The binary options trading market is usually in a state of constant fluctuation, with movements in value going up and down due to the fast paced nature of the world that we live in today. Market performance is always influenced by a number of different factors including economic policies of indivudual countries, the performance of a country’s major organisations, and simple market sentiment. However sometimes, the market appears to stablise, appearing to plateau, and at this point, they are referred to as a flat market which is low volatility and will not show either a significant fall or rise over a number of weeks, days or hours.
Although in terms of economic recovery a flat market is a good and positive sign, many traditional traders see it negatively. If a market is volatile, it can be simpler to anticipate which would be the correct time to either sell or buy a specific asset, and the market will give signals that indicate to investors when to execute their trades. These signals are not so obvious in a flat market, which can cause problems for potential binary options traders.
Luckily however, even if the market is stabilising, there are still good opportunities for investors in the binary options market. Unlike in traditional commodities or stocks trading, binary options trading simply requires a trader to make the correct prediction of an asset’s value direction and the amount by which it falls or rises has no impact on the return achieved from the trade. Therefore, if an asset only moves by a very small amount, the investor will still receive their pre-determined profit from executing the trade. This allows traders to make a significant return on even tiny moves in value when trading binary options while giving them the added advantage of knowing exactly how much they stand to lose should their prediction be incorrect. As an investor is able to make the same profit from a small shift in an asset’s value as they would from a large one, this enables even novice traders to make a profit even in a flat market.
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Which Trading Strategies Work Best in a Flat Market?
If you are interested in trying your hand at binary options trading in a flat market, there are several strategies that you can employ.
Even if an asset’s price is sitting still, No Touch options are a trade type that allow investors to make a profit. In this type of contract, an investor will decide whether or not an asset’s price will reach a specific level. This means that should the expiry period end and the asset’s price has not reached the specified boundary, the trader will be in the money. If the trigger value is close to the current price when the trade is opened, the more profit the investor stands to win, and those who are prepared to play a tight game can make profits of up to 500% on certain positions.
Also called a Range trade, boundary trading involves opening a chart of a consolidating asset and drawing trend lines across the lows and highs. This will show the price going up and down inside the defined channel, with its lower and upper limits defining a range. These limits represent price confining boundaries with the support and resistance becoming stronger every time the asset’s price tries to test the limits but fails to breach them. In a quiet time in the market, boundary trading is a good opportunity to make money, and if an investor has a good awareness of the range’s upper and loower limits, they can apply this knowledge to make themselves a profit.
A third way to profit from a flat market is to try scalping, which is profiting from small price movements. This is done with 30 second or 60 second binary options. Although it is possible to try this technique with longer term trades, the price has more of an opportunity to make a large move in either direction however in a short term trade, exposure to long term price movements is reduced and the investor is much more likely to make a profit.
Other educational articles
- Dealing with Expanding Triangles in Binary Options Trading
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- Divergences In Binary Options Trading
- What are X Waves in Binary Options Trading?
- What is the Zig Zag Indicator in Binary Options Trading?
- What is the Trend Following Binary Options Trading Strategy?
- Wolfers, Justin, and Eric Zitzewitz. Interpreting prediction market prices as probabilities. No. w12200. National Bureau of Economic Research, 2006.
- Samuelides, Yann, and Ezra Nahum. “A tractable market model with jumps for pricing short-term interest rate derivatives.” Quant. Finance 1 (2001): 270-283.