needed to finish your holiday shopping. You are ready to strangle the next person that gets in your way! Just send them over! How is a strangle applied to binary option trading? This strategy involves buying and selling Out of the Money OTM binary contracts on both sides of your trade.
This article will deal specifically with binary strangles. A binary strangle has low risk because you are buying and selling two contracts that are both out of the money, thus limiting your risk. Since your risk is limited, no stop loss is needed. For an ideal strangle set up, you want a 1: However, if there happens to be a retracement before expiration, it is possible to profit on both sides.
The following image shows tickets from contracts bought and sold that create a binary strangle. You can see in this image that both contracts are OTM. It was OTM because it was greater than the current market price. Because the risk is so low, you can see why there is no need for a stop loss. This amount will cover a loss on either side and still give you a profit. His APEX strategies and systems simplify trading entries, stop losses, and take profits based on the things that truly moves the markets.
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Nadex is subject to U. Fill out our online application in just a few minutes. The first article also included some tips to help you when trading OTM binary options. Strangle Strategy Getty Images.