Contents:Not so many trading strategies are multipurpose. Range trading strategy is one of the rare techniques, allowing not only trading on binary options but also using it in scalping and intraday trading.
What is a Range Trading?
Trading Range is quite a simple method based on standard technical indicators: Stochastic Oscillator and Parabolic Sar. The strategy can be used for different market conditions as well as several trading approaches.
A trading range occurs when a security trades between consistent high and low prices for a period of time. The top of a security’s trading range often provides price resistance, while the bottom of the trading range typically offers price support.
How to use Range Trading Indicators?
This trading system is suitable for any currency pair. The only requirement for the asset to trade on is the minimal spread, which is crucial for the scalping profitability. The best timeframes are M1 and M5. The most efficient binary options expiration term is 5 candles. It is always important to choose the right time for profitable trading due to the different volume and volatility periods. London and New York trading sessions are the most suitable periods for the Range system.
Risk management warning: the lot size or the option volume has to be chosen with consideration of the key money management rule - not to exceed 2-5% of your account balance in one single deal.
The settings for the indicators listed above have to be changed to ‘5,5,5, close’ for the Stochastic Oscillator with oversold and overbought levels at 25 and 75 respectively. Parabolic Sar parameters have to be set to 0.04, 0.1.
If you like this strategy, you might also be interested in this Reversal Trading Strategy
In case if you use the MT4 trading terminal, you should install indicators and the system template:
- Unpack the archive with templates and indicators;
- Copy the indicators and paste them in MQL4 - Indicators folder;
- The templates have to be pasted in the appropriate folder;
- Reload the terminal;
- Open the chart of any currency pair chosen;
- Install the template with the name ‘Range Market Binary Strategy’.
Trading signals to buy the CALL option are as follows:
Both lines of the Stochastic Oscillator cross the 25 level from downside up;
Parabolic Sar indicator’s dots are above the current price.
Trading signals to buy the PUT option are as follows:
- Both lines of the Stochastic Oscillator cross the 75 level from upside down;
- Parabolic Sar indicator’s dots are below the current price.
It is recommended to open deals in accordance with the general trend which can be determined on longer time frames.