Sunday, 15 September 2019

Trading Strategy Using a Binary options trend strategy

Many traders are interested in utilizing trends in the price movements of an instrument. Both bullish and bearish, the trend can bring maximum profit opportunities if properly utilized. Not only on spot forex, trends can also be a major concern in binary options. Even though they do not execute orders on traded instruments, binary options traders still need to estimate the direction of price movements precisely in order to make a profit. With the trend, the clarity of the direction of price movement in the future will be more clearly analyzed.

There are several ways that can be applied to take advantage of trends. Trends can be both friend and foe in binary options trading. This depends on your expertise in making the best use of trends. If you can apply the right trading strategy, then the trend can be a friend that you can follow to make profits in binary options. However, trends can also cause large losses if the options you place are not on the correct trend.

In addition to technical trading analysis, binary options privileges in terms of trading types can also be used to maximize profit potential in trending markets. For this reason, this article will discuss two ways that can be applied to improve trend trading strategies in binary options.

Trading Trends with Technical Indicators
The availability of various trends determining indicators can be a convenience that can help you to trade binary options. You can place options at the top of the uptrend or downtrend valley to be able to make a profit by anticipating a reversal. The "call" option can be selected when the indicator sends a bullish reversal signal, while the "put" option is very suitable when the indicator indicates a bearish reversal. These signs can be observed when prices are in the area of ​​peaks or valleys, which can be known by the use of trend indicators and oscillators. Some indicators that can be used to take advantage of trends are channels, bollinger bands and Moving Average.

1. Channel Analysis
Of the many technical indicators contained in your trading platform, the trend line is one of the simplest and most reliable indicators. The channel itself is formed from 2 trend lines that are placed parallel to the peak and price base.

Analysis done with this indicator is fairly easy, because you can make the upper and lower limits of the channel as support and resistance lines to place options in accordance with the bounce that occurs at these limits. However, the possibility of prices to move outside the channel also needs to be watched out, given the uncertain price fluctuations that can bring your options out-of-the-money. Here are some things you can do to anticipate this:

Observe the distance between the price peaks or valleys with the upper and lower limits of the channel. The longer the distance is formed, the more convincing the bounce strategy you can apply in situations like this.
Even though the price broke through the upper or lower limit of the channel, make sure the trend will occur by waiting for a few candles to form afterwards. the price can sometimes break through the channel's limit and then reverse.
After placing an option based on the bounce strategy, expiry time can be placed through timeframe calculations with 3 candlesticks formed after the option placement. For example, if you trade at a 5-minute time frame, the expiry time can be set at 15 minutes.

2. Analysis with Bollinger Bands
Bollinger bands are one trend indicator consisting of upper band, middle band, and lower band. A strong uptrend occurs when prices move from the lower band towards the upper band, while downtrends can be seen from the price movement that leads from the upper band to the lower band. In addition, Bollinger bands can also be used to determine market volatility. Bands that squeeze prices indicate low volatility, while wide bands show high volatility.

For bollinger bands, you can look forward to achieving upper or lower bands. Wait until at least 2 candles are formed in this area, then place the option according to the possibility of a reversal that will occur. If you feel unsure of the strength of the trend that will be formed, you can anticipate it by setting an expiry time that is not too long. If after the expiry time runs out and the trend still has enough strength to last for some time to come, you can place the option in the same direction as the expiry time that is not too long.

2. Analysis with Moving Average
Besides bollinger bands, you can also use one type of Moving Average, namely Simple Moving Average (SMA) with the example of periodization at SMA 20 as a reliable indicator for trading on a trending market. Although still lagging in nature, SMA has trading signals that are quite accurate and easy to read.

Meanwhile, the trend analysis for 20 SMA is seen from the price position towards the SMA line itself. If the price is below the SMA, the price is undergoing a bearish trend. Conversely, the price can be said to be in a bullish trend if it moves above the SMA line. Trend changes are usually marked by crossing the SMA line, where a 20 SMA that cuts prices from the bottom up will indicate a downtrend, while a 20 SMA that cuts prices from the top down will indicate an uptrend. Exact position options can be placed when this intersection occurs, provided that the "call" option is selected when the intersection of the 20 SMA from top to bottom, while the "put" option is placed when the 20 SMA line cuts the price from the bottom up.

In addition, you can also place several Moving Average lines to analyze the intersection between these lines. For example, you can install another type of Moving Average, the Exponential Moving Average (EMA).

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