Binary options strategy Purchase within the Range is one of the easiest strategies. Almost any trader can quickly understand its essence and begin to apply it in binary options trading. The main point of this strategy is that the trader, trading in a certain price range, expects that the price will not rise above or below certain limits. That is the price for a certain time will remain sideways.
To trade this strategy a trader can take advantage of the binary option schedule. If it is assumed that the price will move within a certain price range, the trader can delineate its boundaries using lines. It is possible that these lines are parallel to each other. For example, such figure as the “Triangle” may appear on the graph. It is not necessary to wait for its working out; you can try to trade inside, i.e. in the range of the triangle.
Once a trader decided on a range of trade, he can start trading. As noted above, this strategy should be used only when the trader is confident that the price will not go beyond the range. Therefore, it will make small upward and downward movement inside. A trader can buy a Call option when the price reaches the bottom edge of the range and, consequently, buy a Put option, when the price reaches the upper limit of the corridor.
On this screenshot you can see that the price of the trading instrument fluctuates between 99,000 and 99,300 levels. The trader can use this situation to trade binary options. To do this, he needs to buy Call options when the price reaches the lower limit and buy Put options when the price reaches the upper limit.
Nevertheless, it is important to remember that sooner or later any range of motion is over. After that usually strong impulse market moves in one direction occur. Therefore, the trader must not only be able to determine trading range in which they can earn, but also learn to anticipate situations in which the market can dramatically leave the range.
This can happen, for example, before entering or during the publication of important macroeconomic data or speeches of central bankers. A few hours before publication, the price may be within a certain range, as market players at this time cannot determine the direction of market movement, expecting a strong driver. By the way, in such moments the formation of the “triangle” can begin on the graph. It is recommended to complete the trade according to this strategy half an hour before the news and start to apply a different Binary Options strategy “Trade on the News”.
As can be seen from all of the above, the binary options strategy Purchase within the Range is quite profitable. In order to give clearer signals, you can use additional indicators, for example, the Volume indicator.
That’s all for now. Got any questions? Just ask the expert!