How to trade Doji candle
Binary option Doji candlestick strategy is a fairly simple model that is easy to be found on the chart.
You can try using this strategy at a fair binary broker offering free demo account with no deposit required.
It should be noted that not only professional traders can use this strategy, but also intermediate. Moreover, it does not even need the usage of any market indicators. You can make a profit using this simple model.
Doji candlestick formation
Doji graphic model occurs very often on the market. It consists of only one candlestick. The body of this candle should be the minimum possible size or in other words the opening and closing range of the candle is virtually zero.
Candles should also have large shadows. That is within the trading period, which formed the candlestick the price range of extremes should be large enough. Finally, before this candlestick pattern the market should have a strong movement to one side: upward or downward trend.
Trading signals from Doji candlestick pattern
Next, we shall dwell on this candlestick pattern and the trading signals that it gives. As already mentioned above, Doji candlestick pattern should observe several conditions. One of them – the previous trend.
Using Doji candlestick patterns, traders can predict future market movement. In other words, the trader can predict what will happen in the market in the near future, make the right choice and make a profit.
If a Doji candlestick pattern is generated on the market, in the near future we can expect a trend reversal. Thus, the formation of the model should occur at the peak of the market, or at its bottom. Formation of the model in the middle can lead to the continuation of the current trend.
How to determine whether the market is at extreme price level or it did not reach its peak? It is very easy to do using support and resistance lines. You should find some minima and maxima and draw appropriate levels between them. Then you can judge where the price is now.
Buying Call or Put option according to the Doji model
As for the Doji model, traders should use it as a trading signal very carefully. In order to buy a particular call or put option, it is advisable to wait for the confirmation. The next candle that closes above or below the Dojie extremum may serve as this proof.
For example, if a downtrend appears before Doji’s appearance, formation of the model runs at the support level, the trader is recommended to prepare for Call option buying. However, in order to make the signal stronger, it is advisable to wait until the point when the next candle goes beyond the upper shadow of Doji.
Once this happens, you can buy a Call binary option.
The same can be said about the situation when the price until Doji’s appearance is in an uptrend. At a moment when Doji candlestick is formed on the chart, the trader is recommended to prepare for Put option buying. To be sure in a certain signal, the trader should wait until at least the next candle breaks the Doji candlestick.
Then it is possible to buy a Put binary option.
There are also some recommendations on how to use the Doji binary option strategy. For example, it is desirable to select an expiration date for the end of the trading day, since closer expiration is influenced by market noises, which may lead to the fact that the trader will suffer losses.