The intraday strategy works to help traders identify a price reversal before most investors even realize that one is about to take place. The foundation for this binary options strategy is the intraday candlestick formation. The highest point of the second candle is going to be lower than the highest point of the first. Additionally, the lowest point of the second candlestick, or day two, is going to be higher than the lowest point of the candle for day one.
Youâ€™ll need to be using the MetaTrader 4 chart in order to apply this binary options strategy correctly. Both Stochastics oscillator and Bollinger bands will be used to generate the trade signals. If you are familiar with these, strategy use is going to be relatively simple. For those not yet familiar with the MT4 charts and indicators, this strategy is best avoided until further knowledge is gained.
The strategy works as follows:
Whenever the Stochastics is displaying an overbought signal and at the exact same time the intraday candle formation shows up at the uppermost Bollinger band, the signal that is being delivered is that the asset price is going to decrease.
Whenever the Stochastics oscillator is displaying an oversold signal and at the exact same time, the intraday candle formation shows up at the lowermost Bollinger band, the signal being delivered is that the asset price is going to increase.
Itâ€™s relatively easy to see these signals with a MT4 chart. However, the ability to spot the signals is not the end of the process. Youâ€™ll also need to select the appropriate trade to match. The best option for use with this strategy is the basic binary options Call/Put trade, but One Touch and No Touch trade types can also be used with success.
For basic Call/Put options, if the intraday candle develops at the lower level Bollinger band while the Stochastics oscillator indicates that the market condition is oversold, select a â€śCallâ€ť option along with an expiry time frame of at least two days. For a No Touch option, make sure that the entry price is approximately 50 pips below the market price, headed towards the target price and use a 2-3 day expiry period.
For a One Touch trade, the entry price should be inside a range of asset prices that begin from the price that is positioned at the middle Bollinger band extending on to the market price. The expiry selection should be four days or more. This time frame should provide enough time for a target price touch to take place.
Should the intraday candle develop at the upper level Bollinger band while the Stochastics oscillator reveals that the market is being overbought, trade a â€śPutâ€ť option with an expiry of no less than two days. For a No Touch option, be sure that the entry price is 30â€“50 pips above the market price, headed towards the target price. The expiry period should be 2-3 days. For a One Touch option, the target should be positioned between the upper level and middle level Bollinger bands. Expiry should be 4-5 days or longer.
As with all strategies, be sure to run tests with a demo account prior to trading live. Best binary digitalÂ options offers demo accounts to all Silver Account holders.