SR Break Signals
Many binary traders are looking to profit with 5-minute binary options and want to build a profitable strategy. In my opinion, the combination of fundamentals and price action is the best way to approach short-term trading. It is also important traders lower their expectations.
To best perform the strategy, you need the MT4 platform and a binary broker that offers you fixed 5-minute expiries.
Trading the daily breakouts is a widely used concept in forex trading, and of course, many are trying to implement it into binary trading as well. By drawing key support and resistance levels on the chart, you look for breakouts to open a short or long position. If you are trading daily binary options, it might work the same way but not if you trade short term.
For trading 5-minute or 15-minute binary options, you need to approach the charts differently to identify the most recent highs and lows. Therefore, we need the custom indicator Support and Resistance (Barry) in combination with the Value Chart.
5-Minute binary trading
Placing 5-minute trades is probably one of the most popular trading styles, together with 60-second trading. To set up their strategy, most traders uses the Meta Trader 4 platform as it offers 5-minute timeframes and allows for custom indicators.
Once you set your MT4 chart on 5-minutes, you have to add the SR (Barry) indicator and Value Chart indicator. The SR (Barry) shows the currency pair’s most recent highs and lows, and the VC alerts you when the pair is overbought (OB) or oversold (OS).
We use the VC indicator because, when the currency is OB/OS, it might also break the resistance or support levels. This is the idea behind the strategy as we look to trade the breakouts of SR levels, which give us Call/Put signals.
The best time to perform the strategy is during strong trends as we want to trade with the trend and not the countertrend. Using 21 EMA helps you visualise the current trend and place your trades accordingly. It is also important to check the economic calendar to spot major events that can move the price in one direction on another.
It is ideal if your broker’s platform offers 10-second and 1-minute charts. Thus, you can spot a strong move before the close of a 5-minute candle on the MT4. You can place your trade at the close of a candle or 1 minute before the close.
Call Signal - Resistance break
To trade a Call signal, we look for up trends and breaks in the resistance. In our example, you see a strong bullish candle breaking the resistance, and at the close of that candle, you can place a 5-min Call trade. The breaking candle also came with a VC sound, which alerted us the USDJPY is overbought.
Put Signal - Support break
We get a Put signal when the price is moving in a downtrend and breaks the most recent support level. On our chart, you see EURUSD is breaking the support with a strong bearish candle (no wicks). You can enter your Put trade at the opening of the new 5-minute candle. The breaking candlestick also triggered the VC alarm, which shows the EURUSD is currently oversold.
Comments by traders
Before you start trading the strategy, you have to accept it will not give you 100% ITM signals. You have to approach trading with lower expectations and follow real action on the charts to build knowledge. Expecting high profits every 5 minutes is not going to lead you anywhere.
You should not let the VC alert trick you because not every signal from the Value Chart means a break in SR levels. It is also important to follow the price action closely and identify the breaking candles. In most cases, it should be a strong candle without wicks, but not an overextended one. If you see breaking in SR levels with long wicked candles, it is probably a fake signal.
This binary options strategy is not 100% ITM, but if you have spent enough time on the charts you will get the idea pretty fast. It is important to read the price action and not follow indicator signals blindly. You can also leave your comments below. Happy trading!