Binary Options Iron Condor Trading Strategy
Binary Options Iron Condor Trading StrategyOctober 13, 2012
What is an Iron Condor and how can this trading strategy be implemented in Binary Options? Technically speaking, an Iron Condor is used for credit spreads and not for binary options.
It is comprised of a bull-put kind of credit used together with a bear-call type of credit spread and creates a neutral position. You can make substantial gains and alot of money on neutral positions when the underlying stock or index does not fluctuate significantly from the original entry point.
How do we implement this strategy in binary options trading in order to profit?
The chart above displays a Google Stock behavior pattern over a 2 year period. There is only one line, and this is because the Iron Condor is very slightly affected by volatility. To be specific, this is important in terms of implied volatility, or your ability to predict volatility levels based on historical data.
So when trying to implement the Iron Condor strategy in binary options we have to look at these three factors:
1. Are the markets steady? Meaning are the fluctuations minor or discountable starting from your point of entry?
2. Does the trading platform allow you to take a neutral position? In binary options you can take an above or below position, but if the fluctuations are low you are best taking a put position since the angle or the direction will not be steep.
3. Trade the news! The Iron Condor may be insensitive to volatility, but markets change based on finanical news and economic forcasting such as the non-farm payrolls.
Furthermore, finding the right binary options broker is key to your success. Always make sure to have a couple of brokers to fall back on if you feel you need to change a trading environment or the level of service is not what you expect it to be. It’s also highly recommended to go over our reviews section and open a demo account with a few brokers until you find the one that is right for you.
To sum up, the Iron Condor is a trading strategy mainly used for Forex and other traditional stocks, indices, and various trading vehicles. It can’t be used for binary options, however the guiding principles behind this strategy should very much guide you when trying to make money and engaging in trading & buying contracts.