Price Action strategies for binary trading
Systems based on the principles and forms of technical analysis are quite difficult to understand for those new to binary trading, as they are required to have certain skills, experience, and knowledge in financial trading processes. However, there is a list of simple strategies, Price Action, which can effectively be used by beginners for highly productive trading. In this article, we will provide a set of these strategies to expand the analysis potential of beginners.
Technical analysis - trading on trend levels
This type of trading strategy, Price Action, is built on the simple laws of quote movement, and uses the principle of price reaction on the achievement of certain market levels.
When quotes fluctuate they build so-called trends - movement in a certain direction. Moreover, these chart builds are accompanied by the formation of levels from which quotes constantly rebound and change their direction of construction.
Depending on the direction of the trend, these levels are known as resistance or support levels. Identifying them is simple - use the chart tool "Line" to connect either quote highs or quote lows.
Trading on a technical analysis strategy of this type is carried out during the formation of quote rebounds from the trend level, or at a breakthrough of the level:
Price Action strategies based on trend levels have another effective configuration - trading in the channels. This also uses the trend levels of price fluctuations, which limit the range of price fluctuations. The principle behind registering contracts in a channel strategy uses the classic parameters of trading on trend levels - contracts are drawn up on the rebound from the level, or on the breakthrough:
Price Action strategies - trading in consolidation zones
This method of predicting quote movement is based on the use of periods on the trading chart where the price of an asset reduces its movement activity and forms a zone of low volatility. These zones are formed when the price achieves significant market levels, or before or after impulsive market movement:
Contracts should be registered on the breakthrough of the consolidation zone toward the forecast in the direction of the breakthrough:
This approach has the highest accuracy of trading signals and leads to a stable outcome of dynamic capital growth.
A Price Action strategy - candlestick patterns
This area of technical analysis uses the patterns of quote construction in the Japanese candlestick format. Here, there are many different patterns and forms of trading signals. We will describe the most simple yet effective model of candlestick patterns - "absorption." This pattern is formed by radical reversals of quote trend fluctuations, or the end of price correction movements. Candlestick "absorption" patterns on the trading chart look as follows: a quote candlestick in trending downward movement completely blocks the previous candle with its body in the opposite direction of trend movement:
For trend reversals up, the candlestick model looks as follows:
The Price Action strategy “Candlestick pattern of absorption" uses the simplest principle and configuration of signals for the registration of contracts. Transactions are opened towards the trend reversal identified by the candlestick pattern:
This list of Price Action strategies will provide for contracts on the market that are on average 85% effective. But when using them, don’t forget the rules of money management, which will protect your trading capital from losses.
These are fairly simple rules limiting the volumes of trading positions. The classic parameters of effective money management have the following parameters - the maximum value of contracts are limited to the level of 5% of the amount of funds in the trading account. It's simple, but in this regard, it is necessary to have a certain amount of room to maneuver. The fact is that brokers’ trading conditions restrict traders in terms of the effectiveness of money management by placing excessive demands on the initial deposit and the value of contracts.
We recommend the Binomo broker who provides the most optimal trading conditions with minimal parameters - an account from 10 USD, and the value of contracts from 1 USD.
Such trading conditions would allow the trader to properly manage risk and capital, as well as provide an opportunity to start trading on a minimum investment.