Bollinger Band Binary Option Trading Strategy
One of the Best Binary Option Trading Strategies that Work
If you go online these days and search for binary option trading strategies that work, you’ll be presented with a long list of results that you won’t know where to begin. Some of the search engine results talk about trading strategies for beginners, while others are more suited for trading experts due to their complexity. Sifting through all these strategies and finding out which works and which ones do not can be a tedious task. Here, you will learn about one strategy that will give you a trading success rate of 70%-80%. This has been tested and proven by trading experts. In other words, it really does work.
Bollinger Band Strategy
As one of the best binary option trading strategies that work, the Bollinger Band trading strategy basically anticipates the subsequent movement of a particular asset via the data that is supplied by the 4 binary option trading indicators. These indicators are as follows:
• Bollinger Band
• 20 Simple moving Average (SMA)
• 13 Exponential Moving Average (EMA)
• 26 Exponential Moving Average (EMA)
One thing to know about these indicators is that they are usually generated accordingly by the binary options broker’s charting programs. Always look for binary options brokers that make these indicators readily available. If not, you won’t be able to make use of this particular strategy.
Looking at the aforementioned indicators, the 20 SMA, the 13 EMA and the 26 EMA manifest themselves as three lines that move around the line that represents that asset in the charting platform. On the other hand, the Bollinger band manifests itself as two parallel lines in the charting platform. The middle of these two parallel lines represents the average value of the three aforementioned indicators.
What the Bollinger band basically indicates is the upper and lower threshold of the position of the other three indicators. Think of this like a sandwich, the two slices of bread is the Bollinger band, while the three indicators (20 SMA, 13 EMA, 26 EMA) are the filling.
As was mentioned earlier, the power of this strategy comes from its accurate anticipation of the subsequent movement of an asset. To use this strategy, make sure that the indicators are activated on your charting interface first. Then, you’ll have to look out for 3 things:
• The 26 EMA indicator will cross over to the 20 SMA indicator and will then proceed to cross over to the 13 EMA.
• The 13 EMA will cross over to the 20 SMA
Take note that once both of the aforementioned takes place, there’s an 80%-90% chance of that the asset’s value will either go beyond the top or the bottom threshold of the Bollinger Band.
You should be able to tell whether it’ll go beyond the top or the bottom threshold. The threshold that the asset’s value will cross can be predicted by looking at the general movement of the three indicators that previously mentioned in this article. If the asset’s value is moving upwards, then it is highly likely that it will cross the upper threshold. If the direction of the asset’s value is downwards, then it is highly like that it will cross the bottom threshold.
Applying the Bollinger Strategy
After discussing what the Bollinger strategy is all about, the next step would be to learn how to use this particular binary option trading strategy to your advantage. Take a look at an example of a trading position below:
➢ The FOREX rate of USD/JPY is valued at 1.55
➢ The Bollinger band’s upper threshold is at 1.61
➢ The Bollinger band’s lower threshold is at 1.50
Assume that you noticed that the 13 EMA crossed over the 20 SMA. The 26 EMA also crossed over the 20 SMA and is about to cross over to the 13 EMA as well. In addition, you also noticed that the general direction of these three indicators is downwards.
Seeing this movement as it happens, you now know that in the next 20-30 minutes, the FOREX value of USD/JPY will drop below the Bollinger band threshold. In other word, it’ll drop below 1.50. Don’t forget that after a certain amount of time, the value of this asset will again return back to the middle of the Bollinger band or the average value. In this particular situation, you have two choices:
1. Purchase a basic low/high option and bet on the prediction that in the next 20-30 minutes or so, the value of the underlying asset (USD/JPY) will go below the average value — in this case, 1.55.
The beauty about this choice is that it is less risky since the chance of the value’s asset going down is very high within the indicated timeframe. The trading value of the asset reaching a particular rate is not relevant, since a low/high option is chosen in this example. What matters is that its rate will soon decrease — and likely so, based on the data that this strategy is showing you.
2. Purchase a one-touch option or boundary option and capitalize on the fact that the rate of the USD/JPY FOREX will hit a low threshold of at least 1.50. Keep in mind that utilizing this strategy in most cases will give you the ability to foresee that the asset’s value will go below the 1.50 threshold in the next 20-30 minutes.
This particular option, however, is a little bit risky because you will not know when exactly between 20-30 minutes that event will occur. However, buying a one-touch or boundary option can offer you tremendously high payout values reaching at about 500%. If you want to be on the safe side and you’re just a beginner, just buy a normal low/high option for now.
This is just one of many binary option trading strategies that work out there. What sets this apart from the others, however, is its rate of effectiveness, which is rather high at 70%-80%. Keep in mind that binary options trading is never about luck, it’s purely about knowledge and strategic thinking.
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