One of the greatest challenges of binary option trading is predicting the right direction of the movement of the price of the asset you are trading. The trade will be smooth and unhindered as long as the market dynamics work as per the trends. But there are times when even the most experienced and reliable of all traders is not able to predict the movement rightly due to the anomalous behavior of the market. Under such circumstances, fence trading comes handy for traders in the binary option trading market. In this article, we will find out more about the concept and what it is in the first place. We know that the market conditions are always in a state of flux. It is never constant and the only thing that is constant in the financial market is change!
Fence Trading ways and Binary Option Trading
When traders are not able to predict specific conditions or trends in the market, the collar option also called fence trading is used. Also, this strategy is used when the direction of the movement of the price of the asset appears to move in either direction without certainty. So, you as a trader will find it difficult to know what will happen next in the market or the trend that will set in. Basically, in fence trading, you set a rate range within a stipulated or specific time span. To make it simpler for you to understand, let us say, this strategy will set up 2 fences or virtual limits within which you will be able to trade. You can also seek assistance of experienced professionals at binary-options-brokers.com (a platform that basically throws light on the different trading platforms and brokers that will assist you in fence trading).
Although it is difficult to set 2 virtual fences but you win a fortune if your prediction is right. Moreover, you have the opportunity to make money within a short time span.
In this type of trading, when you set up 2 virtual fences, you do so one for shorter period of time and the other for a longer period of time essentially keeping in mind the expiration date/time. You will be required to opt for the PUT option if you find that the market trend is nose diving and select CALL option, if you find that the trend shows an upward rise in direction of the price of the asset. If you have 2 entries, you can be assured that you will win both ways depending on the direction of movement of price. In this way you can double your profit. However, as per statistical data obtained from previous market trends and as per experts’ comments, it is best not to invest in the market when it is volatile. Fence trading is perhaps the best bet for the traders that love to take risks and do not hesitate to invest their hard earned cash even when the other traders will fear to do so. Since this form of trading involves high risk, the returns are also high if the predictions are right.