Re binary options strategy based on bollinger bands and trend indicator
Pick out an area where price action can be joined by trend lines to form support or resistance, and also see if you can apply trend lines across the highs or lows using a different colour on your chart. The aim is to initiate a PUT contract when there is a downside break of a trend line connecting the lows when price has hit a resistance line at the upper Bollinger band as shown below:. In this chart, we see that a resistance line can be drawn at the level of the upper Bollinger band to connect the price highs.
A lower trend line can also be drawn across the price lows as support. A break of this support will form the basis for a PUT trade using the break out principles described in earlier articles where price is allowed to pullback to the broken trend line for precise entry. In this example, we see a support line drawn at the level of the lower Bollinger band, as well as a resistance line in blue drawn across the price highs.
A break of this line provides the basis for a CALL trade as shown below:. The tracing of the trend lines is a very important component of the entire strategy. When it comes to setting expiry times, it is better to allow the price action to move the length of at least two candles. Therefore, the trader should take note of the expiry times available on his chart, as well as the time frame chart on which the analysis was done, and apply the expiry as described.
For instance, our PUT trade example was analyzed using a daily chart. Allowing two to three candles as the expiry time would mean that the expiry would be set to 3 days.
The second example for the CALL option was analyzed using a 4 hour chart, and this would leave the expiry at between 8 and 12 hours. Using these principles, the trader would then be able to give the trade enough room to breathe and end up in the money. Reversal Trade with Different Band Settings. Different Bollinger band settings can be used to create a larger range with which to capture price movement, and thus get better assessment of support and resistance with which to trade price reversals.
This is achieved by introducing what is known as the Extended Bollinger Band EBB , with settings adjusted from default levels to 13, 2. This means that the middle band is adjusted to a moving average of 13 periods and the standard deviation set at 2.
The EBB is applied to a chart already carrying the default Bollinger band, creating two upper bands and two lower bands or a total of four bands. This strategy is recommended for currency pairs, but it might as well work with other assets. With these indicators we can enter a trade at the beginning of it and then ride with it. How to setup the chart […].
You may have seen this indicator before as it is usually a part of more complex strategies. This is a very thought out strategy which is among my favorites and it brought me lately interesting profits. Even though it is a more complicated strategy, trade openings are very comprehensible from the chart. Doubles strategy uses Bollinger bands which you may know already.
Additionally, it also uses the MACD indicator which is suitable for binary option trade. And how do these indicator get along? How to set up the chart Timeframe: BBand Stop binary option strategy Published: BBand Stop strategie , binary options 5 minutes , binary options strategy , strategie. Binary strategy , pinbar , value chart. The new strategy Doubles!