"Tricky trader" strategy: binary options on reversals
- VFX Blog
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".
Timeframe: Any 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 option: Not less than 70-75%.
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 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.
- 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.