Trading strategies can basically be split up into to 2 categories.
Indicator based and visual based. Indicator based is where you have
certain indicators on your chart and when they move certain ways, you
enter the trade the way the indicator "tells" you to enter. When I first
started binary options, I searched and searched for the perfect
indicator that would actually tell me when and how to take the trade,
but I never found it. Some people trade this way but I find it less
effective than visual trading because of one key point: all indicators
lag. This is especially critical in binary options where a delay in a
matter of minutes to enter a trade could be the difference between
finishing in the money or out of the money. In a later post I might talk
about which indicators are the best and how to use them but I fine they
really aren't very effective.
The second type of
trading is visual based trading. It's using a basic chart and in its
simplest form, drawing lines to predict how price will move(very
scientific). More specifically, using previous low as values of support
and previous highs of values of resistance. These values are where you
want to enter trades as price has a good chance of reversing. This is
also called price action. This can be explained a lot better in a chart
example. Here is the 5min EUR/USD earlier today(sept. 17) with
candlestick chart from freestockcharts.com
As
you can see, price will often bounce off the same value more than once.
Then when the price does fall and break the support level, the roll of
the value is reversed (in this case to resistance). Now, price will
bounce off it and go back down when price hits that value again.
Of
course price won't always follow the support/resistance levels.
However, the higher the time frame, the more likely there is to be a
reversal. Price hitting a all time high is much more likely to reverse
than hitting a 1 hour high.
More on price action
here
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