Going Short with Binaries
The converse of going long, going short is a strategy that can help filter out the bulk of the market noise to focus your efforts as a binary trader. Going short essentially means you’re forecasting markets to close downwards on the duration of your bet, thus you’re looking for markets, commodities and assets that are either overpriced, or showing signs of falling away. Down bets are settled are 0, thus traders calculate their winnings on the basis of the difference between their sell rate and 0, multiplied by the stake put down on the transaction.
Going short as a strategy requires traders to identify markets that are likely to suffer from a decline in pricing. Unfortunately however, many of the obvious picks are already known to the brokers who set the odds relative to market conditions, and it’s essential that you remain one step ahead in order to pick bets where the risk to reward ratio makes it worthwhile.
Sure-fire down bets always pose a smaller percentage chance of a massive loss, whereas moderately likely outcomes weigh up much more evenly – thus, getting a balance between different trades and odds is very worthwhile as far as diversifying your binaries portfolio is concerned. While it might seem logical to scalp a few small profits here and there, the impact of one losing trade on your profits can be so severe as to significantly hamper your trading success, so going short requires a more considered and measured approach in order to determine the most successful course of action.
In identifying opportunities for going short, you should be concerned with instances where markets are likely to fall, often as a response to external market factors or other indicators. While straight forward down bets might not always pose the best value for money in the sense of weighing up odds to risk, handicapped bets or even shorter-term bets might offer better odds, assuming you’re sufficiently well read-up to take advantage of these opportunities.