Binary options is easy: trading on trend
- VFX Blog
- For beginners
The practice shows that regardless of the assets’ type (options, stocks, futures) the trading on the trend in most cases ends in profit. As for the binary options signals with the established time of expiration, for them, there is necessary to have a certain price direction.
Here is the definition of the trend:
- Downtrend or «bearish» trend. Each next maximum (top) and the minimum (trough) is lower than the previous one.
- Uptrend or «bullish» trend. Each next price max/min is higher than the previous one.
To simplify the assessment, trend lines are plotted on the graph after at least three max/min. Courses on binary options for newbie’s advice to open the transactions only in direction of the primary trend.
A market without an evident direction (flat or lateral movement) won’t suit for binary options trading. The trading is possible only in situations of fairly wide flat with at least 3-4 candles in one direction when you can open short-term transactions on a rebound from the channel edges.
Trading on the trend
For the options with short-term, the most efficient method is to open the transactions after the breakdown of the trend line and the following reversal in the main direction. You can see the examples of such situations in the pictures below:
When we see the first signs of the reversal, we open a CALL-option on a rising trend or a PUT-option. The duration of the trade depends on the scale of the graph. Unfortunately, most part of the reliable options is worked out, because their expiration periods are at least 2-3 times longer than the period we have chosen for the analysis.
The larger the time period where you see a strong trend, the longer the trade should be.
Recommended Options: «CALL/PUT», «Boundary Out/In», «One Touch», «Stays Between/Goes Outside».
Counter-trending strategy for binary options
Trading on classical trends is profitable only when the movement is strong and rather long. The edges of the price corridor should be close to each other. It is can be hard to find such a narrow corridor in the market.
Quite often price is trending in a very large range. The trader needs to be attentive to identify these movements. Moreover, the trading strategy against the trend can be very profitable in a broad flat.