Day trading on the dips with a binary option broker could be risky when done as a stand alone trade but employing a binary option broker to hedge against intra-day market movements can greatly improve day trading results. Traders who take long equity positions on dips available in the market but can't gauge for certain whether the marketplace has bottomed may use binary put options to have back a few of the money left on the table.
The way in which a transaction could work goes something similar to this: per day trader is following their target stock available in the market, when the marketplace suddenly turns downward and a buying opportunity or trade trigger is activated. Presuming the trader has either acted on acquiring the brand new long position in their target stock or remains trying to find out where the underside is - an opportunity to call in and work with a binary option broker is available binary options. After the trader makes his move around in the long equities market, he can jump over to the binaries platform and buy fixed dollar amount spot-priced put options contract.
Granted there are significant limitations on this strategy, namely:
A limited selection of binaried securities
The limited time window of opportunity on big movements
The guess work in determining the right-size contract to execute
On one other hand prepared day traders have the following advantages:
Large companies must set news announcement dates well beforehand - allowing maximum preparation for individuals day trading the stock
A spot price binary option broker provides a retail investor an instantaneous margin for error (buying at ask in equity market while buying puts at the spot price) given the differing pricing structure
Binaries trade commission free at some brokerages - no transaction costs make satisfactory day trading returns easier to attain
High yields on binaries reduce the mandatory capital needed to produce them effective
There are obviously risks associated with any trader's strategy but being prepared and educated in how to make use of every one of the available tools available can greatly enhance trading results.