Often this binary option strategy can be found under different names, for example, Three Hits. Many novice traders because of their inexperience confuse this strategy with the work on the method of Elliott or Hartley.
However, unlike the eminent masters of technical analysis, the inventor of this strategy did everything very simply and clearly. By the way, binary options strategy Three Indians can be applied on various underlying assets that a trader can trade.
Three Indians pattern refers to a reversal. Trading on it is quite simple. A trader, who was able to identify it on the graph, may be absolutely certain about the movement of the market in the nearest future.
Three Indians graphic pattern may appear both on growing and declining market. In order to properly determine the figure, it is necessary to know certain rules. When the bulls take advantage on the market, the pattern is determined by the minima. When you see a pattern Three Indians in the graph, you can observe the following picture. On the growing one three consecutive minima should form, each one higher than the previous. The third minimum will be a signal to buy a Call option. The above figure shows that the pattern is completely fulfilled and purchase of the lot at the point 3 was justified.
If the market is bearish, you should look for the terms of the option Put purchase. It is necessary to determine the three consecutive maxima, and each is lower than the previous one. At point 3 the option may be purchased.
In order to work on the strategy Three Indians a trader can plot a trend line on the graph, which will cross maxima (in the case of a downward trend), or minima (when the trend is upward). In this case, touching of the graph and the trend line for the third time will be a signal to buy binary options. In a bearish market such touching should be at the top. The trend line will act as a resistance level. After the third touch, you can buy a Put option.
The same, just on the opposite, can be said about the growing market. Signals to buy a Call option can be looked for given that a graph touches a line, which is carried out on three minima. After the price touches the support line for the third time (the trend line in this case acts exactly as a support), you can buy a Call option.
It is important to define a graphical model in the graph. If a trader makes a mistake, it can lead to the fact that he will suffer losses. Most often traders find the pattern Head & Shoulders instead of the graphical pattern Three Indians. It is clear that if the trader took one model for another, he will suffer losses, as Head & Shoulders is a reversal pattern that is built either on top or at the bottom of the market.
Trading Strategy Three Indians do not forget about money management. Even if the trader is a hundred percent sure that he has found this particular graphic pattern, it is important to observe the rules of money management and not to risk funds on deposit much. The same rules should be used in other binary options strategies.
That’s all for now. Got any questions? Just ask the expert!