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Different Binary Options Trading Strategies

Forex IndicatorsDifferent Binary Options Trading Strategies

In a previous article, Trading Center presented readers with the basics of binary options trading. The article touched on the technical and general rules for trading binary options. Now, let's delve a bit deeper into binary options by studying different trading strategies that you can use for your sessions.

The Basic Options Strategy

This style is one of the most utilized strategies by binary options traders and for good reason. With basic options strategy, traders are protecting themselves from incurring a lot of losses. This strategy is about picking an underlying asset or a Forex pair and then waiting for any market movements of the strike price. If the prices are heading up, investors place a call option. 

Let's use the USD/EUR currency pair for this example. Say that this pair is predicted to hit 1:3000, and you get $100 if you're right. You place the call option, which will expire in an hour. The payout is 70% if you win and 30% if you lose. Say in the first 30 minutes, the price of the USD/EUR pairing hits 1:3016. This is good so you buy a put option for the same pairing at 1:3016 expiring in the next 30 minutes. In this case, there are two possible outcomes when your binary options contract expires. 

First outcome: your one hour call option wins, and the 15 minutes put option will lose. If this happens, you'll earn $170 from your 70% call earnings, and 15% refund from the put option that lost. Of course, the reverse can always happen, meaning you only win 30% of your capital and a 15% rebate from your call option. 

Second outcome: this is the best scenario because both your call and put options were predicted correctly. You will get $340 in total ($170 x 2). 

It's impossible to lose in both scenarios so you're only risking the loss of $15 during your sessions.

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How will CFD Trading be Effected by European Regulations in 2018?

How will CFD Trading be Effected by European Regulations in 2018?

By their very nature, retail trading and vehicles such as CFDs (contracts-for-difference) represent risky business. After all, they tend to operate in low-growth consumer markets, while they also make it difficult for investors to enter into emerging marketplaces.

Retail trading is also likely to be significantly impacted by regulatory measures and compliance issues, which continue to change the landscape for investors and move the boundaries of best practice.

This is particularly relevant in the current climate, with European regulators keen on toughening standards in the retail trading market and protecting online traders.

In this post, we’ll ask how CFD trading in particularly will be affected by proposed regulatory changes in the year ahead:

An Extension of UK Plans – What does the Regulator have in Mind?

As part of a proposed continent-wide overhaul, the European regulators will strive to provide guaranteed loss limits to customers in 2018, while targeting specific products that are deemed to carry an excessive and disproportionate risk. This follows a sudden UK crackdown last winter, which hit the capital hard and caused many market leaders to lose around a third of their share values.

In more specific terms, regulators want to restrict the amount that customers can borrow to leverage their bets, while they have also staked a claim to restrict the core marketing of targeted products. To achieve this, they’ve also honed in on high-liquidity markets and derivative products, including the foreign exchange and CFDs, where investors can speculate on the performance of assets without assuming ownership of the underlying vehicle.

The proposed changes will also be extended to binary options, which enable investors to bet whether the price of a chosen financial instrument will be higher or lower than a fixed threshold. Spread betting may also come under increased scrutiny, and there’s no doubt that the financial market could be braced for significant changes in the near-term.

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