In binary options trading the Reversal Strategy is applied in the following way: when an investor observes that the price of the chosen asset moves in a certain direction (up or down in value) and if it seems unlikely for the asset to stay at this peak or that it is likely to go back to its original trading price, then the investor will quickly decide to buy a “put” or a “call” option, depending on the movement of the price. The so called “Reversal” strategy is a common method used in binary options betting. It is based on the dramatic price movements of the underlying asset.
More experienced traders try reversals only when they are expecting a soaring asset to plummet suddenly or a falling stock to rise abruptly. According to binary option principles, losses can be limited to 15 percent and profits can be close to 85 percent. These numbers should not fool you, it does not mean that this strategy can prove to be profitable in most cases. But still, it is true that when applying this strategy your losses can be significantly minimized, and sometimes your profits can be very pleasing.
This is not a strategy for a non-professional trader. The reasons for that are a lot but the main reason is because a non-professional is highly unlikely to “feel” if the asset will remain in the changed value or if it will go back to its original price. Only an experienced trader can determine more accurately that kind of things. And yet, always have in mind that binary options trading involves risky decisions which sometimes do not have the desired outcome.
The information in this analysis is collected from different sources and should serve for informative purposes only. The author shall not be held responsible for the validity of the presented information. No part of this analysis recommends the purchase or sale of a currency pair or any other financial instrument.