The Engulfing H1 Binary Options Strategy

According to the authors, this strategy is suitable with any instrument, but we however have only tested two currency pairs with it: EUR/USD and GBP/USD. During the last 4 months we have obtained with it 74.5% profitable trades. Accordingly, every 7 trades out of 10 (roughly speaking) were in line with our forecast (ITM), and 3 trades were closed against us (OTM). Continuing with this same example, you can obtain: 7 * 84 = 588 profit, and 3 * 100 = 300 losses, so the net profit will be 588 – 300 = 288 dollars, for every 10 transactions in case you put 100 dollars per trade. In total, we received over 50 signals. The maximum number of consecutive losses was 2.

The Expiry Time of the option should be set at 1 hour (closing of the hourly candlestick, so the strategy is largely determined by the next hourly candlestick)

There are no required indicators to be used in this strategy.

You should use the candlestick chart type.

The conditions to buy CALL option.

1) On the candlestick chart type a bullish engulfing pattern is formed. At the peak of the movement, the last candlestick has a white body, which completely engulfed the previous black candlestick.

2) The pattern should fix minimum values for at least the last 2-3 candlesticks.

3) Next, we are waiting for the first candlestick with a black body.

4) Once the first black candlestick is formed, we buy the CALL option. So, we are assuming that the next candlestick will close with a white body.

5) The first black candlestick after the engulfing pattern must be formed in the next 4 hours (4 candlesticks), otherwise the signal is ignored.

6) If until the moment of market entry the price is rolling back down to half of the total recent increase, this signal is also not taken into account.

7) The body of the absorbing candlestick should not be bigger than 1.5 times in comparison with the absorbed candlesticks.

8) The candlesticks with small bodies, and those formed inside the sideways movements are not taken into account.

The conditions for buying the PUT option.

 

1) On the candlestick chart type there is formed a bearish engulfing pattern. At the peak of the movement, the last candlestick has a black body, which completely engulfed the previous white candlestick.

2) The pattern should fix maximum values at least during the last 2-3 candlesticks.

3) Next, we are waiting for the closing of the first candlestick with a white body.

4) Once the first white candlestick is formed, we buy the PUT option. So, we are expecting that the next candlestick will close with a black body.

5) The first white candlestick after the engulfing pattern must be formed in the next 4 hours (4 candlesticks); otherwise the signal is simply ignored.

6) If, before the entering the market the price has rolled back up by half of the total recent drop, then the signal is also not taken into account.

7) The engulfing candlestick body should not be more than 1.5 times bigger in comparison with the engulfed candlesticks.

8) The candlesticks with small bodies and those formed inside the sideways movements are not taken into account.

As you can see, the strategy does not use any indicators and is quite simple to use as long as you carefully read and follow the above steps.

The Triangle in Binary Options

One of the most simple and clear strategies that can help binary options traders to get oriented in pricing matters is the Triangle Strategy. If the price increases, then there is an ascending triangle, and respectively, if it goes down, we have a descending triangle. Both types are formed in a bearish or bullish market and focus on the dynamics of the market situation. With this strategy you will also identify a balanced and expanding triangle, but the latter is not recommended by experts to use in binary options due to its specific nature.

The Triangle is one of the most popular patterns of classical technical analysis. Despite the fact that this pattern seems simple enough, many traders often make mistakes when trying to interpret triangles. In order to make it a guide that help you draw profit, you need to clearly understand how it is formed and not confuse it with other patterns.

How to build the triangle pattern

To build the triangle chart pattern, select the points on the timeframe that visually stand out. You should do it in the same way as the support and resistance lines are built. Drawing an imaginary line which goes through peaks and lows, we obtain a shape with a top and bottom, and this is our triangle. Based on its shape and projection we can interpret the market behavior and create a strategy.

Types of triangles

Ascending Triangle – it is a figure which visually shows up. As a rule, the upper price resistance line either is horizontal or is slightly looking up, and the bottom line, rising up, forms a sharp angle. In most cases the price breaks through the resistance line , so at this point you can buy the CALL option. If you want to be really clear about this take a look at the image below.

The Descending Triangle is exactly the opposite of the Ascending one. The top line shows a downward trend, but the bottom line stands as a support line and can be positioned horizontally or can go slightly down. In such cases, the logical behavior of the binary options trader will be to wait for a breaking through of the support line and then buy a PUT option on the second candlestick. Now, you know when to buy the CALL and PUT options, but that’s not where it ends. Take a look at the image below to see the complete list of triangles that can be formed by price movements.

 

As you can see, there is also the symmetrical triangle, which is not so simple. Here the price can break both resistance and support line and the trader needs to be extremely attentive to the price changes and, above all, to assess the risks. The Binary Options experts advise that when the symmetry changes in a way that we don’t like, even in the slightest degree, we have to stop the deal. The strategy says that when such a triangle is formed, you should wait for the breakdown of the support line or resistance line, and depending on this you can buy the CALL or PUT option. Again, to avoid false signals, it is necessary to wait for the opening of the second candlestick.

 

As you can see on the image with the list of triangles, there is also the expanding one, which we will ignore because it is not a signal for binary options traders. With the 3 triangles shapes described here you have the opportunity to make a real profit. Don’t forget that the Expiry Time of the contract you buy should exceed the candlestick time value by at least 6 times. It would be wise to test the triangles on a demo account before you actually use them on a real account. Get comfortable with identifying them and then go for it!

 

Raphael Binary Option Strategy

Raphael Binary option strategyThe Raphael binary option strategy is considered an ultra short term trading strategy that is akin to scalping. It is extremely popular among many traders for its simplicity and profitable outcome. Essentially, the strategy calls for a careful observation of the market over three different time frames of decreasing scale. Initially, the trader will observe the market over a one hour time frame chart, then to a 15 minute chart and finally down to a five minute chart. The goal of the observations is to try to discern the current market trend and see where price reversals are likely to occur.

RSI and Stochastic Indicators

The simplicity and easy adoption of the Raphael simple strategy is primarily due to its heavy reliance on the usage of two technical indicators, the RSI and the stochastic indicators. The RSI is used to determine the market trend. If the reading is higher than 50, then the market trend is on the rise. Conversely, if the reading is below 50, this meant the market trend is on the decline. As for the determination of the strength of the trend, this falls back on the stochastic indicator. Generally, the stochastic values should support the trend values as indicated by the RSI. Strong signals are indicated when both the RSI and stochastic values are diverging from the trend as indicated by the hourly chart. It should also be noted that the RSI readings must move accordingly with the market trend and not at the level of the signal line as this will give a false signal.

Once both the RSI and stochastic indicators are diverging from the hourly chart trend, then it is time to focus on the 15 minutes and plot out the support and resistance line. After the support and resistance lines are drawn, the trader should start to look for any signs that the market is reversing. Upon confirmation of market reversal, the trader can now focus on his 5 minute chart to decide the best time to enter and exit the market. Use the stochastic indicator on the 5 minute chart to look for overbought or oversold market conditions. Depending on the direction of the trend, any dip or peak in the value of the stochastic indicator will signal a buy. This observation will hold true until the stochastic value starts to diverge or indicate an overbought market condition.

The Bottom Line

On the whole, the strategy is good as it permits a trader to ride on a larger range of a trend instead of just a small segment midway through the trend reversal. Furthermore, with the use of the RSI and Stochastic indicators, the trader gets to notice the trend forming after major support and resistance lines hence letting the trader have the advantage of a longer window for market entry.