› Monday Price Action Trading Strategy - How It Works

Monday Price Action Trading Strategy - How It Works

“Monday” is a price-action-based strategy, designed to collect trading opportunities from the potential retracements in Monday’s sessions. In this article, you will learn how to apply this strategy to profit from the binary options market.

Overview of the Monday Price Action Trading Strategy



As it was named, this technical strategy (more like a trading technique) is only used to trade on Monday. The principle of the Monday is pretty simple: trying to seek trading opportunities from short-term corrections that usually happen at the beginning of the week. It’s fully based on understanding price action and requires no additional indicators to support during the trading period.

Most interestingly, despite the simplicity, the Monday is a very astute technique which offers a very high win-rate because it takes advantage of a very simple thing: traders often have a tendency to finish up their trades on Friday of the previous week and start a new week trying to catch retracements. Nevertheless, this strategy also contains critical risks as it’s more like a counter-trend strategy, and that means its users may face troubles when trying to catch corrections against smooth and sharp trends developed earlier.

After being tested from January to October 2017, the Monday trading technique’s win ratio has so far been confirmed at 84.54%. There are of course four signals on Mondays of the month, and that may cause active traders bored. If you an aggressive trader, we suggest that you should use another more active strategy alongside.
Let’s review some practical examples to see how to use this strategy correctly.

How to use the Monday Price Action Trading System to Trade Binary Options



The system works best on the 1-day chart and on the Euro – Greenback pair.
In order to confirm a bullish trading opportunity valid, the last day candle of the prior week (Friday candle) must be closed with a bearish body. Right after the beginning of the market on Monday, you should open a buy position in defiance of whether the market opens with a gap or not.

Monday Price Action Trading Strategy - How It Works


On the contrary, to affirm a bearish trading occasion valid, the last day candle of the previous week (Friday candle) must be closed with a bullish body. Right after the beginning of the market on Monday, you should open a sell order regardless of whether the market opens with a gap or not.

Monday Price Action Trading Strategy - How It Works


There are some rules when trading with this technique:
  • Only one transaction should be implemented at a time.
  • The candle of confirmation must be fully closed in order to confirm a signal usable.
  • If the previous week’s development shows a robust trend, you should trade with caution.
  • The order’s expiration is set at the end of Monday.
  • The maximum risk for each transaction shouldn’t be more than 3% of your total balance.


Pros and cons of the strategy


Pros
  • Simple, easy-to-use and flexible.
  • Delivers high-quality signals.
  • Requires no supportive indicators.
  • Highly suitable to market participants that don’t have much time to trade.
  • Can be used as an additional strategy.

Cons
  • Requires a high level of patience.
  • Involves risks of a counter-trend trading method.


Conclusion


Lots of binary options traders love a technical strategy that allows them to trade with fixed rules and timing. Finally, it’s here. With a high win-rate in additional to prominent advantages compared to normal price action trading strategies, we believe that the Monday will be a great tool that helps make additional profits alongside active systems. However, as we have mentioned, you should use it cautiously because it involves risks of a counter-trend trading method. Don’t forget to stick with its rules and combine risk and psychology managing methods during the using period.


Read also

You have successfully registered

You can choose the needed type of account at any time!