Improving the probability of success: charting and hedging in binary options

Charting is a concern to many traders who switch from the highly advanced world of forex and spread betting to that of binary options trading, because the latter is simply not on the same level. Despite that fact that binary options trading is one of the the fastest-growing trading methods in Europe, it distinctly lacks the technological charting quality of its predecessors. Whether this through issues of investment or simply that brokers prefer not to provide in-depth charting to the same quality as forex or spread betting brokers do is a debatable subject. Many traders suggest that the basic charts provided by binary options platforms are to inhibit traders from making astronomical gains through successfully applying technical analysis, and exploiting the potential profits to be made from simple ‘all-or-nothing’ binary options markets.

Solving the problem of inadequate charting in binary options

The reality may be a combination of the two. As a relatively young, and highly accessible method of trading, binary options platforms argue that their consumers do not need to have charting capabilities, and the ensuing confusion, as those provided by forex trading platforms. Whilst this can be viewed skeptically by some, the simple line graph provided by most platforms allows a reasonable degree of artistic licence in terms of pricing. In the early days, some binary options platforms were accused of failing to expire the options at the precise time and the ensuing delay for ‘in the money’ positions was to maximise the possibility that they would be unsuccessful. This is less true today, with a high number of mature platforms gaining recognition for their transparency and efficient expiry of their client’s options.

One of the most effective ways to counteract the reluctance of platforms to provide the level of charting that professional traders require, it to simply use an additional charting package to improve the view of financial price movements. Although it is considered both inconvenient and potentially inaccurate to use an additional price stream, it is one of the most straightforward ways for technical traders to observe price action for potentially high-probability setups which can then be executed on a binary options platform.

Better charting and hedging to improve success trading binary options

The question remains why traders would switch the comforts of their current forex or spread betting platform for the poor charting options on a binary options platform. One answer would be the improved trading opportunities that are available using binary options and the unique technique and risk management strategies that can be employed. One of these advantages is demonstrable through the use of hedging in binary options which can not only neutralise risk when price fails to move as anticipated but can also offer a double opportunity for success in some circumstances.

Hedging works by purchasing binary options in the opposing direction as near as possible to the original strike price. Binary options platforms are one of the few trading vehicles which will allow two opposing positions to be held simultaneously. Whilst this may seem like a fairly pointless exercise, it is most effectively employed where a trade fails to react to an entry set-up as anticipated. This ability to effectively control risk in a potentially losing position is an excellent way to exploit high probability set-ups such as breakouts and price reversals. If the breakout or reversal fails to significantly materialise, or is potentially at risk of moving from an ‘in the money’ to ‘out of the money’ position, it can be used to cancel the trade. In this way, only successful trades will be maintained for the lifetime of the options and will prevent the frequent problem experienced by all traders where positive positions develop in to losses.


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