in all financial trades. With option the fluctuations may be the whole thing! The most appropriate investment saying for it might be, "Buy at the right time"! For example, you may be certain that an asset will rise in value. You are correct, and the asset rises in value during the day, week, etc. But as it was rising it had a few moments of backtracking. If you bought a binary option for the asset to rise, but you timed it for the short period when it lost a bit of value on its way up, you will lose money on the option even though your analysis was completely correct, long term.
Information that Affects Timing
The following points are items that can affect a traders timing:
· Company earnings reports
· Government reports
· Political or social unrest
· Sudden introduction of a competitive product
· Volatility. If the asset is being traded more widely than usual, it often indicates strong market sentiment for the asset to continue moving in the same direction for a while.
To calculate the average monthly range one will need access to reliable historical prices. For any stock, you can get historical open, high, low and closing prices for a given date range. This will give you all the key numbers that will be used in the calculation - the high and the low for each trading day. The average monthly range is nothing more than an average price within which the market fluctuates in a given month between its high and its low.
One must determine the time frame for the movement you expect. If you feel, for instance, that the asset will rise over the coming month, you would not buy a shorter-term option. You would buy the option for one month. You would follow it closely and buy it again if your analysis continues to indicate an increase in value after a month.
When the asset has a retrenching day, you won't panic because your option is for a month.
The same applies but in reverse if you feel the asset will fall during the next month
Here the strike price, the price that triggers the touch in-the-money result, is vital. The broker sets the strike price close enough to the market price at purchase to entice buyers but not so close as to make it foolish for him to offer the option at all.
This option is best for an asset that has been trading in a shallow range for some time with low volatility .The broker will set the range narrowly; otherwise he has no reason to offer the option. Here your analysis is important. If the asset has been trading narrowly for so long that you feel it will continue to do so, the range option may be the best for you.
The Bottom Line
It should be clear to you by now that binary options are an investment in every sense of the word. To trade binaries successfully you have to pay attention and study