Several traders use Double-Up to make their options trading even more dynamic. To use this strategy for your profitability, you need to know what precisely the Double-Up strategy is? How does it work? And how to use it?
You will find answers to all these questions and more in this guide.
What you will read in this Post
What Is Double Up Strategy?
Double Up strategy is what it sounds like – it multiplies the trader’s current position. This easy and rewarding strategy is simple to use, but simplicity does not eliminate the risk.
Though the Double-Up strategy doubles the position, it does not always work in the trader’s favor. To successfully use the Double Up approach, you need a detailed trading plan and a good understanding of binary options trading.
Moreover, it would help if you also studied charts. This way, you can spot the risk and eliminate them to win a big payout from options trading.
How Does Double Up Work in Binary Options?
Learning how does Double Up strategy works can help you use it in a better way. For executing this strategy, your trade should be “In the Money.”
Once you have speculated the price of an asset and selected an expiry time, you can choose the Double Up strategy. The window for doubling up your move appears for a limited time, i.e., 5-10 minutes before a trade expires.
By selecting the Double-Up strategy in a given time, you can double your profit. But your loss will also increase twice in number if your position expires “Out of The Money.”
Since there is a risk of losing a tremendous amount of money with the Double Up strategy, it’s better to consider your financial status before making a move. If you can handle the potential risk, you can double your position. Otherwise, you should avoid doubling.
How to use Double Up Strategy?
While the concept of the Double-Up strategy can be boiled down to doubling market trade, there is more to the story.
Without a proper option trading strategy and understanding of the market, choosing this feature will only bring loss. But predicting the volatility of the market based on market information is not easy.
To know the market volatility, you can analyze trading charts. After analyzing the charts, if you think that trade will be in your favor, you can choose this feature.
But remember that the assets price keeps fluctuating in the binary market. So, it’s tough to predict whether the price direction of an asset will be linear or not.
Also, you cannot enter the market to Double Up your trade just seconds before it ends. That’s not allowed. And if it were, the binary brokers would go broke.
When Not to Double Up a trade?
Like any other binary options trading feature, the Double Up strategy is also helpful, but only when a trader knows how to use it. If this feature is used in an unfavorable trading situation, it can become a curse.
That means when you are familiar with the asset but not familiar with its price movement, do not Double Up the trade.
Moreover, using the Double Up strategy should also be avoided when you are unfamiliar with the asset. That’s because you can’t accurately predict the price direction of a commodity that you never have traded in.
So, rather than risking the entire trade and losing the amount, it’s better to play safe.
Example of Double Up Strategy
Let’s assume you are trading on gold. You are investing an amount of $200, and the trade will end after one hour. Five to ten minutes before the trade ends, the Double Up option becomes available.
You then analyze the chart to understand whether you are Out of Money or In the Money. Since you are In the Money, you choose to Double Up your trade.
After the trade expires, if your predictions were correct, you will win $400. However, if you have incorrectly analyzed the market or if the price fluctuates after you have opted for the strategy, you will lose $400.
Strategy for Double Up
Every successful trader knows the 80/20 trading rule. This rule says that only 20% of people in binary options trading make money. And the rest, 80%, loses.
So, what sets apart the 20% traders from others? The answer is strategy. To save you money from draining, you can also use an effective Double Up trading strategy.
Choose a Reliable Broker
Finding a broker that offers Double Up trading feature is essential as only a selected broker provides it. You can consider a few things like features offered, fees, demo accounts, minimum deposit, and assets provided to choose the right broker.
If you are new to the binary options trading world, you should play safe and bet simply with “Call and Put.” Also, it would be best if you chose a trading asset that you are familiar with. That’s because you already know the price trend of the familiar asset.
Expect Early Losses
Doubling binary trading also doubles the loss. So, when you are choosing this feature, you should be ready to lose. To make the losses smaller, you can invest small.
Read the Charts
Without reading charts, you cannot predict the price movement of an asset. And without speculating the price moment, you cannot win the trade. Thus, it would help if you did a technical analysis to win the trading game.
Predicting whether you will win a trade or not is not easy, but you can increase your chances of making a considerable profit by clearly understanding the pros and cons of the Double Up strategy.
Also, the smaller you keep the time between expiry time and Double Up strategy executing, the better is your chances of winning.
Though this trading feature can make you lose huge money, you cannot deny that you can multiply your profit by two by using the Double Up feature.
(Risk warning: Trading involves risks)