Have you ever observed a long-term trend and thought how it was a good time to bet or the chance was lost? At the beginning of my career, such situations happened many times. It is understandable; on the one hand, it’s better to trade with the trend, but it’s risky to trade when the trend can reverse.
The profitable binary options strategy, Reverse, will help you to determine the entry points on trend movement pullbacks. Quotes can’t rise or fall all the time. The price movement is always wavy, periodically correcting according to the main trend. This correction is called pullback and is considered an excellent entry point during the trend movement. Consider the chart with a timeframe of 15 minutes:
We have a strong upward trend. All the oscillators clearly show that the price is overbought, and it seems that a turn is about to happen. However, with such the strong trend, it would be a huge mistake to catch the reversal. It is much more productive to bid during the trend, and the most profitable strategies are based on this. If you look closely, you can see that there are many green candles with upper shadows.
This means that the price wasn’t moving up all the time, and several times it made pullbacks on which we could deal with the trend and gain good profit. You can say that it’s easy to find the trend in the archive. However, how do you determine a potential entry point in real time? It’s easy enough. I will tell you how.
Some rules of the binary options strategy Reverse
If you see a strong trend in any timeframe, it’s easier to find the best entry point in the shorter timeframe of the same asset. It is important to understand that any red or green candle is made of candles from a shorter timeframe, which likewise can be analyzed.
So, if we have the trend at a 15 minute timeframe and switch to a 5 minute timeframe and put the indicators Bollinger Bands, MACD and MA with the period of 10, we will receive the following picture:
Now, remembering that we have the strong uptrend in the longer timeframe; you can trade on pullbacks, which are found in a shorter timeframe. Bids must be placed only in the direction of the trend of the longer timeframe, as in my example, only upwards (buy CALL option).
Rules for purchasing the CALL options in the longer timeframe
- The price should be located between the upper Bollinger band and MA with the period of 10;
- The MACD histogram should grow;
- Options must be purchased when prices roll back to the MA 10. An expiry time is 1-2 candles ahead.
Rules for purchasing the PUT options in the longer timeframe (similar but contrary):
- The price should be between the lower Bollinger band and MA with the period of 10;
- The MACD histogram should fall;
- Options must be purchased when prices roll back to the MA 10. The expiry time is 1-2 candles ahead.
That's just a simple way you can make a good profit on price pullbacks of the main trend. I called this binary options strategy "Reverse profitable” because it is suitable for all timeframes, but if you use the timeframes 15 and 5 minutes (as in my example), you will receive many more signals than if you use the timeframes 4 or 1 hour.
The strategy will work as long as the trend continues in the longer timeframe (the chart will be located between one of the Bollinger Bands and MA 10). It’s better to stop if the price breaks the MA 10 in the longer timeframe. You can also use additional filters as the indicators parabolic or else.
Remember not to try to use Martingale when the option is out of money. It won’t help you when the trend turns.