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The binary options trading strategy we shall examine today is going to be used for the Call/Put binary option, and is a fairly simple one with which to make money. Making money from trades based on this strategy will involve just two parameters for technical analysis:
a) The use of reversal candlesticks
b) AutoPivot point calculator
The Call/Put digital option trade is the most common bet type in the binary options market and accounts for more than 90% of all trades. It is only fair that traders are equipped with the tools that they need to make money and boost their accounts with this binary option. Most (if not all) binary options brokers offer this option contract on their trading platform, so traders will do well to add this to their trading arsenal.
How This Binary Options Trading Strategy Works
The aim of the trading strategy is to make money by detecting points of market reversal and using these points to predict when the underlying asset is likely to undergo a bullish reversal at a level of support (good for a CALL option trade) or a bearish reversal at a level of resistance (good for a PUT option trade).
There are several candlestick patterns that traders can use for the binary options trading strategy but the simplest and most reliable patterns that can be used are:
a) The Doji star patterns (morning and evening)
b) Engulfing patterns
For the pivot point calculation, traders can obtain free automatic pivot point calculators used in the forex market by a simple Google search. These come in the form of trading software plug-ins that are attached to the “Indicators” folder of the MT4 platform, and can then be pulled out from the Custom Indicators folder and attached to the hourly chart of the asset you want to trade. Once this is done, 7 pivot trade levels (three resistance levels, three support levels and one central pivot level) will be traced on the charts.
Here is an example of how to make money using this binary options trading strategy using the candlesticks and autopivot calculator.
This option trade was done on the hourly chart for the GBPUSD showing the resistance pivot points in red. The reversal candlestick shown here is that of a bearish engulfing pattern, occurring at the R3 resistance level. The way to go is to do the following:
a) Wait for the bearish engulfing pattern to complete.
b) Wait for the next candle to reach back for the key price level it just left. On the chart above, we can see this as a green candle with a high at the R3 resistance point. The reason why this is done is because the reliability index of the engulfing pattern is moderate. Traders should never be tempted to trade the digital options contracts immediately after the engulfing pattern.
c) Once the pullback is confirmed as failed and the price is back at the resistance level, execute the PUT option trade on your binary options platform and set the expiry for at least three hours (since this is the hourly chart used in the analysis).
Here is another example, this time using the pinbar candlesticks as the reversal candles of choice in the market trading strategy.
In this example, there are two pinbars: a shooting star and a Doji. Together, they provide a stronger reliability index than an engulfing pattern and a Doji, so traders can pull the trigger immediately after the formation of the pinbars, especially when the open price of the next candle is directly on the resistance level. The bet to pull off on the account would be a PUT financial contract, using an expiry of 6 hours (since the chart is a 4 hour chart).
Similar principles can be used for the CALL option bet for candlesticks that occur at support resistance levels. Forex brokers are the source of charts used for analysis, and access to these charts is possible from a demo account. This is a setup that can make money any day and boost the trader’s account like a money machine on autopilot.