Thread range bound trading strategy for binary options
There are 2 major market conditions you will see as a trader. The market is either moving in a trend or moving in a range. In fact, there is no other way the market can moves besides this. In order for you to make money consistently in binary trading, you must have a binary options strategy that can help you to trade the trend and another strategy to help you trade the range.
Therefore in this post, I am going to share with you how you can trade the ranging market. One of the best way to trade the ranging market is to use trend channel. Whenever you see that the price is moving sideways, you should start to draw the upper and lower trend line of the range. When the price hits the lower trend line, there is a high chance that the price is going to move up.
Therefore you will start to look for opportunity to enter a HIGH option. When the price hits the higher trend line, there is a high chance that the price is going to move down. The upper and lower bands show the confines of price movement in a consolidating market.
Take a look at the chart below to see the illustration:. The Bollinger bands reveal the range of prices between the price floor and price ceiling. Once you have something like this showing on your charts, use your horizontal line tool to trace two lines as shown. You now effectively have the 2 strike prices you need for your boundary trade. You can now decide on which of the four boundary trade option contract types to purchase, and set relevant expiry dates.
Most brokers will allow a minimum of 7 days for expiry, so make sure that the period of consolidation will at least, exceed that time frame. If you use a daily chart like we did above in this example, you will be able to get enough time to set an expiry. The boundary trade is not the only binary option contract that you can trade with this strategy. The bias here should be for a No Touch option contract , taking time to set the price barrier either to the upside or downside, well outside the range of prices as demarcated by your price floor and price ceiling.
This way, you are sure that the price action of the underlying asset has no chance whatsoever of coming close to your price barriers. If you need the price action to breach the boundaries, you can adjust your price barriers accordingly to make this happen.
Trade Setup The first step in using this trading strategy is to decide on the range to use.