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Today we’ll talk about trends in binaries. I’ll say right away that the information is complicated. It won't be easy for you. When was it simple? That's the theme. In short, I’m starting to share my knowledge and experience on this topic. Go!
Most of the strategies used are designed for investors with a certain level of training; an ordinary person will have to spend a lot of time to understand the principles of their operation.
Meanwhile, any strategy is based on the trend - the direction of the price.
Trend trading with binary options involves the use of dozens of strategies and analysis tools.
One of the rules of professional trading that cannot be broken is the rule: do not go against the trend.
It is necessary to be on friendly terms with the trend; trading should be carried out only in the direction of the trend.
Therefore, among the questions asked by beginners, there is often a question: how to determine the trend in binary options?
To determine trend trends, two types of tools are widely used:
- Lines characterizing price movement.
photo – forexspamm.ru
- Trend indicators for binary options.
There are two main types of trends: upward and downward.
- Ascending is a series of increasing max and min values. At the same time, all subsequent ones are located above the previous ones.
- Descending ones are also rows of minimum and maximum values, but each subsequent one is located lower than the previous one.
For greater visualization of these processes, their schematic designation in the form of trend lines is used.
Particularly effective, when used correctly, is a strategy that takes into account the movement of the lines of these lines, which are considered one of the main tools of analysis.
They greatly simplify the process of determining the width of the corridor and the direction of price movement.
As I said above, there are two types of lines: ascending (resistance) and descending (support).
The resistance line is located at the top of the price chart and runs along the top price indicators for the selected time period. It concerns peak values.
The support line is located below and describes the movement of the minimum price indicators in a certain period. It is carried out between two price minimums.
I wrote a lot about these two lines here - - so I recommend reading it, it will become clearer using my analytics as an example.
The possibility of the formation of these straight lines is an indicator of the existence of a trend that must be taken into account in trading.
To build a line and use this tool, you must have at least two points - maximum or minimum indicators, which can be connected by one straight line.
There are clear construction rules that also characterize the level of reliability:
- The big point is the degree of inclination. A strong slope is an indicator of unreliability.
- Lines built from a pair of points . With a larger number of points, reliability will decrease and the probability of breakdowns will increase.
- One should not strive to carry out the construction in all circumstances of the market, a situation in which all attempts to draw end in failure means that there is no trend. It follows from this: a situation has arisen that is not suitable for using the tool.
Trading with the trend: what are the advantages?
As you know, the price in the market is always moving, and in order to make money on this movement, you need to predict the future direction of the price. A trend is a confident and prolonged price movement in one of the directions (up or down). That is why it is most profitable to trade in the direction of the market, i.e. trade with the trend. An experienced trader can recognize a trend quite easily. A beginner in trading cannot always determine the current trend on a price chart. In the simplest and most understandable language, a downtrend is a price movement from the upper left corner of the chart to the lower right corner:
An uptrend is a price movement from the lower left corner of the chart to the upper right corner:
The advantages are that a trend does not end just like that - there are always harbingers of the end or change of the trend.
Stochastic
It has been in demand for many years, as it is designed for activity in the “channel” market.
It itself is a channel limited by upper and lower rulers.
If the chart goes beyond the top, it is an indicator of overbought.
Moving below the bottom shows that the market has been oversold, and prices are more likely to rise.
This approach is relevant only when the trend is not expressed.
In the process of using indicators and trend strategies, it is important to clearly understand the principle of their operation. Only then can you count on success. In general, with competent, thoughtful organization, these tools are a sure help in trading activities.
Let's finish for today. Madhouse, isn't it? I understand you perfectly. When I first encountered indicators, I almost went crazy. Time passed and it began to dawn on me. Well, we’ll “get to the bottom” together, gradually. As soon as you understand this material, we immediately move on to the next story. It is available here. Bye everyone!
How to spot a trend
Now it’s worth talking about a more acceptable definition of a trend. Still, few people look at the chart just for pleasure - everyone wants to make money on price movement, so every trader should understand not the general picture of price movement, but all the internal mechanisms on which price movement depends. As you know, the price moves in waves or as a ladder. It is this key factor that we will use to determine the trend. An upward trend (uptrend) is a wave-like price movement in which each new peak is higher than the previous one, and each new depression (rollback) is also higher than the previous depression (rollback):
In a downward trend (downtrend), everything is exactly the opposite - each new low (trough) must be lower than the previous one, and each new top (rollback) must also be lower than the previous high (rollback):
The further the distance (vertical) between the peaks (in an uptrend) or troughs (in a downtrend), the stronger the trend itself. If this distance gradually decreases, then this indicates that the trend will end soon. Tops and bottoms should be clearly visible on the chart - you shouldn’t invent them where they don’t exist. If you doubt that the price has formed a top or bottom, then rest assured that there is no top or bottom on the chart yet!
Breakout of support and resistance levels in a trend movement
As already mentioned, the price moves in waves, but if you delve deeper into this aspect, it will become clear that the price moves along support and resistance levels - it breaks through some and relies on others. On the graph it looks like this:
The process itself can be described as follows: the price moves in a trend until it encounters a strong obstacle on the way (support and resistance level), after which, as a rule, it rolls back to the broken level, and from there it continues its movement along the trend . From here we can derive the following pattern for finding an entry point - we wait until the price, during a rollback, reaches the broken level, and open trades in the direction of the main trend:
The main thing is to be able to build support and resistance levels and remember that these levels tend to change their purpose - support becomes resistance, and resistance becomes support.
Takeover Battle
This is one of the best trend strategies for binary options, which will delight you with high earnings in the financial markets. But for this it is necessary to adhere to strict recommendations for concluding transactions.
You and I will need the Live Chart, which is located on its official website in its full version. Set a 1-minute time interval on the chart and configure it in accordance with the following parameters:
- (NM) Improved Linear Regression Bull and Bear,
- two Exponential MAs with periods of 9 and 21.
We conclude the contract above at the moment of intersection of two EMA moving averages, and Linear Regression Bull and Bear at this moment intersected with its zero level on the scale.
It is worth trading downwards when EMA 9 intersects EMA 21 from top to bottom, and the Linear Regression indicator intersects level 0 from top to bottom.
During testing, this trend strategy for binary options demonstrated very good results. It is a reliable tactic that can identify the emergence of a new trend and make a profit from binary trading.
In our case, we set the transaction period to 5 minutes. If you prefer to analyze other timeframes, then set the expiration to 3-5 candles.
Flag trend continuation model
There are other ways to find entry points into trend price movements, one of them is the “Flag” trend continuation model. “Flag” allows you to find entry points even after minor rollbacks. Everything here is quite simple: we initially have the direction for opening trades - this is the direction of the trend; all that remains is to determine the entry point. The Flag itself is drawn on the price chart and consists of two lines - the price channel during a rollback or price correction. In practice it looks like this:
The entry point is a breakout of the flag border: in a downward trend there should be a breakout of the lower border, in an uptrend - the upper border. Thus, you can make transactions very confidently; in addition, missing the end of a trend will also be problematic.
Harmonica
In order for trend trading tactics to bring good profits, it is not at all necessary to apply a lot of indicators and complicate the already difficult life of a novice trader. Our next trend trading technique is one of the simple but highly effective tactics that, when used properly, can result in 85% of profitable trades.
Since this is a trend strategy for binary options, it is based on the best trend indicators of technical analysis.
- Williams alligator,
- Moving Average,
- Relative Strength Index.
With the help of the Alligator, we will find the moments of price exit from the consolidation zone and subsequent price surges, the Moving Average will directly demonstrate the trend itself, and with the help of the RSI oscillator we will determine market price reversals and the actual moments of entering the market.
As a trading asset, you need to choose exactly the currency pair in which the trend is always clearly visible. The AUD/USD pair would be ideal for our trading. In fact, it was precisely for this purpose that such a strategy was developed.
We change the period of the moving average to 75, leave the Alligator with standard settings, and set the RSI with a period of 55.
This major market trend strategy is capable of generating several types of signals. Let's look at them using the example of bullish trading.
The first signal to open a trade occurs at the moment when all three Alligator lines recorded the intersection and began to move in the upward direction, and the Relative Strength Index intersected with level 50 from bottom to top.
The second signal to open a trade occurs at the moment when the Alligator lines intersect with the moving average moving average, and the RSI is above the 50 line, which confirms the upward trend.
In our case, when analyzing the M1 chart, the deal is concluded for ten minutes. This will be enough to wait for a full trend reversal.
1-2-3 pattern in trend trading
The Price Action 1-2-3 trend pattern also allows you to find confident entry points in a trend movement. The Pattern itself, as you may have guessed, is built on three points:
- 1 point – start of the pulse
- 2nd point – end of pulse
- 3rd point – end of the rollback and continuation of the trend
On the graph it looks like this:
When using this pattern, the entry point appears already in the formed impulse - upon the breakdown of the horizontal level formed by point “2”:
It is noteworthy that the pattern works very well in real trading, and that it can be used on all time frames.
Ichimoku indicator
Photo - lovedengi.ru
At the beginning of use it often seems complicated, but thanks to its accuracy it is especially attractive . It consists of five lines that form a variety of signals due to the shapes of their intersection. If the indicator is lined up on a chart, then intersections with the chart line are also clues.
A large number of lines allows us to call this indicator self-checking.
Only if all received signals confirm each other, does it make sense to purchase an option.
Most often used for large scales, since its main task is to determine the trend.
With a large trend, this task is easier to implement.
The best options for trend trading
Most traders trade trend movements using regular Up/Down options - this decision is determined by their simplicity and the habit of traders who are “afraid” to introduce something new into their trading. This approach to trading, although appropriate, does not have the maximum effect. The best option is to use options with increased profitability in trend trading, such as the “Higher/Lower” options from the FiNMAX broker. These options allow you to earn up to 250% of the transaction amount, versus 65-90% on regular Up/Down options.
At first glance, an option may seem complex or even risky, but in practice it is a wonderful tool designed for trading with the trend or sudden price movements. The trader is only required to make all the same transactions according to the trend, but only on a different type of options, and receive more profit for the same actions. This option is best traded using support and resistance levels or a Flag trend continuation pattern. In this case, you will be able to use this option as efficiently as possible to make a profit. The disadvantages (if you can call it that) of this type of options include the fact that trading is carried out with an expiration of 15 minutes or more. But in most cases this will be a plus rather than a minus - the trend should be determined on longer time frames than M1 or M5. You can find out more about the “Higher/Lower” options in the review of the FiNMAX broker.
Oscillators
A really complex indicator. It took me a long time to figure it out, but it seemed like I got it, albeit with some difficulty. Come here and read, learn -
These are indicators of a separate category.
They are recommended to be used in case of an implicit trend, which is quite promising for binary options traders.
If in Forex it is necessary to take into account the number of points passed by the price, then for options this indicator is not important.
Information about a change of 2-3 points is enough to make a decision that will bring profit.
Oscillators do an excellent job with this task.
Updated - there is a lot about oscillators here -
Trend is our friend
It’s not for nothing that trend trading is considered the most profitable trading, and I hope you have seen this personally. The main trading idea for making a profit is to follow the crowd, but it is the crowd that creates stable price movements called trends. It turns out that in most cases you need to follow the trend to make a profit. If you are a novice trader or do not have much experience in trading, then the trend is your best friend, which will not only teach you how to trade and correctly understand price movements, but will also bring you a lot of money as a reward for your perseverance.
Sincerely, Igor Lementov aka REDFOX
MACD
Represented by two variations: MACD, MACD histogram.
The regular option is almost no different from Bollinger in its graphical appearance and location. The histogram is designed as an independent graph, where the trend is expressed in the form of vertical bars of various lengths. The length is proportional to the strength of the trend.
The location of the dashes above and below the horizontal line indicates, respectively, the type of trend.
If you want to optimize your activity using MACD, then keep in mind that it works best on long time intervals, but fails on short and five-minute ones.
You can read about this incomprehensible schedule on my website; I just wrote about it yesterday. You can break your head if you climb and read on other portals, I found it quite simple and clear -
