Up & Down Binary Options Strategy

The up & down binary options trading strategy is a strategy designed for the Up/Down trade format, which chronicles up or down movements in the financial markets. The strategy utilizes the WATL Trendlines.ex4 indicator, but in a different manner than we have earlier described for this indicator.

Chart Setup

  • MetaTrader4 Indicators: WATL Trendlines.ex4 indicator (default setting).
  • Preferred Time Frame(s): 15 minutes, 30 minutes, 1 hour
  • Recommended Trading Sessions: Any time. Depends on when the indicator signal appears on the chart.
  • Currency Pairs: Any. It can also be used on other asset classes.

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TRADE Example (click the image for full size):

up-down-binary-options-strategy

Strategy

The WATL Trendlines.ex4 indicator will draw trend lines across the price highs and lows at various points. The unique thing about the indicator is that it is able to draw these trendlines across points of major and minor supports and resistance, and project same into the future.

These trend lines represent areas where the price action will bounce from one trend line to the other. Therefore the essence of this strategy is to continue to trade along the price bounces until a breakout occurs and nullifies this setup.

Two candles are used for this strategy. There are the numbered candles, which perform the initial test of the upper and lower trend lines, and then there are the entry candles. The entry candles will usually attempt another test of the key areas but will be rejected.

CALL ENTRY RULES

  • The first step is to wait for the projected trend lines to be traced by the WATL Trendlines.ex4 indicator. In other words, the indicator will trace trendlines into the future.
  • The next step is to wait for a candle to test the lower trend lines. If the candle does not break the trend line (i.e. touches the trend line but does not close below it), then this trend line is regarded as solid and can be used for the trade. The candles performing this action are seen on the chart as the numbered candles 1,2 and 4.
  • Allow the next candle to open and attempt a further move down to the trend line. Once the candle touches the trend line, set a CALL trade.

Expiry

The trade is setup in such a way that the entry candle is also the expiration candle. So the closing price of the candle has to be higher than the opening price for the trade to end in profit. The time frame of the chart determines the expiry time. For this example, we have used a 1 hour chart so expiry time is 1 hour.

Early Exit Strategy

Most platforms will only allow early closure when there are 15 minutes left on the trade. Early closure will therefore only be allowed if the minimum time frame used is 1 hour. If the trade is in profit at this time, it can be closed for a reduced payout profit.

PUT ENTRY RULES

  • The first step is to wait for the projected trend lines to be traced by the WATL Trendlines.ex4 indicator.
  • Wait for a candle to test the upper trend lines. If the candle does not break the trend line (i.e. touches the trend line but does not close above it), then this trend line is regarded as solid and can be used for the trade. The candles performing this action are seen on the chart is the numbered candle 3.
  • Allow the next candle to open and attempt another test of the upper trend line. Once the candle touches the trend line, set a PUT trade.

Expiry

The entry candle is also the expiration candle. The time frame of the chart determines the expiry time. For this example, we have used a 1 hour chart so expiry time is 1 hour.

Early Exit Strategy

If the trade is in profit on a 1 hour chart with 15 minutes to go, it can be closed for a reduced payout profit.

Free Download

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About The Trading Indicator

The WATL Trendlines.ex4 indicator draws clear trend lines across both major and minor support/resistance levels. This strategy should be practised on a demo platform before being used on a live account.

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