Binary Option Strategies

Binary Option Strategies

Support and Resistance

binary options strategies

binary option strategies

As the names suggest, support and resistance act as barriers within binary options markets and are easily detected on price charts either preventing the price from moving higher or lower. This would be seen on any binary options chart across all timeframes Both support and resistance in Binary options trading are known as areas which have historically caused a large number of traders to enter the market. Often these areas also have a very large number of automated trades and orders which are triggered as soon as price reaches these levels. The typical battle between Bulls and Bears attempting to push the price lower and higher will result in this area either forming an area of support or resistance. Most often, areas that were previously levels of support become resistance once they have been breached and vice versa.

binary options strategies

binary option strategies

Binary Options trading using support and resistance can be one of the most effective ways to successfully predict future price movements. Not only do areas of support and resistance show traders the sentiment of the market as a whole, with support and resistance either holding firm or breaking through.  Support and resistance, therefore, creates a map of the price chart, showing us where the price has previously reversed or bounced and trading strategies can successfully incorporate this knowledge. Having the ability to predict where the majority of market orders exist is a powerful tool which can be learned using the simple analysis of any chart.

Then if you also consider using basic price action seeing the  formation of a hammer, shooting star or Doji candlestick will give you the double confirmation as to a change in direction of the current trend

Support and Resistance

 

I have personally used this strategy with great success in the past with 75- 80% win rate

  1. Go to http://www.freestockcharts.com and run the free edition or download http://www.metatrader4.com as a good alternative
  2. I would try to keep to the major currencies
  3. go to settings and change plot style to candlesticks
  4. this works best on a ranging or neutral market
  5. set your lines of support and resistance
  6. now, wait for the candle to close at a support or resistance and take the trade.
  7. be aware that support and resistance will only hold for so long and don’t  trade if it has hit more than 4-5  times
  8. Trading can be done on 5min to daily charts the longer the period generally the accurate the signal

To identifying areas of support and resistance, this can be done by zooming out on any price chart and looking at the areas where the price has historically reversed, reached a new high or low. By simply applying horizontal lines to charts where this has occurred will show a trader how significant this area is considered by the market. Those areas of support and resistance which should be considered the most effective are when it can be seen to have influenced price on several occasions. Many of the most powerful areas can be seen on hourly or daily price charts going back several years. When price approaches these levels it bounces off and explains why several market lows can be seen to have reversed at precisely the same point.

The same method can be applied to a trending market the example below shows an upward trend

 

binary options strategies

5 Min Moving Average/RSI Strategy

In this strategy we are going to be using just 2 indicators, this is a relatively simple yet effective strategy. 72-78% win rate

  1. log on to freestock http://www.freestockcharts.comcharts
  2. again it is advisable to stick to the main currencies
  3. set timescale to 5 mins
  4. add a simple moving average  set at 50 to your price history
  5. then add RSI set to just 4
  6. To the RSI add horizontal lines set at 20 and 80
  7. now to start if the candles are above the moving average this is an uptrend, below the moving average a down trend
  8. we are waiting for the RSI to drop below 20 or above 80
  9. our signal will be when RSI below 20 with an uptrend we will enter a 15min call
  10. or if the RSI is above 80 with a down trend we will enter a 15min putt

 

MacD Strategy

I felt the need to add this as it is a very useful strategy, this article was written by James Ayetemimowa and posted Forex Strategies Revealed. It is a very simple strategy for short term traders and utilizes MACD to great effect.

How James’ “Best Of MACD Entries” Works

The set up is pretty simple and since it is on the 5-minute charts signals come pretty regularly. The two moving averages are used to determine a trend, trade type and as part of the signal. The trend is determined by the positions of the two SMA’s. When the short term 50 bar SMA is above the long term 100 bar SMA the trend is bullish. When the short term SMA is below the long term SMA the trend is bearish. With that in mind, traders are instructed to only trade according to this trend. Calls when it is bullish puts when it is bearish. A signal is generated when MACD is overbought or oversold and makes a crossover at the same time that prices have retreated past the SMA’s. What this means is in a downtrend you will wait for prices to correct above the moving averages. When that happens a signal will be generated when the MACD oscillator is on the overbought side and makes a bearish crossover. This crossover and signal can be predicted with the MACD histogram. If you look in the example provided the MACD histogram is making a nice divergence and foreshadowing the lower high and subsequent buy signal generated by this system.

the indicators are set as follows

simple moving average 50 green

simple moving average 100 red

MACD  are default settings

Simple 15min ema strategy

This is a really simple strategy, it does take patience but can be very rewarding

  1. log into freestockcharts.com
  2. use one of the main currencies ie EUR/Usd or JPY/USD
  3. In settings, under plot style, choose candles
  4. now add an indicator, moving average, set to exponential and to a period of 13 colour blue
  5. now add an indicator, moving average, set to exponential and to a period of 26 colour red
  6. set time to five-minute chart
  7. you are now ready to go,  we are waiting for the blue line to cross the red and as soon as it does we are going to trade in that direction for 15-20 min