“Channel Trend” is a strategy for binary options in which systematic trading approaches to technical analysis and indicator type strategies are combined. Objectively, it should be said that this strategy is not the Holy Grail of financial markets and won’t let you earn all the money in the world, but its effectiveness in 85%, and its stability allows you to get good results on the binary market. The basis of the system is the principle of registering contracts in price channels with the use of auxiliary indicators. All the details of this system will be discussed further in this material.
Trading and technical requirements of the system
The construction of channels and the use of technical indicators call for some requirements for the trading platform. In addition, we need to properly manage risk and working capital. On the basis of this, the trader needs to ensure the brokerage company’s terminal has the following specific list of trading and technical capabilities:
- The ability to apply indicators to the trading chart
- The presence of chart services on the broker’s platform
- The minimal possible trading conditions
- Speedy execution of orders
- Precise quotes of the underlying asset
The Binomo company is the binary options broker ideally suited for such parameters, with a list of services and trading conditions which include the following:
- A professional platform for binary trading with an integrated set of chart services and indicators
- Trading conditions with minimum values, suitable for any trader: initial transactions from 1 USD, minimum trading accounts from 10 USD
- Precision quotes of underlying assets
- Orders processing in 1.7 ms
In addition, the company offers a wide range of support services, among which are professional training and effective daily analytics.
Template for the “Channel Trend” strategy for binary options
First, we set the strategy indicators on the quote chart: RSI and MACD in a standard configuration, then we build the channel where the price will fluctuate with the help of the specialized Binomo platform service. The principle of the channel is classic maximum and minimum quotes. As a result, the trading chart of the underlying asset will have the following markup:
This combination of analysis tools will provide a clear, formalized trading signal to register the binary option. In the “Channel Trend” strategy, indicators act as a means of false alarm filtering, which allows you to increase the efficiency of channel trading and receive more pronounced signals while trading.
The “Channel Trend” strategy for binary options – signals to register transactions
The signal system for binary options contracts UP:
- The RSI indicator shows an upward trend of building moving averages
- The histogram of the MACD indicator begins to build above the zero level, and the oscillator lines intersect in an upward direction
- The asset price touches the lower border of the trend channel
The signal system for binary options contracts DOWN:
- The RSI indicator shows a downward trend of building moving averages
- The histogram of the MACD indicator begins to build above the zero level, and the oscillator lines intersect in a downward direction
- The asset price touches the upper border of the trend channel
Registration of contracts according to the system signals should be done before the breakdown of one of the channel boundaries. After the formation of such a situation on the market, the trend channel loses its relevance and it will be necessary to build a new quote fluctuation channel to continue to use the system:
Moreover, the breakdown of the channel can also be used as an effective signal to register a short-term option.
Expiration
The duration of the trading strategy signal allows you to use contracts with expiry times of up to 5 minutes. This time period allows the asset quotes to substantially deviate from the position registering level, and does not let the price go back to the area where it will incur losses on the transaction.
Money management
The “Channel Trend” strategy for binary options, despite the high level of signal efficiency, sometimes falters and brings losses. To ensure the level of damages does not destroy your balance, you must use small amounts of funds to register each contract. The optimal level of risk for trading on the system is 3% of the amount of funds in the trading account.
