Support and Resistance Binary Options Trading Strategy

Identifying major Support and Resistance levels is one of the most crucial issues of technical analysis.

 

What is Support and Resistance?

■ Support levels are the historical price levels which an asset or an index has shown difficulty falling below. At those levels a lot of traders tend to buy the market (Enforced Demand).

■ Resistance levels are the historical price levels which an asset or an index has shown difficulty break through. At those levels a lot of traders tend to sell the market (Enforced Supply).

 

Support & Resistance Timeframes

Traders have to be always aware of the close support and resistance levels of their trades, no matter their timeframe.

■ Short-Term Support & Resistance (one day to one month)

■ Mid-Term Support & Resistance (one month to one year)

■ Long-Term Support & Resistance (one year to several decades)

Support & Resistance levels are not changing as Oscillators, Trend-lines etc. Support & Resistance levels are usually characterized by stability over time.

 

 

How Support & Resistance Levels are Formed?

Support & Resistance levels are basically psychological levels of demand and supply. The more times an asset / index has proved unsuccessful in breaking certain price levels the stronger the perception of the existence of certain support / resistance on these levels.

Chart: Support Levels

Fibonacci Retracements Binary Options Strategy

 

This is a price-reversal strategy based on pre-defined retracement levels as you will see below. The Fibonacci method is a pure technical analysis method deriving from the Fibonacci sequence of numbers.

 

Information -What is the Fibonacci sequence of numbers?

Fibonacci was a famous Italian mathematician who lived during the late 12th and early 13th century. Fibonacci spread the Hindu-Arabic numerical system in Europe. The Fibonacci sequence of numbers is a sequence that follows a certain rule, every number equals the sum of the two previous numbers. Here are the first 12 digits of Fibonacci sequence:

1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233

This sequence of numbers is directly linked with the Golden Ratio or Phi or Φ {Φ=1.61803….). This number 1.618 is found everywhere in our universe. It is found between the distances of planets in our solar system, it is found on earth’s nature, it is found in our human body’s anatomy and it is also found on the global financial markets. On this article we are going to focus solely on the Fibonacci Retracements and not on the Golden Ratio’s effect in the financial markets.

 

The Fibonacci Retracements Binary Options Strategy

The Fibonacci Retracements Levels

The Fibonacci Retracements Binary Options Strategy is a pure price reversal trading strategy based on certain price retracement levels. The three (3) Fibonacci Retracements have the following values:

■ 38.2% (not very important level)

■ 50.0% (important level

■ 61.8% (very-important level)

Follow-The-Trend Binary Options Trading Strategy & 5 Ways to Identify Trends

Follow-the-Trend is maybe the most popular strategy to trade any financial market using any financial instrument. As they say, the trend is your best friend.

In this article you can find information about how to “Follow-the-Trend” using binary options but also 5 different ways to identify trends using technical analysis.

 

Follow-the-Trend Strategy Outlook

Financial markets tend to follow certain trends. Actually they constantly follow a certain trend until that trend is temporary disturbed by a short-term price pullback or it is fully reversed and a new trend is emerging at the opposite direction (reversals).

Trend Continuation is the Best Strategy to Trade High / Low Options

When you trade High / Low binary options it is better to seek for trend continuation than for trend reversal. On the contrary when you trade Touch Options or Range Options reversals can prove a successful choice.

Follow-the-Trend strategy is the best strategy to profit from 60-second binaries trading. This strategy has a proven record of success while it is really easy to be implemented by any trader. The power of this strategy relies on statistics.

Statistics have shown that there is always a better likehood that a trend will continue than a trend will be reversed.

In order to apply 'Follow-the-Trend' Strategy with success you certainly need a basic understanding of technical analysis and charting. In this article you will be able to find all the basic information about how to recognize and to use trends.

 

The ‘Follow-the-Trend’ Trading Strategy Implementation

When the existence of a trend is confirmed the only thing you have to do is to execute a trade in the same direction. Here are some easy steps to apply the strategy.

Trading Binary Options using the Stochastic Indicator

The Stochastic is one of the most popular indicators for trading Binary Options. The Stochastic is oscillating between two extreme values (0 and 100). The indicator is able to evaluate the momentum of a price trend and identify also divergences.

 

Stochastic can generate many different types of trading signals including entry, exit, trend reversals, support & resistance etc. The most reliable trading signals occur in multiple timeframes and not in just one timeframe. For more reliable signals the readings of the indicator should be combined and confirmed with another technical analysis tool (for example Fibonacci retracement).

 

Trading with Stochastics at a Glance

■ The Stochastic can be used in any market but it is best used when trading Forex Major Currencies (especially EURUSD and GBPUSD)

■ In a 5-minute timeframe, you will normally get 2-4 trades per day

■ Stochastic Indicator can be combined with Fibonacci Retracement, Bollinger Bands, RSI, Moving Averages and the Directional Movement Index for more reliable signals

■ Stochastic standard settings (14,3,3) but for trading Forex in short-term timeframes use settings (5,3,3)

■ The two key Stochastic readings are: 80 (signals overbought levels) and 20 (signals oversold levels)

 

The Stochastics Indicator Formula

This is the Stochastic Indicator formula:

■ %K = {(Last Price - Lowest Low in K period)/(Highest High in K period - Lowest Low in K period)} X 100

■ K represents the number of periods.

■ The standard Stochastic settings (14,3,3)

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