Trade binary options on Pivot points. Strategy «Binary points»
When you hear about the use of the levels of "Pivot", you automatically think that this is an invention of a talented person (such as, Fibonacci’s net, Murray’s waves, Wolf’s waves). However, everything is much simpler. Pivot means "turn", and the Pivot points are, respectively, the levels of price reversal on the chart of the asset. These levels of reversal are very important in technical analysis in determining the daily turning points of the asset, as well as the basic math levels of support and resistance of the price.
This technique was developed in the 30s of the last century and is still actively used by most professional traders of the financial market. The developer of mathematical calculation of such levels was Henry Chase, thanks to whom we now have a unique tool for determining such levels on the chart. Of course, now, it is not necessary to make the calculations yourself, as there are many technical indicators which are carried out by the hardware and automatically for every trading day.
Thus, let’s specify the purpose of pivot points
Market monitoring of each asset using such levels is carried out by an automatic calculation that allows to calculate the levels of reversal for a period of time. Thus, pivot points are not static and are not always in the same place, but dynamic and are calculated according to the location of the current price. Pivot levels are calculated in the opening of each new trading day. That is, at the opening of every new day candle.
Thus, the opening price of the daily candle is the starting point for calculating of pivot points, from which the ladder of levels of support and resistance is built. These are the so-called turning points.
As you can see on the chart, the indicator performs the calculation of pivot points for every new trading day automatically.
To date, the system of constructing Pivot levels is significantly modernized and optimized, which was done by modern mathematicians and traders. As a result, such levels appeared: Camarilla’s points, Woodie's points and DeMark’s points).
However, the essence remains the same. The pivot points are lined up, and the price wanders between them during the trading day, sometimes repels, then breaks through and follows to the next level.
How can we use it to trade binary options? It's very simple. To do this, there is even a strategy of binary options trading on the pivot points which is called «Binary points».
Let's look at the examples of the trade with this strategy.
To begin with, we need some means for technical analysis of the charts. To do this, download terminal Meta Trader 4. If you still do not know how to use it, we will help with a brief introduction to the work with the terminal.
Once you have a personal computer running this software, put there an indicator that calculates pivot points automatically, as well as other indicators and the template of the system. After applying the template on the chart, your trading area turns into a field for trading.
We use the following indicators in this trading system:
- Pivot all levels - which will count for you Pivot points every day;
- Moving Average - which will show the direction of the transaction. In this case, if the price is above the moving average, we only buy; if below - only sell;
- Stochastic Oscillator - will point to us the point of entry into the transaction, so that we are able to accurately identify the location of rebound and breakdown of pivot points;
- Fractals - will show the starting point to enter the transaction.
- The price is close to the level of support or resistance;
- The price of the asset is above the indicator Moving Average;
- Stochastic Oscillator crossed the border from the bottom up after the fall under the oversold level;
- Fractals - showed the emergence of trends in the quotations growth, that is, "threw" a down arrow.
The signals to sell we get when:
- The price is close to the level of support or resistance;
- The asset price is below the indicator Moving Average;
- Stochastic Oscillator crossed the border from the top to the bottom after moving above the overbought level.
- Fractals - showed the emergence of trends in the fall in prices, that is, "threw" an up arrow.
When you get used to trade on the pivot points and understand the entire process of trading and behavior in the charts, you can remove the trade indicator Stochastic Oscillator and trade on rebound more professionally. However, do not rush to remove any confirmation indicator of this trading system. Learn how to trade methodically and accurately, and the profits will not be long in coming.
There are many examples of using pivot points to trade different types of options. For example, take the option One-Touch. It automatically sets the strike levels which must refer to the contract price, and its profitability is 400%. This gives us the opportunity to trade even with the statistics 3 losses and one profitable trade. Anyway, the deal size of $ 100 will bring us a profit of $ 400, which will block all the lost time and add to the deposit $ 100 of the net profit.
To trade this type of options, traders make deals in all the points of touching the price of one of the pivot points, according to the rules of this strategy.
In addition, for this type of trade the classic binary options, options Range (on the way out of the price channel specified in the contract) and Below (to repay the price level specified in terms of a binary contract) are suitable.
TERMS of EXPIRATION
Most comfortable for technical analysis chart is M15 which clearly shows the signals. At the same time, we can easily calculate expiration dates, that is, the time intervals in which the price will fulfill the conditions set in the options.
For example, the classic binary options have the condition for 3 to 5 hours. As for other types of options, for each individual asset you need to define such terms manually, using the technology of testing the trading system. Do not know how to test the profitability of a trading system? Then read about this here.
Your broker does not give such expiry dates as mentioned in the trading system? Then select another broker from our rating. After all, not a broker is able to fill your deposit, but a trading system.
The trading system «Binary points» is profitable enough. Especially if you use to trade options One-Touch, Below or Range, the payment of which reach 400% or more. A profit from the pivot levels, confirmed by additional indicators, gives you about 70 % -77%. This means that the ratio of profitable to unprofitable trades is 3 to 1 and even 4 to 1, i.e., 3-4 profitable transactions and only 1 loss-making that will allow your deposit to grow very quickly.
Do not forget about the precautions that will keep your deposit safe and sound at a series of loss-making entries and allow it to grow rapidly in the ordinary course of profitable trading. Thus, the maximum lot size should be not more than 3% of the amount of your deposit. That is, when the size of the deposit is 1000 $, your trading lot should not exceed $ 30. At the same time, in the trade you cannot use more than 4 financial assets simultaneously.
However, in the choice of assets to trade read an article about the correlation, so as not to pick up trading tools that walk parallel. Select those which depend on each other in the smallest degree. That is, the currency pair, commodity, index and share. Such a portfolio is called portfolio to trade with diversified risks.
Good luck in trading and profits to you!
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