Trading Binary Options on USD/JPY Forex Pair

Trading Binary Options on USD/JPY Forex Pair

Trading binary options on USD/JPY forex pair, with the Stochastics indicating that the market was overbought, allows traders to limit their risk on entry when the chart is indicating a retracement is likely.

Trading Binary Options on USD-JPY Forex Pair
Trading Binary Options on USD-JPY Forex Pair Getty Images

Trading Binary Options on USD/JPY Forex Pair

The USD/JPY 15-minute chart Stochastic indicator showed that the US/JPY was overbought.  This indicated that the USD/JPY would likely retrace down.  Additionally, the higher timeframe (60-minute chart) was also indicating that the market would move down.  This is very significant because, with the higher timeframe in harmony with the lower timeframe, the move would be more substantial.

The USD/JPY was trading slight above the 112.42 area.  Three short trades were entered with the following risk and maximum profit potential (excluding exchange fees):

  • USD/JPY > 112.42
    • $53.50 risk per contract
  • USD/JPY > 112.38
    • $46.50 risk per contract
  • USD/JPY > 112.34
    • $44 risk per contract

Trading Binary Options on USD/JPY Forex Pair

 

Since binary options have a maximum payout of $100, the maximum profit potential for each trade is shown on the chart below (excluding exchange fees).  However, notice there is an hour and seventeen minutes left till expiration (red box on the chart with the red arrow highlighting the time left till expiration).

Trading Binary Options on USD/JPY Forex Pair

While the trader could wait and watch the trades and try to capture the maximum profit potential, the trader can also simply set a profit target to capture the majority of the maximum profit potential.  The gray box on each of the trades indicates a profit target order is set on each of the trades.  Since the trader is short, the profit target for each trade was set to $10.  Using the $10 profit target, the trades would capture the following profits:

  • USD/JPY > 112.44, $36.50 per contract
  • USD/JPY > 112.38, $43.50 per contract
  • USD/JPY > 112.34, $46.00 per contract

Within 15 minutes, each of the profit targets were filled, capturing the profits identified above:

Trading Binary Options on USD/JPY Forex Pair

Trading Binary Options – Learning to Take What the Market is Offering

Herein lies one of the biggest issues that most traders face — taking profits.  Instead of doing their job, which is to take profits, they want it ALL and fail to realize that by staying in the trade, they are risking the profits that are on the table.  Binary Options help traders to overcome the “ALL” mentality because the maximum profit is always known.  In other words, traders can now say, “Do I want to give up my current profit of $36.50 per contract for the additional $10 of profit per contract?”

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