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Everyone likes to keep it as simple as possible, but also better. Now we will talk about just one very simple but effective strategy for trading on binary options.
During testing, it was found that it is better to trade on older timeframes and, of course, during calm market times (without strong news).
To work, you need an MT4 trading terminal (download here) or you can use live chart.
In general, it is recommended to trade on higher timeframes, for example: H4, 1 day, 1 week or even a month. But during trading, it became clear that the strategy works great on younger timeframes, such as: M30 and H1, but it’s better not to go below the 30-minute chart - there is a risk, since the levels are very weak and sharper movements.
So, first you need to open a chart (as an example, a chart using the MT4 terminal will be shown.
I would like to warn you right away that there may not be as many signals as it might seem at first glance, since there are many filters by which the signal is filtered in order to identify the best one for entry.
The essence of the strategy
The bottom line is to buy an option to rebound from major levels. We will focus on Japanese candlesticks. Levels will be built manually, it's easy.
Which levels work and which don't?
Here you need to remember simple rules that you will later learn to put into practice.
- The more often the price approaches a certain level, the weaker it becomes. The most working level is for the first and second time after the formation of the level, most often the market does not give a third chance.
- Whether it is possible to enter a trade and whether there will be a rebound or not is determined by the nature of the price movement and the shape of the candle itself near the level, which may indicate a reaction or not.
- We will use as levels: highs and lows of the previous day, as well as weekly, monthly and even annual levels.
As you might guess, weekly and even more so monthly levels are much stronger, but this does not mean at all that daily trading cannot be done.
Take a look at the graph for an example:
Every day, on all popular pairs, we postpone levels from high and low.
It is necessary to postpone it according to the shadows, and not according to the bodies of the candles! That is, from there where the price went, and not at the close of the candle.
The chart shows (from left to right) that the first reaction was, but we would not use it, since the price did not touch the level (more on filters later).
The second time, the price has already clearly reacted to the level and it could be used in trading. The price also reached the next level (almost ideally), in principle, it could also be traded.
Now let's look at the main rules for determining the candle after which you can buy an option.
To conclude transactions, it does not matter what level it is: daily, weekly or just on a rollback.
A signal is only read if:
- The candle exactly touched the level with its shadow, almost got out of it or almost reached it;
- The body of the candle closed almost reaching the level and did not crawl out of it;
- Candle of medium size, with small shadows of approximately the same length;
- Prior to this, there should not be strong movements, huge candles or “thorns” (candles with a small body and huge shadows);
The expiration is chosen based on the situation: if the conditions are ideal, then we buy for 1 candle, if the distance between the closing of the candle and the level is slightly more than expected, the expiration is 2 candles.
We use the level only 2 times, after breaking through (it doesn’t matter how it was: a shadow or a candle body) - we remove the level.
Trading pairs: all major ones, which include USD, CAD, GBP, JPY;
Working timeframe: M30, H1 and H4, D1;
Expiration: 1-2 candles (depending on the situation described above);
Time to trade: any, except for the release of strong news and holidays;
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