This binary options strategy can be used to increase prediction accuracy when trading price reversals. Oftentimes, this method will help you to determine an upcoming reversal well before any change in market sentiment has even taken place. Japanese candlesticks will be employed to establish the future price direction. Stochastic and Bollinger Bands will also be used. These will supply the signal to enter into a trade. Novice traders can use this strategy, but some familiarity with these indicators is necessary, as is some familiarity with charting tools such as MetaTrader4.
The first step is to locate the point where the top tip of the secondary candlestick is below the top tip of the first candlestick. This will be the action for day one. Next, look for the lowest point of the secondary candlestick to be above the lowest point of the candlestick for day one. Once the stochastic indicator is displaying over-buying in the market and the intraday candle is positioned at the very top Bollinger band, a reduction in price is being suggested. When reversed, this method will suggest a forthcoming rise in price.
This binary options strategy may appear complicated on paper, but within your chosen technical analysis chart you should be able to easily observe these actions occurring. When looking at your chart, the correct time to enter the market is going to be very obvious. Nevertheless, this strategy will not be exceptionally valuable unless the specific price movement is combined with the proper type of instrument. Standard Call or Put trades are usually the best instrument to use with this strategy. However, they’re not the only instrument option.
For standard Call/Put trades, anytime the intraday candle shows up at the lowest Bollinger band and the stochastic is display over-selling in the market, get ready to trade. When this setup occurs, opt for a “Call” option and select an expiry time of of 2-3 days. When using this strategy along with a No-Touch trade, make sure that the entry price is approximately 50 pips under the present selling price and is already moving towards the target price. Again, any expiry of 2-3 days is the recommended selection.
The strategy for One Touch trades is a bit different. With this type of instrument the entry price needs to be selected from inside the selection of prices that stretch from the center Bollinger band to the present selling price. With this type of trade, the expiry needs to be a minimum of four days to provide sufficient time for the price to reach or exceed the target. Within the majority of binary options trading platforms, the One Touch instrument typically expires within 5-7 days. These expiry times are perfectly suitable for use with this strategy.
When Bollinger Bands are used along with the Stochastic oscillator, the occurrence of false signals will be reduced. However, this does not mean that errors cannot occur when utilizing this binary options strategy, especially in the event that the expiry time finishes close to the discharge of any connected economic or earnings report. Make sure that you look at your economic calendar in advance of choosing the expiry time. The only exception to this rule will be One Touch trades, because significant market reports could supply a powerful price thrust that could enable the asset price to reach the target price.
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