30 minute binary option strategy explained
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Okane is one my fellow traders over at Communitraders. He first described this strategy for trading minute binary options in a forum post that has become on of my favorite on the site. The strategy is based on the RSI indicator, uses two time frames and is trend following. Originally intended for taking signals on charts of 5 minute candle sticks I think it can also be used with success in longer time frames as well.
Okane is trading CySEC style digital options but this strategy will also work well with Nadex and options. This is how it works. For this strategy you will start with charts of 15 minute candlesticks. Of course, I recommend using a chart of daily or at least hourly candlesticks first to draw some support and resistance lines first.
Use the moving averages to determine the trend in this time frame. If the shorter term averages are above the longer term 50 bar moving average then the trend is up, if they are below it then the trend is down.
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It is best if both conditions are met as Okane does not recommend using this strategy in a sideways trending market. Once you have identified a clear trend it is time to wait for the signal set up. The set up begins when the RSI reaches over bought or over sold levels.
In the original posting a bearish example is given but this strategy works equally well in both directions.
So, assuming a down trend, wait for the RSI to reach over bought. This will happen when the asset price bounces higher before resuming the current trend. Once RSI reaches over bought levels it is time to move down to the 5 minute charts to pin point an entry. On the 5 minute chart you will need to wait for a confirming signal. This can be a variety of things but will be a signal continuing the underlying trend on the longer term 15 minute chart. Just prior to the signal the chart is bullish but prices are extended, waiting for a pull back is recommended.
Once prices pull back to the moving averages a series of candlesticks confirms support and signals an entry. Once an entry is confirmed binary options with 15 to 30 minutes of expiry are used. Stochastic is also used at this point. A trade may be indicated by RSI. This strategy is based on very short term charts.
Even though currency pairs are very active in these time frames it is still harder to predict than longer time frames like hourly or daily movements. You have to be really quick to catch some of the trades. News events can also have a big impact on this strategy and should be avoided until you get a handle on using it.
In addition, Bogdan one of the other Pros at BOTS. Okane himself will caution you to use stochastic as a coincident indicator when timing entries.
RSI may be signalling you to open a position but if stochastic says the move is already played out then you should stay away. An example would be is RSI indicated buying a call position but stochastic was already overbought. Click here for the full story at CommuniTraders! I apologize for the delay in adding this to the page.
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And that is the whole point! The Trading Tools Chart Time Frames — This strategy uses two different chart time frames; 15 minute and 5 minute. The longer term is for determining trends and setting trade direction, the shorter term is for pin pointing entry. Moving averages — This strategy uses three moving averages to help determine the trend.
Support and Resistance — This strategy uses support and resistance lines. Lines should be drawn any where and in any time frame that they appear to be important.
This tool is not restricted to the 15 and 5 minute charts. Okane uses a support and resistance tool that automatically seeks out potential areas. You could also use Fibonacci Retracements.
RSI 4 — This strategy uses RSI Relative Strenght Index to pin point entry. It is a fast RSI, set to 4 bars, and is only used to produce signals that follow the underlying trend as set on the 15 minute chart.
Signals are only taken on the 5 minute charts. Candlesticks — This strategy uses candle stick charts in both time frame. The candlesticks are used to help identify trends and entry points.
Okane uses it to help determine underlying trend and to confirm his entries and exits. The Strategy For this strategy you will start with charts of 15 minute candlesticks. Chart of 15 minute candlesticks.
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