Locking in profits on USDJPY binary option is important because sometimes by the time the reversal bar forms, most of your profits have evaporated. Here is an example of why you would exit early, if needed.
Locking in Profits on USDJPY Binary Option
In this case, the 240-minute USDJPY showed trend divergence and the 15-minute confirmed with price testing the ATR and unable to break it. This generated an entry to the short-side. Gail entered using the 4am expiration for $26 of risk per contract anticipating that the USDJPY would continue down. On the USDJPY binary option, she set a profit target at $15.
However, about 12 minute prior to expiration, the 15-minute Stochastics was showing an oversold status, with potential volume divergence on the lows, and price was moving against her position and eating away her profits. If a reversal bar formed, then she would lose her profits so she opted to lock in profits by exiting early. Although she did not make what she anticipated, the number one rule for any trader is to lock in profits, which she did.
In this case, the USDJPY binary option did expire in Gail’s favor but you can never go wrong by taking profits especially when your profits are greater than your initial risk. In this example, the initial risk was $26 but $32 was captured in profits (per contract basis).
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