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Threshold Binary Options Strategy
The threshold binary options strategy, also known as “double profit”, allows traders to increase the ITM payout and minimize possible OTM losses. The ideal situation for such trading is when the price of an asset bounces up and down within a reasonable price range, allowing you to enter two opposing trades as close as possible to the highest and lowest prices on the asset’s chart.
By creating a wide enough range, it is possible to increase the probability of winning both trades and getting a double ITM payout, hence the term “double profit”.
At the highest price level within the threshold, a PCI rate can be placed, while at the lowest price level, a CALL rate can be placed. In this case, the goal is to ensure that the closing/expiring price of the asset is between the price levels of the upper and lower trades.
An example of using the Threshold Strategy
Let’s assume that the price of asset A is currently $25, which gives 75% ITM return and % OTM return. We decided to invest $100, predicting a rise in prices, we set the expiration date to 60 minutes. After 20 minutes, the price of asset A reaches $30, based on the neutral trend, we assume that the price will close below $30, and we have invested another $100, predict a decline in prices. At this point, we have entered the market by specifying CALL and PUT trades and predicting the creation of a threshold between $25 and $30.
If the price of the final asset (expiration) falls between the lowest and highest price levels, we will get the maximum return on investment, formulated in the first example below:
Asset A expiration = $30 $25- ($100 + $75) + ($100 + $75).
Initial investment = $200, end-of-period balance = $350, profit = $150.00
Asset A expiration date> is $30 ($100 + $75) + ($100- $100).
Initial investment = $200, end-of-period balance = $175, loss = – $25.00
Asset A expiration is <$25 ($100-$100) + ($100 + $75).
Initial investment = $200, end-of-period balance = $175, loss = – $25.00
The obvious conclusion is that with a threshold trading strategy, we can significantly reduce losses with OTM trades, getting a doubling of potential profits! The profit from winning trades is 6 times higher than the potential loss ($150 vs. – $25), which means that even if we lose multiple consecutive trades, we can still return more profit in terms of trading volume. This is definitely a winning binary options strategy!
Threshold Trading and Bollinger Bands
Now that we understand the huge potential of a threshold strategy, it is important to know how a neutral trend can be correctly identified by detecting the necessary degree of volatility to indicate a safe entry point.
Bollinger bands are used as a technical analysis indicator that allows us to measure the current price volatility of any underlying asset. The volatility lines are positioned above/below the moving average line, forming a range that constantly adjusts depending on the volatility of the market, making it an ideal indicator for threshold trading.
The visual representation of Bollinger bands is used to predict the ideal “lowest and highest” entry point. Confirmation of the presence of a neutral trend for the current period of time is displayed on the asset chart.
Threshold trading combined with Bollinger Bands make a very solid strategy. Let’s say you’ve set an expiration date of one hour, giving yourself enough “response time” to enter the second trade.
Remember that binary options involve a high degree of risk, so any strategy that tries to minimize possible losses will ultimately minimize the risk and allow you to generate more profits! Before you fully dive into trading, make sure you test the threshold strategy with lower trading amounts or on a demo account.
Threshold strategy at the broker Olympus Trade
For productive work on the Threshold strategy, we recommend trading in the terminal of a reliable broker Olympus Trade. The company offers its users the necessary functionality for comfortable work, a convenient personal account, transaction analytics, an expanded set of indicators, a choice of options and expiration (from a minute to an hour), current market news and an economic calendar. You can get acquainted with the current reviews of professional traders about Olympus Trade here. You can see what the terminal workspace looks like in the image below.
A detailed review of the Olymp Trade broker is here.
Go to the official website of the broker Olymp Trade here.
In order to buy a
CALL
option in the Olymp Trade trading terminal, follow these steps by going to the olymptrade.com website and preparing an option by specifying:
- Type of asset
- Expiration
- The size of the bet
- Forecast of quote movement: UP
- Click the “buy” button and follow the results.
In order to buy a
PCI
option in the Olymp Trade trading terminal, follow these steps by going to the olymptrade.com website and preparing an option, indicating:
- Type of asset
- Expiration
- The size of the bet
- Forecast of quote movement: DOWN
- Click the “buy” button and follow the results.
Traders’ reviews about Olympus Trade
Bonuses of the broker Olymp Trade
Working with a broker is not only comfortable, but also profitable – the official website of Olympus Trade constantly holds promotions for traders. The use of bonuses in trading allows you to increase the chances of earning decent money without investing personal capital.
Now the broker offers newcomers to the platform to take advantage of a profitable starting bonus, which will double the deposit. The amount of the bonus depends on the amount deposited (according to the terms of the promotion).
Tagged with: Binary Options Strategy • Binary Strategy for No Touch Options • Bollinger
