Flat binary options trading strategy

Binary options allow a trader to make money by predicting market prices. In other words, the trader bets that prices will go up or down. Some may mistake this for a typical gambling game, but this is far from the truth. If you want to trade options, then you will need to approach this matter with great seriousness and acquire certain professional skills.

Rules for trading Binary options in flat

It is generally accepted that the market operates in flat mode most of the time. Literally 30% of the time during trading there is a directional movement, the remaining 70% of the period the market spends without hesitation. Consequently, a well-honed skill in determining a flat will allow you to trade Binary Options much more effectively.

What does flat mean?

However, it is worth understanding the main differences between a flat and a trend movement. The concept of trend has two variants. Upward and downward trend. The first means the order of increasing extremum. Directional movement is created by an imbalance of buyers and sellers, due to which the price of options will increase or decrease. When flat time comes, the balance of buyers and sellers normalizes, so the price no longer updates past lows and highs.

If you see that the chain of ascending highs or lows is broken in the upward direction, this is a clear signal to start a “sideways movement.” You can also determine a flat when the price strengthens. This can be understood as the time of correction of movement within the boundaries of the general trend, or the horizontal direction during a reversal. During the accumulation or distribution phase, a process of consolidation can often be seen. During accumulation, flats usually occur at reversal lows and represent the stage of volume accumulation before a jump. The distribution phase is explained as an increase in volumes before a decline, and usually looks like a brief horizontal movement. You can detect the start of a sideways movement by two peaks and two holes present within the last wave.

RECOMMENDATIONS

If you want to quickly and correctly determine a flat, then you will need to draw a couple of horizontal lines on the chart. They will indicate the level we need. After determining the boundaries of support and resistance, a flat can be found quickly by simply looking at the price movement between the two lines that will form the channel zone. After the chart line hits the channel, events can develop according to 3 scenarios:

1. the price will go beyond the channel;
2. will fight them off;
3. the range will expand.

Be sure not to confuse it with an inclined channel. Since it is a trend movement, and its main task is to update past extremes.

The purpose of a flat is to move the chart horizontally when there is no clear direction. As you can judge from the data, the price usually rests on the level rather than breaking through it. Therefore, it is recommended to trade only at the end of the day. In the event of a channel breakdown, this will mean the destruction of the created square channel shape.

However, as it may seem at first glance, flat transactions also have certain risks, so you need to know exactly about all the nuances. In this situation, trading makes your task much easier because it does not require a large price jump to generate income.

The most important rule is never act before confirmation! Even if you are waiting for a rebound from the level. It is not recommended to enter trades quickly until the price touches any edge. The final verdict on entering the market should be taken only after the candle closes at the moment when the price fixes at the same level. Watch the edges of the channel so that there are no places where volumes accumulate, as this is a signal for a possible breakdown.

Another aspect worth considering is the selection of the best period for transactions. It is foolish to trade during an active market. For example, you can take the European or American sessions, at this moment the number of trades increases and at the start there is a rapid change in direction. Also, you should not enter into transactions when this trend receives fresh volumes. The presence of small changes in the market is the most favorable time for a flat. At these moments, the market is tuned to better forecasting, and is better positioned to move in a horizontal channel.

Examples on graphs

The trading level is clearly determined by barely noticeable extremes on the chart. For better handling of the chart, it is recommended to apply the ZigZag indicator. Next, set horizontal lines along the bodies of the candles at the points where the ZigZag peaks appear. At these points there will be resistance to the price, which does not exclude an impact on the price in the future.

When the price enters the channel, the candle closes inside two horizontal levels. You will need patience, wait for the entry signal when the candle touches one of the two edges of the channel. When you touch the bottom one, we go for a rise, and if it touches the top one, we go for a fall. The signal candle must close within the channel. Purchase an option in the direction you want at the start of the next candle, with an expiration of one candle.

If the price nevertheless deviates from the level, we will see confirmation from the signal candle. It is impossible to be one hundred percent sure what the strength of impulses is at the auction. If the price began to rise, but the trades were not successful, then even without using additional filters, and provided that you have correctly marked the key levels, some of the incorrect rebounds will not exceed the available statistical error.

Conclusion

If you have sufficient trading skills, the flat period will not present any difficulty for you, and it is also safer than counter-trend trading. However, know that the flat will stop in any case and will be replaced by a directional movement. In the meantime, flat will allow you to earn additional income if you have strict discipline. Feeling unsure, try yourself first on demo accounts, and only then, for the sake of your money, go to the real market.

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