Binary Options Fibonacci Strategy Binary Options 2020

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Trading Binaries with the Fibonacci Tool

A Sure-fire Way of Trading Binaries with the Fibonacci Tool

In my experience dealing with retail traders, I have come to discover that the Fibonacci retracement tool is one of those lesser used technical indicators in market analysis. Mention the MACD or moving average indicators and traders will immediately brighten up with recognition. But talk about Fibonacci and everyone just draws blank.

Retracements are a normal part of trading. They occur all the time and a trader needs to know how to use retracements to his advantage. This is what the Fibonacci retracement tool does for you. The tool plots five horizontal lines on the charts which correspond to 5 possible areas to which prices may retrace, with the distances expressed in terms of percentage of the original move:

Prices can retrace to any of these points. So how would you use the retracement tool to trade binary options?

If I were to trade binary options using retracement, this is what I would do:

1) I would select a strongly trending financial instrument, such as gold, EURJPY, GBPJPY or EURUSD.

2) I would select a time frame that will confirm that what is playing out in the market is actually a retracement and not something else. I would therefore choose the Daily chart.

3) I would purchase a “Touch” option in the Touch/No Touch trade type as my preferred trading option, picking a point between current prices and the 23.6% retracement point.

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Trade Technique

Take a look at the Daily chart for the EURUSD. Note that by selecting this chart, I have already fulfilled my first two trade conditions. It is a daily chart, showing me when a retracement is actually occurring, and the EURUSD trends well, being the most actively traded currency pair in the market.

I am now looking for how to fulfil my third condition, which is actually my trade objective. I want to pick a strike price at a point along the course of the price retracement, between the market price and the 23.6% Fibo level. To do this successfully, I must be sure that a retracement is actually in progress. How do I confirm this?

Look at the area where a blue arrow points to “drag Fibo tool here” on the left side of the chart. The bullish momentum of the EURUSD has actually been checkmated by the formation of a reversal candlestick pattern, a bearish harami. An expanded version of that point is shown below:

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Occurring at the peak of a bullish momentum is a clear reversal signal. The retracement followed soon after, and went all the way to the 50% retracement point.

Trading binary options is not rocket science. It just takes a trader knowing what to do and when to do it. But it also requires that the trader must be quite knowledgeable about topics such as candlesticks, chart patterns, etc. A trader has to be thoroughly at home with the candlestick patterns. If there is any topic in the financial markets that deserves attention, this is it. With candlesticks, you can determine price direction easily, and then add other tools to increase the success rate of your trade calls.

Binary Options Fibonacci Strategy

The retracement tool is probably the least understood, especially among the new traders. They hardly realize about the importance of having this tool by their side in order to take their trading to the next level. Retracements are one of the most prominent elements of any uptrend; therefore developing a trading strategy around this phenomenon can be a wise decision to take.

Percentage Retracements: A Brief Understanding

They are some essential tools that are especially made for swing traders, helping to decide how far the correction will go. You might know that market creates trends and it never goes in a straight line. And as for the trends, they keep on taking zigzag routes while building higher highs alongside higher lows during uptrend and the opposite in downtrends.

Precisely, the market is in continuous movement, fluctuating between high and low. And the movement against the usual trend is known as the correction (retracement). Since the swing traders try every possible ways to benefit from the single movement, regardless of the high or low, they have to be capable of predicting the future movement of the retracement. This will help them to determine whether the touch option will be a good investment in the present environment or not or should they still consider investing in the retracement or wait till the trend returns to the main direction.

Percentage Retracement Occurrence

To go by the past, the correction is likely to move one third, or say half the distance of the existing movement. Well, the exact percentage value that the traders use for estimating the retracement’s size varies. Where some traders use 50% to 60%, the others have faith in Fibonacci retracement, which is a series of number developed by the famous Leonardo Fibonacci. In here, every number is the total of two preceding number. For example, 0, 1, 2, 3, 5, 8, 13, so on and so forth.

The traders use these numbers for calculating the movement’s distance. The majority of the good charting software like Meta Trader can get percentage retracements to the traders’ chart automatically, whereby saving them from calculating in pen and paper.

Trading strategy using fibonacci retracement

Trading Percentage Retracements

When trying to build an automated system for trading, you should make a decision on the values to be used. Essentially, you need to understand that correction in a trend never ends at a particular percentage value. Instead, this ends at a point near a percentage value. So, in that case the trader will have to use a wide range of percentages, like 33% to 38%.

Being a regular binary option trader one should not let the discussion on various percentage values confuse oneself. It’s better to go by the one third, two third, or a half, indication. If you are thinking of investing in high or low options, use percentage retracements in order to search for an indication of the impending conversion in the price direction close to the price levels. On the other hand, if you are investing in the touch options, use percentage retracements as the determining the distance a correction would move.

Bollinger Band-Fibonacci binary options strategy (60sec)

TABLE OF CONTENTS:

The Bollinger Bands, Fibonacci based binary options trading strategy works best for placing 60 second binary options trades. It makes use of Bollinger bands and automatic Fibonacci drawing tool.

Who is this strategy ideal for?

This 60 second strategy is a rather simple set up despite the complexity involved. The use of only the Bollinger band indicator, which is a trend/volatility indicator alongside the Fibonacci tool ensures that trades are placed in the direction of the trend on a retracement.

Bollinger Band-Fibonacci binary strategy Indicators

  • Bollinger Bands (20,2)
  • 1-2-3 Pattern Indicator
  • Chart Time frame: 1 minute

Downoad (1-2-3 Pattern MTF v3.1.ex4, 1-2-3-binary_scalper(ProfitFcom).tpl, 123Alarms.ex4)

Signals Bollinger Band-Fibonacci system

For Put Option

  • Visually scan the Bollinger bands. If it is sloping downwards, then the trend is a down trend
  • Wait for price to hit the 1.618 Fib level. It doesn’t matter if price closes at 1.618% or not
  • Place a Put option on the next candle with a 60 second expiry

For Call Option

  • Visually scan the Bollinger bands. If it is sloping upwards, then the trend is an uptrend
  • Wait for price to hit the 1.618 Fib level
  • Place a Call option on the next candle with a 60 second expiry

Bollinger Band-Fibonacci system – Examples

Put Option

  • The Bollinger band in the above chart is pointing downwards, so the trend is down and we look for ‘Put Options’
  • The 1-2-3 Pattern indicator plots the Fib levels and the candlestick denoted by the ‘Blue vertical line’ shows price hitting 1.618% Fib level
  • A put option is placed immediately after the candle closes, resulting in a profit

Call Option

  • The Bollinger band in the above chart was flat before turning upwards, indicating a change of trend so we look for ‘Call Options’
  • The 1-2-3 Pattern indicator plots the fib levels and we place a 60 second expiry contract as soon as price crosses the 1.618% Fib level
  • The call option placed results in a profit

Strategy Tweaks and Tricks

The strategy looks simple and robust on its own and therefore no further tweaks are recommended.

Conclusion

By combining the Bollinger bands for gauging the trend and momentum, and using the 1-2-3 pattern indicator to identify retracement, this is a rather safe strategy to trade. However, because we trade based off 1 minute charts, it is important choose most trusted binary brokers that trades are executed quickly.

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