One of the very popular strategies that allows to trade binary options profitably is a Trend binary option trading strategy.
The strategy can be used both independently and as a complement to other trading strategies. The time of purchase of a binary option coincides with the beginning of the trend movement in the market.
It should be noted that the use of this strategy often does not work, because the trend movement in the market takes only thirty percent of the time. All the rest of the market stays within certain ranges or trade corridors or ranges.
Most binary option traders work within the trading range. However, this is not quite right, because in the market there are times when support or resistance lines are punched by the price and occur the moments of coming out of the trading range and the beginning of a trend. It is at such moments a Trend binary option trading strategy can be used. The strategy includes a number of sufficiently strong signals that will indicate the formation of a new directed movement. These trading signals will show the trader when to buy a contract Put, and when – a contract Call.
As an aid in the strategy binary option indicator Stochastic (with a long period), as well as the binary option indicator Moving Average are used. To work with the strategy you can use the minute and hour time period. To get started with the strategy, it is necessary to begin to understand the current market situation in the time intervals of ten minutes and an hour.
If the upward movement is formed in the market, the price will be above the moving average. Conversely, when the downward trend is formed in the market, the price will be below the moving average. Next, you can go directly to the search of trading signals. In other words, you need to determine when to buy one or another option. In order to do this, it is desirable that in the ten-minute time scale the price does not extend beyond the narrow range of forty points. In this case, the lines must cross on the binary option indicator Stochastic.
If there is a signal to buy the contract Call, crossing lines on the Stochastic indicator happens below the level of twenty. When there is a signal to buy the Put contract, the crossing happens above the line eighty.
Using this strategy, you can see whether the price in an uptrend or a downtrend. You can also see when the current trend is starting to slow down and identify the ability to roll back prices. After the price goes beyond a forty point range in a ten-minute time scale, the trend begins. In this case, it is possible to buy binary options.
It should be noted that trading this strategy is rather risky. Only a few are able to catch the trend. Especially because in the binary option market a trader does not matter how many points the price will go through of a certain level. A trader’s profit regardless of it will be calculated in percentage (if it is not, of course, about the contract OneTouch). In addition, after a strong trend the price may roll back. If you do not have time to catch its start, and go, for example, in the middle, the time of expiration may just coincide with the time of the rollback. In this case, no one can guarantee that the price level will be in the range where the trader will get a profit, not a loss.
That’s all for now. Got any questions? Just ask the expert!