Contents:“+500” is a binary options trading strategy based on forex strategy with the same name. It uses a classic set of technical indicators. The main idea is to buy and hold for a long-term perspective, whether it is a CALL or PUT option. We use examples of EUR/USD as currency pair and 4 hours timeframe.
Overview of the "+500" Binary Options Strategy
The binary options way of trading is not intended to catch a long-term big trends. But there is a certain set of conditions, which allows us to buy options in the same direction several times and maximize the profit coming from a long-term trend. Various technical indicators have a nature of the trend confirmation and their main purpose is to show when the trend is going to continue. The combination of indicators used in this strategy allows us to continuously enter the market in the same direction until the conditions are favourable for that.
We’ll try to understand today how to define a trend continuation with a long-term perspective. We cannot call this binary options trading strategy as extremely profitable, of course, as negative positions could occur quite often. However, having several profitable deals for quite a long period is always positive not only from the money point of view, but it asl adds positive emotions to any trader.
If you like this strategy, you might also like this Vortex Indicator Trading Strategy
Just to add some statistics, this binary options trading strategy brought us roughly 87% of profitable positions in the previous year from May 2017 to April 2018.
Timeframe recommended is H4.
The currency pair to trade on is EUR/USD. This strategy is suitable for different other currencies as the authors claim. Still, we did not check out the multicurrency efficiency for this strategy.
The following technical indicators are used for this binary options trading strategy:
- Relative Strength Index with default period of 14.
- Parabolic SAR with both step and maximum value at 0.03
- Simple Moving Average with 70 period (MA70).
The conditions for CALL option are as follows.
One of the candles is closed above simple moving average with 70 period. All of the further actions have to be taken only if the price remains above MA70.
- Parabolic SAR indicator jumps below the price.
- RSI14 indicator is above 60 level.
- We buy CALL option right on the next candle.
- We can keep buying options in the same direction until the Parabolic SAR appears closer to the entry point. Once we see the Parabolic SAR has crossed the price, we stop buying CALL options.
The conditions to buy PUT option are as follows.
- One of the candles is closed below simple moving average with 70 period. All of the further actions have to be taken only if the price remains below MA70.
- Parabolic SAR indicator jumps above the price.
- RSI14 indicator is below 40 level.
- We buy PUT option right on the next candle.
- We can keep buying options in the same direction until the Parabolic SAR appears closer to the entry point. Once we see the Parabolic SAR has crossed the price, we stop buying PUT options.
There is one more additional option to this strategy. The same direction position can be considered in case if the price at least touches MA70 on the pullback. Ideally, it’s better to see the price crosses MA70 and comes back after that.