Binary Options Strategy: Bollinger + RSI. Profit method for options trading.
One of the simplest and most common ways to predict market movement in binary trading is to use indicators. It is they that allow you to conclude a deal with a binary option, which, with the maximum degree of probability, will close in profit.
This approach is also effective because the arsenal of these technical analysis tools is very large, while all of them have different operation algorithms, which allows them to build various profitable trading strategies based on them.
Therefore, today we will describe an indicator strategy for a high level of profitability: Bollinger + RSI, the use of which is indispensable for scalping on market fluctuations. Through such high-frequency binary trading, you can rapidly increase your trading capital.
Setting up the Bollinger Waves and RSI indicator
First of all, you need to apply the RSI indicator to the chart of the selected exchange asset, and then the Bollinger indicator, which must be set to the value: 1 for the construction period in its construction parameters.
If your trading platform does not have these technical tools, then you can use the live chart or download the MT4 program.
An example will be shown on the platform this broker, which already has a built-in indicator set. In addition, this will allow us to increase the accuracy of the forecast and significantly reduce the level of risks in binary trading, since we will not be distracted by switching to other windows.
Your asset trading chart after that should look something like this:
Thanks to the changed parameters for building the Bollinger channel, we will be able to use it in a strategy in a way that differs from the classic one. So we can see on the chart not a clearly marked channel for the movement of quotes, but the direction of the trend and the strength of its movement.
Thus, when quotes go beyond the channel built by the Bollinger indicator, this will be an indicator of strong trend fluctuations. It is at such moments that it will be necessary to conclude deals.
At the same time, the RSI indicator will play the role of a classic trend indicator in this situation, which will indicate changes in the direction of the trend and the overbought / oversold zone.
These zones will be the starting points of the trend movement and the zones of attenuation of price fluctuations.
Strategy trading signals: Bollinger + RSI
Signal to buy an option UP (call option):
1. The fluctuation of asset quotes occurs below the price channel, built by the Bollinger indicator.
2. In the oversold zone, the dynamic moving average of the RSI indicator reversed and it broke through the 30th level of the scale upwards.
When you see a combination of such signals from these indicators on the chart, you need to buy a Call option:
Signal to buy an option DOWN (put option):
1. The fluctuation of asset quotes occurs above the price channel, built by the Bollinger indicator.
2. In the overbought zone, the dynamic moving average of the RSI indicator reversed and it broke down at the 70th level of the scale.
Having considered such a movement of indicators on the constructed chart, you should safely buy the Put option:
Thanks to trading on such formalized signals from indicators, binary trading is able to bring more than 80% of profitable completed transactions.
When the price channel changes the direction of its construction and this reversal of the trend direction is confirmed by the RSI indicator, this always indicates that the situation on the market is changing dramatically.
Using indicators in this way, a trader can successfully trade on short-term fluctuations (scalp) and get very profitable results from binary trading.
Engaging in binary trading in scalping mode means using only short-term options in trading. In this indicator strategy, a suitable time frame would be 1-5 minutes.
By the way, by making the periods of their constructions longer for the indicators, the expiration of contracts can be increased up to 15 minutes while maintaining the same efficiency of the strategy.
The level of trading risks during scalping increases significantly, so this indicator should not be taken lightly.
Sometimes, you can notice lightning-fast movements behind the quotes, and so that in case of unsuccessful positions they do not greatly damage your capital, it is necessary to trade with transactions of small value.
For example, a broker FinMax The value of the minimum available trade is set at $5. Such minimal contracts are the most optimal for binary-option scalping.
Thanks to this method of risk management, you can protect your capital from trading drawdowns, even if it has an initial size of at least FinMax - only 100 dollars.
And if you trade with a more significant amount on the deposit, then the cost of each transaction can be increased to 2% of the volume of the deposit account.