The most popular binary option strategy without the use of any indicators is the European session breakout strategy.
You can start trading binary options on European session with $1,000 demo.
In this article we consider the basic rules that will help to determine the entry points and expiration time to choose.
Put or Call Signals from breakthrough Support or Resistance level
Let’s assume that we have drawn the upper and the lower levels of resistance and support in the morning in the flat early European session (from 4.00 to 7.00 GMT).
What are the possible options for further currency movements?
Option 1. Currency pair for the entire trading session will not go beyond the corridor, i.e. sideways trend is not broken.
This happens very rarely, especially in cases when at the next trading session the publication of very important news is expected. In this case, the whole European session turns into flat, when none of the participants do not want to risk serious playing Heads or Tails, not knowing what news will be published and where brokers gathered to move the currency pairs on.
Your actions - wait. If the currency is not moving all the European session, they will arrange for the American present rally, moving at least 2 times more distance than they usually are during trading sessions. It is clear that to take a huge risk is not logical if that behavior states that on the American trading session is expected a move of at least 150-200 pips.
Option 2. Currencies hit some of the levels above or below the morning formed flat.
A true breakthrough occurs only when the currency crosses drafted resistance you will make a small setback and intersects the second time a new top, so double breakthrough level is the main criterion for the conversion of the resistance level to the level of support of given currency pair.
In this case you should have at least one transaction for Call option with a long-term expiration (relatively) – for a few hours try to take all of those movements, which the currency will to the U.S. session. Usually the distance is from 30 pips or more on EUR/USD and GBP/USD pairs.
- Both pairs must cross its resistance.
- You choose expiry time as long as the tips of each zigzag and hollows above the previous one.
- Necessarily set expiry before important news publication.
Option 3. Currencies made the first breakthrough and the first breakthrough is always false, and it could not cross formed level on the top.
Currency will not stand. If it cannot go up, then it will go in the opposite direction. Advised actions for a trader: wait for downward double crossing and work this trading session on Put option buying.
It is a very common strategy among binary option traders because it could be very profitable and easy to implement. However, despite the widespread use of this system, many traders, especially beginners, make a lot of mistakes in its application. We recommend you investing more time in reading and learning before start real trading.