Double Binary Strategy [Video]

#1

Learn how to use ITM binaries to pay for OTM binaries to increase reward while having reduced risk.

#2

Is there a rule for exiting the OTM binary? For example, I was thinking to exit the OTM if it’s still OTM when ITM binary reaches profit target, thus limiting the trade trade loss or possibly exiting with full profit on the ITM and partial profit on the OTM. Or I was thinking after exiting ITM at profit target, and if OTM is at a loss, then enter order to exit OTM at entry price (BE).

#3

This is just the strategy.

The one consistent rule (SYSTEM) that I apply is when to exit the ITM binary to limit losses.

The OTM binary is the profit potential part. If you wanted to bail you could exit when it reached its strike (ie to cover the loss of the ITM if it lost) - or close both when it hits there for most likely about a $50 total profit.

ITM will most likely reach profit target close to when the OTM strike is hit (absent of time) -

But no reason to just exit the OTM at this time if it was just due to time decay. The whole point of the ITM is to cover the OTM strike. If you did this and closed the ITM now you have the free “OTM” which is there to ideally take the big profit.

If exited ITM at full profit and OTM at entry price then cut risk/reward ratio in half.

Main goal of strategy is to be directional and if neutral or only a bit in your directional come out breakeven.

But great thoughts lots of ways to apply it.

After you have strategy is to have a system.

You could also use deviations

Volume Spikes

Apex Trailing Stops

Etc

#4

[quote=darrell]

You could also use deviations

Volume Spikes

Apex Trailing Stops

Etc[/quote]

I use those. I try to enter the double-binary ITM at or just outside a deviation level or APEX P to help “protect” it from any reversal. Hopefully the OTM strike will be inside the next deviation level

#5

Excellent. Yes there are unlimited applications.

#6

Another exit i considered is if the OTM goes ITM, back OTM, then exit OTM when net trade P&L=0, stay in ITM.

#7

how much ITM how much OTM as it may oscillate at the strike for a bit?

#8

If it is >$57/$57, I watch for the net trade P&L to be = $0. If it does, exit OTM contract.

#9

could get kicked out a lot of it oscillates at all

#10

Hello Darrell. I’ve been focusing on this strategy for the last couple of weeks. I also recently watched the video on the Binary Spread Cross Combo. Obviously these strategies attempt to do the same thing. You’ve had more time looking at both. In your opinion is one better than the other? If so, why? Thanks in advance!

#11

Depends on what your goal/strategy is. More profit potential in the binary spread cross combo if you have a large spread but requires a larger move. Also the spread will not lose everything unless it expires at or under the floor (on long)/ above at the ceiling (on short) so this could lead to profits in a somewhat flat market

This is probably more challenging to do if you are not familiar with both binaries and spreads.

Most people prefer the double binary or binary ratio strategy.

It is not a best worst - it is just personal choice and depends on the trade your taking and the expectations of that trade based on the system rules your using.