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The Pros And Cons Of Binary Options Range/Boundary Trading

Trading binary options has gained a lot of traction recently, as word got out that this is a straightforward process that pretty much anyone can master. Normally, traders need to predict whether the price of the underlying asset will exceed a specific value at the expiration date. Range trading is slightly different, because in this particular scenario the trader has to estimate whether the price of the asset will remain between two fixed limits which are known as the upper and lower strike prices.

Pros of binary options Range/Boundary trading

Boundary trading has wide applicability, because you don't need out of the ordinary events to trigger this type of trading. You can make profits even during those times when nothing of significance appears to happen in the financial market, because these are the moments when the prices are more likely to preserve their value. Those who use fundamental analysis are very accurate in these types of predictions, because they can easily distinguish between significant announcements and those that make no impact on a stock.

Naturally, the trader can do the exact opposite if he expects spikes in the prices and simply purchase an "out" trade which means that he expects the price to go outside the fixed boundaries. Another advantage of using the range trading, is that if you master the technical analysis, you can easily foresee the way the prices will perform on short-term. The options can be closed in just a few minutes after they were opened and the profits secured if the price didn't move outside the upper or the lower strike price.

Cons of binary options Range/Boundary trading

The main downside of range trading is that in order to make decent profits, you need to shrink the boundaries between which the price is expected to oscillate. This makes trading riskier, and a simple spike can be enough to win an otherwise impeccable performance of the asset's price. For beginner traders with small budgets, this might not be the best way of trading binary options.

Another downside is that you need to be permanently kept up to date with what happens around the world, so you won't be surprised by the latest financial news, economical or political events. Those who don't like fundamental analysis should stay away from boundary trading because if you don't have a better view at the big picture, you are pretty much trading in the dark.