Double Up is more of a feature than a strategy, although you could refer to it as either a feature or a strategy. Until recently, it was alien to the Binary Options industry. Even, at this point, it is only available on a select number of enterprising brokers.
‘Double Up’ is exactly what the name suggests, doubling up your current position. The tool allows a trader to double the investment with the potential resultant effect of doubling the profits from a position at expiration of the contract.
The Double Up tool, can therefore be seen as a tool that permits extensibility of your current trade like the “Extend/Rollover” and “Close Now” tools offered by brokers.
How does Double Up Work in Binary Options?
In general, to use the tool, you should be holding an in-the-money option, with decent time left before expiry, and then you can click on the double up feature (which is often a clickable tab selection on the Broker’s trading platform).
By clicking on the feature, you double the potential liability and profit of your current position. Therefore, if you are in the clear when the contract expires, you will have double your initial profits, while the opposite is the case if the position ends out of the money.
Nature of Double Up in Binary Options
- The feature is only available on the platforms of select brokers
- An option must be ‘in the money’ before the tool can be used
- Double Up can only be used at a certain point (usually within 5 and 10 minutes) prior to the contract’s expiration
- A Double Up position is opened at the market rate as at the time the tool is used. Hence, you could make double wins, double losses, or have contrasting results for the original contract and the newer double up contract.
Like several innovative features in the financial markets, the Double Up tool may be a blessing or a curse depending on when and how it is used. This is because, while it is marketed as a profit-boosting tool, it can also be a loss-compounding tool.
Some traders advise against the use of the tool, as it could easily lead to recklessness on the part of the trader. Still, this tool has exciting potential that must be adopted into a working strategy. You should not use the feature blindly or when your emotions are running high. When and how you use the tool, should stem from a prudent analysis, than from the rate at which your heart pumps blood.