Trading Momentum Strategy
Binary options offer a number of great strategies to trade the momentum. The simplest of them uses the momentum indicator and boundary options.
Boundary options are such a great way of trading the momentum because they are the only options type that enables you to win a trade on momentum alone. Boundary options define two target prices, one above the current market price and one below it. Both target prices are equally far away, and you win your option as soon as the market touches one of the target prices.
This means it is unimportant where the market moves, as long as it moves. The momentum can help you make this prediction. Assume that an asset is trading for £100. Your broker offers you a boundary option with target prices at £99 and £101, and when you adjust your momentum to meet your expiry, it reads 2.
Now you know that the market has moved twice as far in the recent past as it would have to move to win your boundary options. This seems like a good investment opportunity. If the momentum were only 0.5, you know that this would be a bad time to invest.
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