The Double Up strategy is a relatively new idea offered by Binary Options brokers as an advanced trading feature on many platforms.
With a simple click it allows you to ‘double up’ your investment on the contract with the resulting chance to earn double the profit at the contracts expiry.
The binary options double up is one of a range of recently introduced features that allows you to alter the conditions on a live trading contract prior to it reaching expiry.
It offers a useful addition to the successful binary options traders toolbox. You just need to understand how and when to implement it correctly.
How It Works
- This feature provides the ability to extend your contract and ‘Double Up’ your return. It is only offered on live ‘in the money’ contracts that you have running in your account.
- The opportunity to ‘double up’ your stake is provided towards the conclusion of an open contract. Most platforms will offer this facility around 5 to 10 minutes prior to the set expiry time.
- When you click to double up, the investment amount that you originally placed on the contract is instantly doubled. As a result both the potential profit and liability are doubled at this point.
- If you win then you have doubled your profit. If the contract ends out of the money then you lose twice the amount that you originally wagered on the contract.
It is worth noting that not all brokers currently support this advanced trading feature.
Example
Here we are illustrating this feature by using the Banc de Binary Trading Platform. It is worth noting that you might find some differences with the execution of this facility on your own brokers trading platform.
In this example we are using the EUR/USD currency pair. A strong news flow has pushed the pair above the 1.3800 level. We expect this move to build momentum and continue.
When viewing the open position we can are given a number of options, one of which is to take a ‘Double Up‘ on this contract.
Click on the ‘Double Up (x2)’ icon to activate this facility. This offers a pop up box detailing the information of the newly proposed contact.
As you can see from the image below we are given the current rate, the new investment needed and the potential payout. To accept the conditions we have to approve the contract before the offer times out.
After approving the Double Up the new contract is displayed under ‘Open Positions’ in our account.
As you can see the we have doubled the investment on the account and therefore double the potential for our reward. The investment on each contract is $250 with a potential payout of $452.50 for an ‘in the money contract’.
If you study the above image carefully you will notice that the second contract shows a payout of $250.00. This is because it was currently sitting ‘at the money’ at the time the screen shot was taken (current price equaled the entry price).
This is an important point to address. You Double Up contract is opened at the market rate at the time you ‘Double Up’. This means that you can effectively have one contract will and the another lose (or both win and both lose) when using this feature on your account.
Advantages and Disadvantages Of the Binary Options Double Up Strategy
As with most of the advanced trading features on offer from binary options brokers, this trading feature can both extend your profit or extend your loss. It offers a great way of boosting profits. However on the flip-side, you can also rack up big losses on your account.
While it may seem attractive to make use of the Double Up feature you should not do so blindly. Using it when you only have a small margin on your contract may not be the best idea. A sudden market spike could easily compound your loss and see the price of the asset end up on the wrong side of the barrier you have set.
It is important to remember that while you can double your profit you can also double your loss. Any contract that ends out of the money will see you lose your initial wager and the duplicated stake as well.