The “Third Candle” strategy is a principle of forecasting the market for binary options trading which uses a combined signal based on the signals from the standard MA trend indicator and patterns of quote building. This format of analysis allows you to open trading bets on the binary market at the most favorable price positions and leads to regularly positive expiration outcomes for up to 85% of your binary contracts. Such performance statistics for the “Third Candle” trading system make it possible to achieve growth dynamics for your trading profit at the level of at least 200% in a week.
The “Third Candle” strategy – technical requirements
Using this system on the binary market will require the use of a high-tech, professionally equipped trading terminal offering the following list of services:
- The availability of an indicator set
- Quote building in the form of Japanese candles
- A service for configuring the timeframe of the operating chart
- High-precision quotes
- Contracts with high profitability
- High speed trading operations
- The minimum trading conditions
On this issue, we offer our professional advice – we suggest carrying out your binary trading processes on the resource of the licensed Binomo broker, which offers the optimal trading conditions and a terminal with all the necessary services and instrumentation:
- A set of high-precision indicators integrated into the platform
- “Japanese candles” mode for chart building
- A range of available timeframes – from 5 seconds to 5 minutes
- The most accurate quotes
- Level of bet liquidity – 87%
- Speed of trading operations – 1.7 ms
- Trading condition parameters – the initial cost of a contract is 1 dollar, the amount of an account starts at 10 dollars
So, the “Third Candle” strategy uses for forecasting an automatic algorithm that determines the average figures for asset price and trend direction – the MA indicator in its standard configuration. As a signal pattern for registering bets on the market, the strategy uses patterns of market movement at moments of asset quote breakthrough of the technical moving average of the MA indicator. This pattern is the return of the price of the underlying asset to the level of the indicator after its breakthrough, which, in 85% of cases, occurs on the third candle after the breakthrough of trading quotes. In practice it looks like this:
The rules for registering bets on the signals of the forecasting system are quite simple. For a trading operation with a bet UP, it is necessary to wait for the moment of the asset quote’s breakthrough of the indicator’s moving average upwards, and on the opening of the third candle following the breakthrough, we open a trading contract:
We carry out operations with options DOWN when the pattern forms in the opposite way: the price of the asset breaks through the level of the MA indicator downwards; on the opening of the third candle of trading quotes we register the contract:
After studying the history of the market, you can notice the high cyclicality of the formation of the pattern of the “Third Candle” strategy, as well as the accuracy of the forecasts that it forms.
Expiration and money management
When determining the optimal expiration range for profitability and trading efficiency, follow a simple rule – after registering a bet on trading quotes, at least 5 candles should be formed. That is, on the technical timeframe M1 this expiration range will be 5 minutes. An important caveat – do not use this strategy on minimal timeframes where quotes have the highest dynamics of candlestick building. In this format, the level of market forecastability is significantly reduced, which will not allow you to obtain stable positive trading results. The optimal timeframes for trading are M1 and M5.
A secure mode of risk management for trading on the “Third Candle” strategy is achieved through the use of trading bets with the minimum amount of funds involved. For initial-size accounts, we use bets of $1; for trading accounts with large amounts of funds, we use bets with risk limited to the level of 5% of the amount of capital.