A drastic market movement can be either higher or lower, and will follow some major news announcement or event. A good trading strategy is betting that the initial market movement will reverse, therefore, making this a reversal trade.
An example of this type of drastic movement is as follows:
There is an important press conference, after which the FTSE-ALL-SHARE Index quotes are extremely high, however, the prices do not stick, and the market drops back down.
Binary betting on this type of market is an extremely popular strategy, as this kind of market has a tendency to make these types of drastic moves.
We have compiled a list of what are key elements to be successful Binary betting using this strategy.
1. Examine the factors you wish to use to make your decision on the binary bet you will make. Do your research prior to the upcoming figure announcement. Decide if you are going to make an hourly bet or daily bet.
2. Remember the days when these figures are announced; as an example the first Friday of the month is when the United States announces the unemployment figures.
3. Do not follow the news, but watch the markets. When the market makes a sharp significant move quickly, bet the opposite way.
4. Typically a down-bet trade will range from 10 to 20 under, which provides minimal risk, but provides a far greater reward. When the trade goes in your favour the binary bet should settle at 100. If you wish, you are able to sell anytime, prior to the expiration, of the trade.
5. The likelihood of having a successful bet is 65-70 %. Even if the trade loses it is possible to still see a profit. The risk to reward ratio is approximately 5 – 1.
6. Binary bets will always be quoted, and there are many markets that will quote hourly. Binary betting hourly allows trading on a short term basis, but you must be alert and flexible.
Binary betting trades move fast, and you should fully understand how binary bets work. Initially, it is wise to start with minimal positions to minimise your risk.