One of the best strategies to trade binary options is based on the binary option indicator Bollinger’s Stripes. This strategy gives a strong enough signal for the purchase of both Put and Call options.
Bollinger’s Stripes strategy can also be considered as an indicator. It not only provides the trading signals, but also shows the time period the market is in a particular position. Also, the strategy can be applied so a trader could know that soon market conditions would change.
The name of the strategy comes from the name of John Bollinger, who is the author of the eponymous binary option indicator. Briefly, it consists of two (sometimes three) stripes, which show a range. In this range, the price is moving. Approaching the top of the range, the price is repelled from it and goes to the bottom. The same thing happens approaching the lower limit. When it is reached, the price is repelled and goes to the top.
In general, Bollinger’s Stripes indicator is a strong enough auxiliary tool of the trader. If it uses a third stripe, located in the middle, it can also be used as a signal line. When the price goes over this stripe top down, the downward movement continues to the lower boundary of the range. In cases when the price crosses it upwards, the movement to the upper boundary will continue.
It should be noted that the markets are in a state of lateral movement for a long period of time. Only about five percent of the time is in the trend, that is, in the directed movement. That is why the use of this indicator will allow often enough making a profit in trading binary options.
It is also important to establish periods of curves, which are the part of binary option indicator Bollinger’s Stripes. These settings can significantly affect the operation of the indicator, so traders should consider them attentively.
After a trader set all the settings, he can start trading binary options. However, it is important to learn not only to identify the signals, but also to see how long the price will move from one curve to another. Indeed, in the binary options trading the key factor is not what level the price can reach, but how long it will be in a unidirectional movement.
Bollinger’s Stripes strategy is very simple to use:
- When the price approaches the upper curve, you can buy a Put contract.
- When the price reaches the lower curve, in turn, the Call option is called.
On the screenshot you can see exactly which recommendations are made on the strategy. As can be seen, during this time you can buy a Call option for five times and the same number of times a Put option can be bought.
The graph also shows that the price may from time to time go beyond the range. However, it quickly turns back into range. Therefore, if the term of expiration allows, the trader still makes a profit, even at a penetration range. You can apply this strategy not only for options Put or Call, but also for the others. You can also vary the terms of expiration, going for long time intervals on the graph.
That’s all for now. Got any questions? Just ask the expert!