Methods of working on binary options. Using a Strategy for Trading Binary Options
Mark the strong signals and weak signals.
Once that is done you can take an average of the number of bars needed. Both for the strong and for the weak signals to move into the money.
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If you are using a chart of hourly prices and your signal takes an average of 3. This could be a mid day, end of day, 4 hour or other methods of working on binary options.
If the signals takes 3. If using the hourly chart, it means 3.
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I am going to use a basic moving average strategy to demonstrate. I will use the 30 bar exponential moving average. It hugs prices closer than a simple moving average and will give us more signals to count. Also, in order to weed out bad signals and to improve results, I am only choosing the bullish trend following signals. So, there are 15 total signals.
On average, it takes 4. That means, since this is an hourly chart, that each signal will move into profitability and reach the peak of that movement in about 4 hours. So for expiry I would want to choose the closest expiry to 4 hours that is available.
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If a good choice is not available then no trade can be comfortably made. Do not try and force trades where they do not fit.
Breaking it down a little, the weak signals peak out in about 2. Putting this knowledge in perspective, a weaker signal might be one that is close to resistance.
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A stronger signal might be one that is not close to resistance. Also, a stronger signal might be one where price action makes a long white candle and definitive move above or from the moving average whereas a weaker one might only create small candles and spinning tops. All too often I get asked questions about why a trade went bad in the final moments. One of the most common areas of error I find is in choosing expiry. Of course there can also be errors in analysis, trends or random events.
But the focus of this discussion is expiry.
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One question you must ask yourself is: if you are trading with or against the trend. When trading against the trend I would suggest a shorter expiry than a longer one.
Simply because there is less chance of an extended move counter to the trend. Your expiry must be more precise. When you trade with the trend your expiry can be a little farther out.
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Another factor that can have a big impact on which expiry is best for a given trade is support and resistance. The relative level of prices to a support or resistance line is a factor in how likely a trade is to move in a given direction.
So, how does this apply to expiry? I purposefully did not say call or put, or bullish or bearish, because this applies to both bullish and bearish trading.
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Compare that to stocks, and you understand start making money on the Internet binary options are so successful. To trade 1-hour strategy with binary options, there are a few things you have to know.
This article explains them.