Those are the reasons why experienced traders always check a trading signal for a confirmation from another indicator based on different approach. An oscillator would be the best option for that purpose.
William’s Percent Range binary options trading strategy is a bit unusual in that sense. The key indicator here is based on oversold and overbought levels, while the second one is a slow tool with a trend nature. The main difference is that it’s a breakthrough strategy. Have you ever noticed that a trend has a sudden acceleration once breaking a certain support/resistance level? Have you seen a price action of a currency pair which loses the ground after several attempts to clear a strong level where a huge volume of postponed orders is placed? The market is full of similar events, and that’s the key idea of William’s Percent Range binary options trading strategy.
The fundamental explanation is quite simple for such an event, and it’s based on bid/ask relations (supply/demand). Let’s imagine that a significant volume of postponed orders is placed above a certain horizontal level of the price. Once the market approaches that level, trading stations start executing postponed orders, dramatically increasing the volume of supply and offers. After a volatile price action, the market goes through that level in case if demand volume is able to engulf and beat the supply volume. The price jumps in a blink of an eye, accelerating the bullish run for a number of pips without any resistance from the sellers' side, as the offer is limited due to the lack of supply at that particular price range. This is exactly a scenario which suggests using William’s Percent Range oscillator, as it clearly shows the entry point according to the price action described above.
The secondary technical tool here is MACD, however, the default settings have to be modified in order to avoid false signals. Instead of standard parameters of 12,26,9 as main periods of MACD trend indicator, settings of 26,34,14 should be implemented for this trading strategy. That helps to enlarge the overall period of technical analysis for MACD, comparing a wider term before making the conclusion of the trend direction. Remember, that CALL signal occurs when MACD is above its zero level and PUT signal happens when MACD is negative. Other options are not considered and William’s indicator is ignored otherwise.
The main indicator for this trading strategy is Williams %R with modified settings as well. The typical period is 14, including Williams, for any oscillator, however, the statistic shows that the effect grows exponentially if the period is enlarged to 28. Williams %R shows the price momentum, moving in the range of 0 to -100, and comparing the recent closing highs/lows relation ratio. Of course, like any other oscillator, Williams %R is supposed to signal market reversals, pointing to overbought and oversold levels. Nevertheless, this strategy’s signal for CALL options occurs when Williams %R crossed upwards the Level -20. The PUT options should be bought when the price crossed down the Level -80. This oscillator’s effectiveness is based on measuring overbought and oversold ranges in relation to the previous high/low close periods.
The strategy is suitable for any currency pair among majors and exotics. However, it's always battered to use a trading strategy based on technical indicators for assets with larger trading volume. Therefore, such currency pairs are suitable: EUR/USD, GPB/USD and USD/CHF. All of those are vulnerable to the scenario described above, hence, the effectiveness of William’s Percent Range binary options trading strategy would be higher. The restriction is in the timeframes, which must be larger than M30 in this case. The best timeframes, according to statistics, are H1, H4 and D1, as shorter timeframes suggest a larger number of fake trading signals.
If you like this strategy, you might also be interested in this Vortex Formula
There are two conditions of exiting the market, according to William’s Percent Range binary options trading strategy. The first one recommends closing current positions manually if MACD indicator crosses the zero line from above (for long positions) and from below (for short positions, respectively). Another option to stop buying options in the same direction is when the price reaches a certain level of profit. The target profit for H4 timeframe is 60 pips for EUR/USD, 70 pips for GBP/USD and 40 pips for USD/CHF. The daily timeframe suggests a wider range of targeting the profit: 200 pips for EUR/USD, 250 pips for GBP/USD and 150 pips for USD/CHF. Remember, that all of the number listed above have a recommendatory character and have to be tested additionally on a demo account, as they depend on volatility and liquidity market conditions.
You may find an example of William’s Percent Range binary options trading strategy in action on the chart below: