When to take the risk on Trading with binary digital options trading Platform
One thing to consider in considering binary digital options trading strategies is not just what risks to take, but when to take them. One of the oldest adages in traders’ lingo is ‘buy on the rumor, sell on the news’ but what exactly does that mean for you as a day trader?
Consider Using binary digital options trading Strategies for Day Trading Short Term Known Coming Events
What some traders may consider is making side bets on their trading strategies using binary digital options tradings to make quick gains on short term movements while the market settles early bets on the long term trends. For example known news announcements on a public company such as an earnings release. Trading on securities with upcoming material press releases is halted prior to the announcement in order to maintain an orderly and ‘fair’ trading market.
Prior to that announcement (the date an time of the official earnings release of listed securities is always known well in advance) traders are in the market taking positions based on the expectation of favorable or unfavorable results. The traders inevitably expect to cash in on those gains immediately or nearly immediately after the announcement, and certainly before the end of the day. What this means is that should the rumored favorable results come to fruition, there is likely to be a small spike up (after an earlier run-up), followed by a dip as short term positions are cashed in while their is extra liquidity to move or unload sizeable positions post-news annoucement.
Trading Patterns on Stocks May Differ – So Do Your Homework and Be Prepared
So you’re inevitably asking yourself, “How can I take advantage of this?” and the answer is do your homework on the specific securities you day trade. When do they typically make announcements, how does the market for the common stock trade going into those announcements (do they run up on rumors of favorable results? How quickly? How much? Where does the spike fall relative to binary digital options trading expiration?)? The answers to these questions can give you an edge in setting your binary digital options trading strategies for that security.
An Example binary digital options trading Strategy for an Earnings Release
Consider an example in the trading of Company ABC. Let’s presume that they’re widely expected to post favorable results at their announcement at 3:30PM today. Given the time of day of the announcement and the broadly expected result, one wouldn’t be surprised to see a small run-up in the stock leading up to the announcement. If you’ve done your homework and it indicates the market pulls back sharply after ‘meet expectation results’ then you might expect a similar pull back on the announcement today, and trade a put binary digital options trading prior to the trading halt leading to the earnings release.
Results Will Be Sporadic – But Add This options trading Strategy to Your Arsenal
Consistent market earnings are not made by having one catch-all strategy. Big earnings are made in very short bursts using a variety of strategies exploiting irregularities in market timing, imbalances of trade flow, and socio-psychological irrational behavior. Your ability to capitalize on daily transactions increases with the number and variety of trading strategies you are able to master and finance.
Taking advantage of the timing of trading transactions rather than the net resulting direction of transactions of securities is another way the short expiration binary digital options trading strategies can be deployed as part of your trading arsenal. This strategy hinges on the use of a commission and spread free binary digital options trading broker.