Binary Options Bounce Trading Strategy

The wedges indicator is basically an indicator with the ability to trace out multiple patterns on the binary options price chart.

This enables the trader to get a chance to trade several trade opportunities that would otherwise not be very visible.

The patterns traced by this indicator are usually channels, triangles and wedges.

Some knowledge of how price action behaves in the context of each individual pattern is required to trade this strategy successfully.

Chart Setup

  • MetaTrader 4 Indicators: wedges.ex4 indicator (default setting)
  • Preferred Time Frame(s):  M1, M5 M15, M30, H1, H4
  • Recommended Trading Sessions: Any time. Depends on when the indicator signal appears on the chart.
  • Assets: Any

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Download the Binary Options Bounce Trading Strategy

Trade Example (click the image for full size):

Strategy

The strategy here is very simple. Place the indicator on the chart and allow it to trace whatever patterns it finds on the chart.

Each pattern will have a period of price breakout. But before this period occurs, price will bounce within the borders of each pattern.

Therefore, the binary trader can trade these price bounces as well as the eventual breakout which occurs.

This is shown in the example to be described above.

CALL ENTRY RULES

A Call entry is initiated when the following is displayed on the chart:

  • A preceding candle on the chart bounces off the lower trend lines as defined by the wedges.ex4 indicator. These candles are seen at points 1,2,3 and 4.
  • Open the Call trade when the next candle commences.

Expiry

The expiration of the trade is set at the closing price of the candle which comes after the entry candle. Trade duration is therefore 2 candles in length. The time chart will determine how many minutes of trading this translates into and for this example taken from a 15-minute chart, this translates to 30 minutes.

Exit Strategy

  • It is possible to close the trade early if a time chart longer than 15 minutes is used. This will involve closing the trade manually when the trade is in profit, but comes with a reduced payout.

PUT ENTRY RULES

A PUT entry is initiated when the following is displayed on the chart:

  • A bullish candle is rejected at the upper trend line (i.e. does not close above this trend line). This scenario is seen at the points marked 5,6 and 7.
  • You can also enter a PUT trade when there has been a downside break of the lower trend line as seen at Point 8. In this case, the trader should allow a pull back of price to the broken trend line and then initiate a PUT trade as soon as the pull back candle has touched the lower trend line, which now acts as a resistance line.

Expiry

The expiration of the trade is set at the closing price of the candle following the entry candle, which is 2 candles in length. The time chart will determine how many minutes of trading this translates into.

Exit Strategy

  • It is possible to close the trade early if a time chart longer than 15 minutes is used. This will involve closing the trade manually when the trade is in profit, but comes with a reduced payout.

Free Download

Download the Binary Options Bounce Trading Strategy

About The Trading Indicator

The wedges.ex4 indicator is a pattern tracing indicator.

There is a tendency for trader to take trades carelessly by not waiting for appropriate bounces or breakouts of price action.

Entry parameters must be adhered to very strictly to get the best possible results.

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