Strategy › Trendline Trading Strategy - How use Them

Trendline Trading Strategy - How use Them

Binary options trading is an extremely interesting but also difficult job.
A trader participating in the binary options industry at least must equip himself with the minimum trading knowledge, otherwise, he will be wiped out sooner or later. Knowing how to define trending market conditions without using repainting indicators is a must amid the minimum technical reading knowledge.
If you haven’t know about it, this article will guide you how to determine a trendline using just manual drawing..

What Is a Trendline?


In this article, we are discussing how to identify trends by manually drawing trend lines, hence, we will focus on this subject and put aside the methods to spot other market conditions.
Before starting to draw a trendline, a series of highs and lows must be ascertained. You need at least 3 swing peaks and nadirs to validate a trend line.
Trend lines are practical tools for tracking and trading trends. It makes sense to form trading strategies with this simple but useful tool.

Trendline Trading Strategy - How use Them

This is a perfect bullish trend since there are many points lying on the lower trend line. A trend composed of two parallel trend lines is called “a trending channel”.
Now, let’s find out how we can make profits from a defined trend.

How to use trend lines?


After determining a trending channel, your next work is to take advantage of it. Luckily, trends appear in any trading time frames and on any financial assets, including currency pairs.
Buying opportunities are present when prices approach the lower trend line of an uptrend and tend to rebound from it.

If you like this strategy, you might also be interested in this Darvas Box Trading Strategy
Trendline Trading Strategy - How use Them

Conversely, selling occasions are determined when prices approach the upper trend line of a downtrend and tend to bounce from it.

Trendline Trading Strategy - How use Them

Bullish entries also appear when a downtrend is breached. On the contrary, bearish signals are present when an uptrend is broken.

Trendline Trading Strategy - How use Them

There are some important entering rules when trading with trend lines:

  • Only one position should be opened at a time;
  • The pump candlestick must be fully close before a signal is confirmed valid;
  • In a bullish trend, only buying signals are traded except the trend is broken. Similarly, only selling occasions should be traded in a bearish trend, except the trend is breached;
  • The expiry time should be established 6 times larger than the trading time frame. For example, you can set the finishing time to be 6 hours when trading on the 1-hour chart.

Pros and cons of using trend lines to trade


Pros:

  • Easy-to-use, general-purpose;
  • Generating highly accurate trading opportunities;
  • Enabling traders to grab a string of signals from long trends.

Cons:

  • Requiring a high level of patience;
  • Requiring a proficient technical analysis level.

Conclusion


Trend-following is proven to be the most effective trading theory by professional binary options traders.
Successfully spotting nice trends, you could generate profits in the long run and make a lot of money.
Failed to define trends, you will soonly be filtered out of the trading cycle.
Anyhow, always remember to apply risk controlling and psychology managing methods when trading because no trader can survive market fluctuations without stably maintaining his balance and his cold head.


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