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"Tricky trader" strategy: binary options on reversals

"Tricky trader" strategy: binary options on reversals

Binary options that have a fixed expiration date require an accurate determination of the opening time, although at first glance everything is simple, you just need to click the "CALL/PUT" button. Standard technical analysis tools will help you not to make a mistake, as does the exact binary option strategy "Tricky trader".


Strategy characteristics


TypeTrend.

TimeframeAny in the range M1-M5. In our case, M1 is used, but with an increasing period of analysis, the accuracy of the signal an increasing.

Trading asset:  Any currency pair. The main requirement is a fixed (2-3 points) spread and no hidden fees.

Trading time:  All Forex trading sessions.

Percentage premium optionNot less than 70-75%.


Indicators used


The tools used are present in the basic set of all popular trading platforms and follow one of the basic principles of technical analysis "signal confirmation should be carried out by indicators with different calculation algorithms". The strategy description contains three indicators:


  • Bollinger Bands (BB). Trend indicator of three simple (SMA) moving averages: the upper and lower ones are shifted from the central one by the value of the standard deviation or, as in the strategy, by an increased value of 2.


The basic settings allow you to "capture" 90-95% of the market movement in the channel within the trading day, and when the range is wide enough, you can search trading binary signals from its borders (swing trading). The remaining 10-15% of the time the price goes beyond the BB and these moments are in the field of view of the strategy "Tricky trader" opens options to return the price to the middle line.


The main advantage of Bollinger Bands as a channel indicator is leading signals of a change in the market state (accumulation, distribution, etc.) and confirmation of the truth or falsity of local breakouts of significant support / resistance levels.



  • CCI (Сommodity Channel Index). Confirms the hypothesis of cyclical, rather than chaotic, movements of all financial assets (currency pairs, cryptocurrencies, stocks, futures, indices). The indicator calculates the trend amplitude and accurately determines the moment when the trend changes. In auto binary signals, it is used as a typical oscillator: an exit from the extreme areas of + / - 100 (200) indicates the search for an entry point in the opposite direction to the current trend.
  • Stochastic Oscillator. A classic tool for finding overbought or oversold market periods. It acts as a filter for CCI signals and provides additional entry points, since the commodity channel index as an indicator of the general trend unfolds rather slowly, and you can miss good options (especially on small timeframes). At the same time, it is insurance for beginners, who first should enter by CCI and only then by other indicators!

The strategy for binary option «Tricky trader» can be downloaded from the Internet without any problems. The recommended timeframe is from М15 and higher, the expiration period is at least 3-5 bars. If possible, close the deal when the opposite signal appears!

Trading signals

Once again, we remind you that trades are opened when the current trend ends with a confirmed price reversal. More information on how to trade rollbacks, see the article "Price reversal: open an option or not?". For RISE (CALL) option, the following conditions must be met:

  • The price goes beyond the upper limit of the Bollinger band and then returns to the channel. Look at top binary options signals for entry points into the area above the midline;
  • CCI breaks the -100 level from bottom to top and is directed up;
  • Stochastic is out of the oversold zone (level 20). The lines intersect with the blue line above the orange one.

For the FALL (PUT) option, the opposite signals are used:

  • The price goes beyond the lower boundary of the Bollinger band and returns to the channel. The entry point must be below the midline;
  • On CCI, the breakdown of the +100 level from top to bottom and the movement of the indicator down.
  • Stochastic has gone out of overbought (below the 80 level), the lines have crossed and the blue line is below the orange one.

If you look closely at the chart, you will see that almost always the conditions for options do not occur at the same time and there is a gap between live trading signals. A natural question arises: should we wait or should we enter at the first signs of a reversal? And which indicator will be the leading signal?

There is no definite answer; it all depends on the characteristics of the asset, timeframe and current situation. But if you are a beginner, you definitely need to wait until all the conditions of the strategy are met. Before using the “incomplete” auto binary signals, we recommend waiting for confirmation from at least one oscillator, Stochastic reacts faster in the intervals up to M30, and then look at the Bollinger condition. If the price has returned to channel and is near the center line, you should make sure the movement continues and enter at least the next bar above/below the average BB.

Open a trade on the next candle after binary signals. Time of expiration of options has to be not less than 5-7 minutes even if as a working timeframe it is chosen of a minute, as in our video.


Summarize…

The strategy uses the classic binary option strategy - “Trend indicator + Oscillator”. Yes, there is CCI as an additional filter, but it first of all measures the pace (amplitude) of the current trend, only then indicates its direction. This means that the more periods there are, the better the Commodity Channel Index works.

At the same time the lag is growing and many short-term options signals will be lost. The authors of the method followed the path of decreasing the periods, or rather, left the base setting unchanged, trying to "pull up" the data under Stochastic for mutual filtering of signals. As a result, both instruments move almost synchronously, especially at the moments of entry/exit from their extreme zones. 

Therefore, the statement about mutual filtering of signals is not very correct; in fact, we have only a small delay relative to each other due to different use of smoothing in the calculations!

An effective alternative to CCI can be in the form of volume indicators (even tick volume indicators). The dynamics of changes in open interest can provide advanced information on how binary options signals work on the balance of power between buyers and sellers, confirm speculative impulses and short-term corrections when the logic of oscillators is violated, and the Bollinger begins to "creep" along the upper or lower border, giving only false signals.

Start trading

Disclaimer:

Available vfxalert signals present for informational purposes only and in no way are not a guide to action. The owner of the site and the program does not accept any responsibility for the use of information provided on the website and in the program vfxAlert, as for any errors. Information on this site does not constitute a public offer.