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A strangle is a strategy opposite of a butterfly. When you place a binary butterfly trade, you buy a lower strike and sell an upper strike. With the strangle strategy, you have to think oppositely of what you have probably heard most of your life.
For this strategy, you will buy high and sell low. Strangles are good for volatile markets when movement is expected, but direction is unknown. You are expecting one side to lose. Determine your risk and then make up for the amount lost on one side. The image below shows a minute binary strangle done on the US Tech Combined risk is rounded to As you can see, the sold side lost. Because you want to recover the amount lost, you add that to the amount of the risk, which is also equal to what you need to break even.
If you look closely at this chart, you can see that both sides would have lost if held until expiration because it expired at about , right in the middle of the two strike prices. Do not get greedy and do not hold until expiration. There will be times when you will look back and see that you could have made more money, but take your profits and run.
Know ahead of time where you plan to get out and stick to your plan. His APEX strategies and systems simplify trading entries, stop losses, and take profits based on the things that truly moves the markets.
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