The Butterfly strategy is a strategy for buying binary options in the direction of the main price movement based on a signal from the indicator. Entry into the market is carried out when the indicator gives a signal of a price increase or decrease, and an additional indicator confirms it. The strategy can be used on any timeframe and is recommended for all beginners, regardless of their level of understanding of the market.
Characteristics of the Butterfly strategy for binary options
- Terminal: MetaTrader 4 .
- Timeframes: from M5 and above.
- Expiration: 1-5 candles.
- Types of options: Call/Put.
- Indicators: Butterfly Forex Signal.ex4, Butterfly Forex Trend.ex4.
- Trading instruments: currency pairs , stocks, cryptocurrencies , commodities.
- Trading hours: 12:00-20:00 Moscow time.
- Recommended brokers: Quotex , PocketOption , Deriv .
Installing strategy indicators for Butterfly binary options in MT4
Indicators are installed as standard in the MetaTrader 4 terminal.
MetaTrader 4 instructions for installing indicators:
A template for setting up the Butterfly strategy can be downloaded for free at the end of the article.
Review of Butterfly strategy indicators for binary options
The strategy uses two indicators: Butterfly Forex Signal and Butterfly Forex Trend.
Butterfly Forex Signal is the main indicator that signals a rise or fall in price. Signals on the chart in the form of green or red squares, according to the author, are not redrawn or disappear in real time.
The indicator settings are not of particular interest and only allow you to enable or disable notifications (alerts). All alerts are enabled by default.
The Butterfly Forex Trend indicator is located in the lower right corner of the chart, its information panel shows: the direction of the main price movement - trend , trend strength (Trend Strength), current price (Current Price), time until the opening of a new candle (Next candle in...).
The most important data of the indicator is the direction of the trend: up – green triangle; down – red triangle; sideways price movement ( flat ) – gray square. This data is used to filter the signals of the Butterfly Forex Signal indicator; they will show the main direction of the trend, or, in the case of sideways price movement, its absence.
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Geometric shapes are easily perceived visually and can be useful to traders who simultaneously consider a large number of financial assets, for example, currency pairs .
The indicator input parameters allow you to change the location of the information panel, color, font, as well as enable or disable notifications (alerts):
Trading rules for the Butterfly binary options strategy
The rules of the strategy recommend waiting for a signal following the main market movement. Options are purchased only in the direction of the trend, which allows you to reduce the number of losing trades to a minimum. Entry points are formed solely by the indicator, and built-in alerts simplify the trading process.
Buy Call (“Higher”) : the information panel shows the direction of the trend up (green triangle), a green square of the Butterfly Forex Signal indicator has formed.
Buy Put ("Below") : the information panel shows the direction of the trend down (red triangle), a red square of the Butterfly Forex Signal indicator has formed.
In all other cases, it is recommended to refrain from opening a transaction and wait for the next signal.
The choice of timeframe is limited only by the activity of the trader himself: according to the indicator signals, you can work both on fast M5 timeframes and on medium-term timeframes from H1 and higher.
For successful trading, it is recommended to choose the most volatile time, which is usually observed at the intersection of the American and European trading sessions .
The expiration time is very flexible, and depends primarily on the trading style: if you prefer quick profits, an expiration of one minute or less is recommended; if we consider longer transactions, the expiration time is from three to five candles.
Conclusion
There are a huge number of strategies for buying binary options, the rules of which will be clear even to a beginner. Due to its simplicity, trading using indicator signals is becoming more and more popular even among experienced traders. The reasons are obvious: trading using signals is much simpler, better and faster, and in some cases even more profitable.
The effectiveness of the strategy has not been tested in real time. The described rules for opening transactions are for informational purposes only. Before using this strategy, we recommend testing its effectiveness on a demo account , and only after that move on to choosing a good broker and trading on a real account.
Download the Butterfly strategy for free
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See also:
Binary options trading platforms
What novice traders need to know about binary options
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