The Caiman binary options strategy is a proprietary tool based on trend analysis methods. Despite the fact that there are many similar developments on the market, this solution provides traders with new options for behavior on the exchange.
The strategy is based on the Alligator and Aroon indicators. Each of these tools is used to work on long-term positions during a period when the trend line does not change its direction. Both indicators allow you to determine in which direction the market is currently moving. At the same time, the Alligator is considered a more promising trend instrument due to its strength and significance.
To work with the Caiman strategy, you need to set the Length indicator of the Aroon indicator to 14. Alligator is configured as follows:
- Jaw Length - 21;
- Teeth Length - 13;
- Lips Length - 8;
- Jaw Offset - 8;
- Teeth Offset - 5;
- Lips Offset - 3.
A number of platforms do not support the Aroon indicator. And to take advantage of the opportunities that the Caiman strategy provides, it is preferable to work on a live chart .
How to apply this strategy for binary options
To understand how to apply this trading strategy in practice, it is necessary to consider separately both indicators on the basis of which the Caiman strategy is built. Alligator consists of three lines: red - teeth; blue - jaws; green - lips.
The indicated curves are located sequentially on the graph. The direction shown by the Alligator indicates the current (upward, downward) trend in the market. In other words, if this indicator is used in trading, then as soon as it opens up, it is necessary to open positions only to buy (call options). Conversely, when the Alligator opens down, you should sell assets (put options).
The conditions described above remain relevant when working with the Caiman strategy.
The main feature of Aroon is that it is only effective in strong zones (in the range of 85-100 and 0-25). When indicator lines are located sequentially in the named areas, they indicate the current direction of the trend.
Both tools are highly effective in predicting trends. However, they are not without certain disadvantages. In this regard, when using the Caiman strategy in stock trading, you must adhere to several mandatory rules.
Strategy signals for buying PUT options
A signal for making trades (put) on a downward chart is the achievement of the following conditions:
- The Alligator shows a clear sequence of downward trend. This is indicated on the graph by blue, red and green lines, located in that order from top to bottom.
- The blue line of the Aroon indicator is located in the range of 85-100, and the orange line is 0-25.
Strategy signals for buying CALL options
When working with an upward trend, both indicators should display the opposite indicators:
- The purchase of a Call option is indicated by the green, red and blue lines of the Alligator indicator, located in this order from top to bottom.
- The orange Aroon line ranges from 85-100, and the blue line ranges from 0-25.
At the same time, you need to understand that the trader assumes all risks. The Caiman strategy is not capable of consistently providing accurate signals for binary options .
Determining the expiration time of options
One of the main features that trend indicators have is that they allow you to work over long time periods with the selected asset. This means that if the trend is confirmed by the Caiman strategy tools, we can talk about the formation of a persistent and impulsive trend.
Moreover, this strategy involves trading only with highly volatile assets. Therefore, when the Caiman strategy is used to work with binary options, the time period is set approximately 10 levels ahead.
In particular, when during analysis the time frame is set to 30 minutes, then the asset should be purchased with an expiration of 300 minutes (5 hours). During this time period, the trend gains the necessary strength, which ensures the success of the transaction.
Advantages and disadvantages
The main disadvantages of the Caiman strategy include the fact that it provides few signals for binary options trading. Therefore, it is recommended to use it only in a trending market.
The main advantages of the Caiman binary options strategy include the fact that the signals of this strategy are very accurate and this approach allows you to earn consistently in the long term.
It is recommended to first test all new strategies for binary options on a demo account.
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