Linda Raschke strategy
Binary options strategy three indians has proven to be quite effective in today’s market. This method of trading is described in the book of the famous trader Linda Raschke.
Three Indians strategy could be very profitable in trading binary options at a regulated broker with high payouts on currency pairs and stocks.
Often this binary option strategy can be seen under other names such as Three touch. Many novice inexperienced traders confuse this strategy with the method of Elliott or Hartley.
Three Indian pattern as a reversal pattern
However, unlike the famous inventors of the technical analysis, the inventor of this strategy made everything simple and clear. By the way, binary options strategy Three Indians pattern can be applied with various underlying assets.
Three Indian pattern is a reversal pattern. A trader, who was able to identify it on the chart has almost one hundred percent confidence that there will be the same market movement in the near future.
Three Indians chart pattern may appear in both growing and declining market. In order to properly determine the shape, it is necessary to know certain rules. When bears takes precedence in the market, the pattern is determined by the lows.
Bullish and Bearish market trading
You can better see it on the chart on the following picture. The falling pattern should form three consecutive minimums, each of which will be lower than the previous one.
The third minimum will be trading signal to buy a Call option.
The figure below shows that the pattern is completely fulfilled and the purchase of the option at point 3 was justified.
If the market is bullish, you should look on it in terms of a Put option.
It is necessary to determine three consecutive maximums, each will follow above the previous one. At point 3, this option can be purchased.
How to trade Three Indians strategy?
In order to use the Three Indians binary option strategy, you can draw a trend line on the chart that will cross the lows (in the case of a negative trend), or highs when the trend is upward. In this case, when the trend line touches the chart for the third time, is a signal to buy binary options.
In a bullish market, a touching should be at the top. The trend line will act as a resistance level. After the third touch, you can buy a Put option.
The same, just but in the opposite way can be said about falling market.
Signals to buy a Call option can be searched at the touch of a trend line, which is held by three lows. Once the price touches the support line for the third time (the trend line in this case acts as support), you can buy a Call option.
It is important to identify the graphical model on the chart correctly. If the trader makes a mistake, it can lead to the fact that it will suffer losses. Most often traders instead of Three Indians chart pattern identify Head & Shoulders pattern. It is clear that if they took this pattern instead of Three Indians, it will incur a loss as the Head & Shoulders is a reversal pattern that is constructed either on top or on the bottom of the market.
We recommend you testing this strategy with a demo account first as it depends heavily on the market conditions.