This binary options strategy has been around for quite some time and like many other strategies, it has been applied in various markets. At it’s base it is a price action strategy, but it also includes solid support and resistance elements. It’s primarily a reversal strategy, but it is applicable when trading along with trends as well.
You will need charting software in order to see the price swings. These instructions are for a downward pattern, but they can be easily reversed for an upward patter. Following an uptrend you’ll start looking for a three peak pattern to develop, starting with the first. The first point becomes the top if the strategy plays out (price continues to move upward and the new high is labeled as point one). Next, counter movement will start and you will mark the lowest part of that movement as pattern point two.
What you have at that point is an upward moving price trend and a retracement that finished and asset price began to move upward. If the new upward movement is going to exceed point one, abandon analysis and wait for a different setup. Should the new movement not exceed point one and begins to turn downward, mark the uppermost point of the movement as being point three. At this point the pattern will be complete, but note that the price has to move downward to break through the low that was established at point two. Only then are all conditions met. The only thing left to do is to enter in your Put option position and watch to see how the trade plays out.
This binary options strategy offers you a substantial probability of having your trade finish in the money when used correctly. It can also be quite helpful in allow you to avoid some really bad trades. There are times when the market is so volatile that it renders even the best strategies less effective. No strategy is entirely immune to false signals or other crazinmayfess that the markets can deliver. Even so, this is a solid strategy that can deliver a positive success ratio.