The “second signal of the day” strategy is actually an end of the day binary options strategy that focuses on early movement in order to get an idea of what is going to happen later on. This is a tricky strategy to use, but it can be effective in certain situations. Here, we will look at what needs to be done to apply it, as well as the pitfalls to beware of.
Time to Put it to Work
This strategy is actually quite simple on the surface. You break the day into signal sections, look at the second signal generated, and then buy the appropriate option based upon the second signal. If the second signal is a buy signal, then you purchase a call option. If the second signal is a sell signal, then you buy a put option. Expiries should point to the end of the day, depending on the asset that you are geared toward. If it is a U.S. stock, then that would be the end of the New York trading hours. If it is the U.S. dollar and another currency, then there is more leeway. However, the rule of thumb that you should stick to is if you are looking at the second signal of the U.S. trading day, go to the end of the U.S. trading day. If you look at the second signal of the London trading day, for example, then you go to the end of the London trading day.
This seems simple enough, but the difficulty lies in which timeframe you use for making your determination. First, be sure that you are using a candlestick chart. You should set the intervals at which candlesticks are created for five to 15 minutes, depending on your knowledge of the asset that you are trading.
The signals that you are finding are the next thing you need to consider. Here, you have quite a bit of freedom. We suggest staying away from signals that have a history of ambiguity, but instead gravitate toward those that have a proven history with the specific asset that you are trading. This is something that you will learn more thoroughly over time. Basically, you alert your charting package to look for the signals that you are looking out for. These should be both buy and sell signals. Having an equal number of each is a must for this to be most effective. Once these are plugged in, you just watch your charts at the beginning of each trading day and wait for the second signal in your asset of choice. Once you see this, plug it into your binary options broker’s platform and wait.
Check all the Factors
This strategy, like all others, has a certain number of drawbacks. The first is that the strategy, as it stands, does not take into consideration the strengths and weaknesses of the individual signals that are created. These would need to be determined on your own, based upon your knowledge of the specific asset that you will be trading. As you know, certain signals work better for Forex pair than they will work for a commodity or a stock. This is an advanced strategy primarily for this reason.
The other drawback is the problem that comes with charting. MetaTrader 4 provides an automated chart resource for currency pairs, but when it comes to other assets, you will find that this is much more laborious. There are automatic processes that exist, but there is usually a charge associated with them. However, the costs and benefits of this is something that you will need to assess for yourself. Some traders will find it worthwhile, others will not.
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