Pair Options trading in Binary Options

While doing technical analysis traders try and remove market forces and sympathy from factored into their decision of what and where to trade many times. When traders remove this part of the analysis, they are said to be trading with market neutral strategy. One of the greatest Binary Options Trading Strategies that attempt to do this is called Pair Options Trading. Read the article by Secured Options and master the strategy.

This type of Trading is based on the theory that certain asset’s price move very close to the same length over the same time frame as another asset; this is called correlation of the pairs.

The amount of correlation between two pairs of assets when it comes to trading is known as a percentage. The ideal correlation between the movements of two assets is 100%, but traders will never see this. 100% correlation simply means as one asset moves over time upwards or downwards in price, so its pair moves ‘exactly’ the same way. At the opposite end of the spectrum there can be zero correlation between two pairs of these assets, if they move in opposite directions all the time.

Many traders wonder why correlation is a useful binary options trading strategy for trading. The answer is simple, because it has a predictive nature to it when analyzing and monitoring favorable factors for placing a trade.

This is a market neutral strategy which seeks to fully capture all the advantages that close correlation is offering. When investors notice a break in the movement of two highly correlated assets in market, they can them place both a put option on one of the asset and a call option on the other asset at the same time.

Chances are that at least one of the trades will be profitable for them. One good thing about pair options is they can be profitable, and it does not matter which direction the market is trending in. Many trading sites allow traders to select assets that they can track according to the correlation between them. Analysis of this trade can directly lead to get profitable trading opportunities to traders.