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Tunnel Trading In Binary Options

May 16, 2016

Most binary options traders, especially beginners, get used to the commonly traded Call and Put options, which simply means determining if the price will go up or down at the Expiry Time. In this article, we will speak about a new type of option trading – tunnel trading. So what is this kind of contract about? At first glance, it appears quite simple. The broker determines a tunnel, and the trader has to decide whether the price will remain within the tunnel’s range at the time of expiration or it will go beyond its borders. It is as simple as that!

In Range – In the first case, trading in the tunnel means that the price should not touch any of the defined boundaries. This is the complexity of this type of contract. By choosing a classic option – Call/Put, the trader simply defines the direction of market movement without being tied to a certain level. In this case, it does not matter whether the price goes five points or a hundred points over. The profit would be determined when the trader correctly predicts the direction. When it comes to tunnel trading, also called In Range option trading, everything is more complicated on a practical level. Here, we need exactly the opposite of the classic binary options trading. We don’t care about the direction, but we care about the price moving only a few points, keeping its path within the tunnel.

Trading binary options with this type of options is more profitable when there is a sideways trend, which means when the price goes horizontally. It is important to avoid any macroeconomic reports coming before your trading session, so keep an eye on the economic calendar.

 

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Out Range – If you are afraid that the price may go beyond the borders, tunnel trading offers you a second option – you can set the Out Range option, by clicking out. This means that you predict the price will go outside the tunnel, and once it does by the Expiry Time, your trade will be profitable. Remember – it doesn’t matter if the price breaks the top or the bottom border. The direction is not important; the price simply has to break the tunnel border at the expiry time.

 

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If In Range trading is more profitable in sideways trading, as discussed above, then in Out Range trading, you should look for a market in consolidation. This means you should wait for an important piece of news to appear, but you don’t really know how it will affect the price – will there be an uptrend or a downtrend? Thus in turn, you can benefit from the fact that the price will definitely have a direction and will break the tunnel, but it does not matter if it is up or down.

This kind of trading type, along with many other types – like touch, no touch, is one of the most popular tools offered by brokers of all levels. By using proven strategies you can trade binary options by making decent profits. It is really simple and by spending only a few minutes you will easily master your own approach.

One of the most common strategies that can be used to trade this type of option is the triangle. It can be profitable for range options. You should particularly look for the triangle borders of which are gradually narrowed, so that the probability of penetration of you tunnel is minimal. Another great strategy is channel trading – when the price highs and lows forms a visible channel, generally horizontal.

You can choose your own approach, but make sure to deal with a regulated broker!