Saturday, October 26, 2013

Random Fluctuation Strategy for Binary Options

The random fluctuation strategy is the main strategy I'm currently using when trading binary options. The best times to use it are when the asset is in a range and not extremely active. The strategy is simple yet effective. you wait for price to spike toward a support/resistance line and you enter the trade toward where price was originally. It works best on the 1min chart but use the higher time frame charts to make sure the asset is in a range and not trending. Your winning % will probably be slightly lower, but the number of trades you can take is much higher that I have found it to be more effective than traditional price action. Here's a chart example of the strategy.
EUR/GBP 11-1pm est Fri 10/25/13 1min price chart, from freestockcharts.com
As you can see, over only 2 hours, there was 16 possible trades that could be taken and would have won at least 11 (2 you would lose and 3 could go either way). The trades you enter should have short expiry times. No more than 5mins and should be 2-5mins depending on the setup. Risk low amounts of money on these trades, since you have the opportunity to take a larger number. Set up lines of support and resistance on the previous spikes in price and trade in the opposite direction when price reaches that value again. Make sure the market is in a range and isn't trending. Trade when prices touches a point of support/resistance. Questions?

Wednesday, October 9, 2013

Using Candlesticks Charts with Binary Options

When trading Binary Options, I always use a candlestick chart when plotting price. A simple line or bar graph won't provide enough data to know when to enter a trade. Candlesticks show the movement of price over a given period of time. The color of the candlestick tells you whether price went up or down during that time period. Green and clear means price went up. Red and filled in means price went down over that time interval. Example below.
Now for how to use them. There's certain candlesticks you want to be on the look out for when trading binary options.. Candlesticks should help guide you and NOT be used as the only signal to trade. Alone, the reversal signs from candlesticks aren't very accurate. If used with Price action (as discussed in other posts) there effectiveness is much higher. Take a look at the image below.
At the start, price is moving up (indicated by the green candle). The second candle is what people call a pin-bar. It signaled that price moved up, then moved back down to where it started at that candle. If the 'wick' of the candle is on top, it's a possible sign that price will start moving downward. The 5th candle is the same thing except it signals price might start moving upward. The 8th and 12th candle are called doji's. A doji also indicates a possible reversal and is characterized by a wick on the top and bottom with little net movement in price from the beginning to the end on the candlestick. Use candlesticks as guidelines for when price might reverse in binary options. They are by no means guarantees that price will change direction.