Posts Tagged ‘Bollinger bands indicator’


Fence Trading Strategy for Binary Options

Thursday, January 2nd, 2014

Thursday, January 2nd, 2014 by Michael Freeman


The Fence Trading Strategy, also known as ‘Double Profit’, allows traders to increase the ITM payout and minimize the potential OTM loss. The ideal situation for Fence Trading is when the asset’s price bounces up and down within a reasonable price range allowing us to enter into two opposite trades and as close as possible to the highest and lowest prices on the asset’s chart. By creating a wide enough range, we can increase the probability to win both trades and get double the ITM payout, hence the term ‘Double Profit’.

At the highest price level within the ‘Fence’ we enter a PUT prediction while at the lowest price level we enter a CALL prediction and our goal is to ensure that the asset’s closing/expiry price is between the price levels of the upper and lower trades.

Fence Trading Strategy Example

Let’s say that the price of Asset A is currently $25, yielding a %75 ITM return and a %0 OTM return. We decide to invest $100 predicting a price increase upon expiry which is set at 60 minutes. 20 minutes later the price of asset A  reaches $30, based on the neutral trend we assume that the price will close below $30 and we invest another $100, predicting a price decrease. At this point we entered a Call and a Put predictions creating a “Fence” between $25 and $30.  If the final asset’s price(expiry) falls between the the lowest and highest price levels, we will get the highest return on the investment formulated in the first example below.

Asset A expiry =$25-$30 ($100+$75)+($100+$75).

Initial Investment = $200, Ending Balance = $350, Profit = $150.00

 

Asset A expiry > $30 ($100+$75)+($100-$100).

Initial Investment = $200, Ending Balance = $175, Loss = -$25.00

 

Asset A expiry < $25 ($100-$100)+($100+$75).

Initial Investment = $200, Ending Balance = $175, Loss = -$25.00

The obvious conclusion is that with the Fence Trading Strategy we can significantly reduce the loss on OTM trades while doubling the potential profit! The profit on winning trades is 6 times higher than the potential loss ($150 vs -$25) which means that even if we lose a few consecutive trades we will still take back more profit over a volume of trades. This is definitely a winning binary options strategy!

 

fence

 

Fence Trading and Bollinger Bands®

Now that we understand the great potential behind Fence Trading, it’s important to learn how we can properly identify a neutral trend while spotting the ‘right amount’ of price volatility to indicate a safe entry point so we can safely utilize this binary options strategy. The Bollinger Bands are used as a technical analysis indicator allowing us to measure the current price volatility for any underlying asset. The volatility bands are positioned above/below the moving average line, forming a range that is constantly adjusted depending on the market volatility, making it an ‘ideal indicator’ for Fence Trading. The visual representation of the Bollinger Bands is used to predict the ideal ‘lowest and highest’ entry points and confirm the presence of a neutral trend for the current time period displayed on the asset’s chart.

The Bollinger Bands are available Free on Meta Trader 4 and FreeStockCharts.

Fence Trading combined with Bollinger Bands make up a very solid strategy. It’s also suggested that you set the expiry for one hour, giving yourself enough ‘response time’ to enter the 2nd trade. Remember that binary options involves high-risk, therefore any strategy that attempts to minimize the potential loss will ultimately minimize the risk and allow you generate more profit! Before you ‘jump in the water’ head first with $100 trades.. make sure to put the Fence Trading Strategy to the test with lower trade amounts or on a demo account. For brokers offering low trades amounts and a demo account visit the Recommended Binary Options Brokers reviews.

Advance Binary Options Trend Trading Strategy

Wednesday, November 6th, 2013

Wednesday, November 6th, 2013 by Tim Lanoue

topoption

The aim of today’s article is to give novice or experienced binary options traders a strategy that I have had some great success with lately.  Oftentimes if I run across a strategy like this and have been seeing the success I have I would not share it for free to the public but I figured I may as well help you to the best of my ability.  With that being said we are going to discuss my advance binary options trend trading strategy.

 How does Trend Trading Strategy Work? 

As many of you may know there are three types of trends associated with any asset in the online trading world.  We have a bearish trend which simple means a down trend while on the other hand we have a bullish trend which signifies an uptrend.  The last type of trend there is would be a neutral trend, where the price of an asset is neither increasing nor decreasing much.  Moving forward, we can create a trend line like seen in the picture below.  We can create one straight line on the top of the asset and under the belly of the asset.  The purpose of these trends lines is to help point out significant support and resistance levels of an asset.  These trend lines also make it easier to spot new highs and lows during a short trend allowing more opportunities for trades to be made.  Once a trend line is broken or reflected off we can expect a strong reversal in the assets direction therefore creating another trading opportunity for us.

 

 

Setting up the trend trading strategy is relatively simple and requires little to no time.  First off you will need a charting solution like Meta Trader 4 and you can where you can watch the live feed of an asset. To create a free account with Meta Trader, you must enter your username and password from a Forex Demo Account.  From there on we put 3 exponential moving average lines set at a period of 6, 9 and 14.  Next we add our Bollinger Bands® indicator to our chart and finish off by adding a straight line over the top of the asset and under the asset like seen above.  As seen in the picture above we have four instances where the Eur/Usd asset bounced off or break our trend line and reversed in the opposite direction.  However, we need to wait for atleast one confirmation to occur and that is that our reflected or broken candles have to be within or partially within our Bollinger Bands® cloud, if they are then we are good to place our trade.  Lastly, if any of our EMA lines are running through our candle it acts as a stronger indicator that the asset is likely to reverse in the other opposite direction.

This strategy is simple and easy to use which is why it is probably one of the better ones I have used.  Not much is needed for a good trading signal to be generated and there are many confirmations that the signal you are receiving is likely to happen.  Trend trading can be very effective when used wisely so if you are a trend trader then this strategy is for you!  If you have any questions or comments go ahead and leave one below or you can email tradingbinaryonline@gmail.com for additional comments or suggestions.