The Trend Breaker binary options strategy offers an original approach to filtering false signals. Instead of the usual trend indicators, this system uses a standard graphical analysis tool. Read our review to find out how to use it correctly to increase the percentage of profitable trades in binary options trading.
Content:
- Characteristics
- Installation
- Overview and Settings
- Trend Breaker Trading Rules
- Specifics of Аpplication
- Conclusion
- Download Trend Breaker
Characteristics of the Trend Breaker Binary Options Strategy
- Terminal: MetaTrader 4
- Timeframe: M5
- Expiration: 3 candles
- Option Types: Put/Put
- Indicators: SMC Traders.ex4
- Trading instruments: currency pairs , commodities, cryptocurrencies , stocks
- Trading hours: 8:00 - 21:00 Moscow time
- Recommended brokers: Quotex , Pocket Option , Deriv , Binarium
Setting Up a Strategy for Binary Options Trend Breaker
The Trend Breaker strategy indicators are installed in the Metatrader 4 platform as standard. To do this, you need to add them to the root folder of the terminal by selecting “File” in MT4 and then “Open data directory”. In the opened directory, you need to go to the “MQL4” folder and then to “Indicators”, and then move all the files there. Templates are installed in the same way, but they are placed in the “templates” folder. You can read the installation instructions in more detail in our video:
Trend Breaker Binary Options Strategy Review and Settings
The Trend Breaker binary options strategy consists of only one signal indicator and a graphical analysis tool called “Trend Line”. The indicator generates signals in the form of white and purple arrows to buy Call and Put options, respectively, and the trend line acts as a filter, cutting off most of the unprofitable trades.
The arrow signal indicator has virtually no settings. The only thing that can be adjusted is the number of bars on the chart where the arrows are displayed. The logic of signal formation is hidden from the user, but the position of the arrows indicates that they most likely appear at the moment of a break in a short-term price impulse - a swing.
Aggressive traders can try to trade on every signal of the arrow indicator. However, we do not recommend doing this and advise adding a trend filter of your choice. If you find it difficult to do this, we recommend choosing one of those that we described in detail in the article " The Best Binary Options Trend Indicators ".
To simplify, we will use a standard simple moving average indicator with an averaging period of 21 candles. As can be seen in the chart above, by following a simple rule - buy Call options when the signal candle (on which the arrow appeared) closes above SMA(21) and buy Put when the signal candle closes below this simple moving average - it was possible to filter out three false signals.
Trend Breaker Trading Rules
The Trend Breaker binary options trading strategy successfully combines graphical analysis techniques and arrow indicator signals. It is based on the trader's ability to correctly draw trend lines on the candlestick chart of the asset being analyzed. If you are not familiar with the principles of constructing technical analysis figures, we recommend that you read a selection of articles on this topic:
- Graphical analysis of binary options
- How to Trade Chart Analysis Figures
- Japanese candlesticks - graphical analysis of charts online
- Live cryptocurrency chart online
- Live chart for binary options free online
As mentioned above, we will buy Call options according to this system after the white arrow appears under the candle and the signal candle breaks through the green line of the bearish trend . We will buy Put options after the purple arrow appears above the candle and the signal candle closes below the red line of the bullish trend.
Opening a Call Option
- A white arrow appeared under the candle
- The last candle closed above the green bearish trend line
- At the opening of the next candle we buy Call
Opening a Put Option
- A purple arrow appeared above the candle
- The last candle closed below the red bullish trend line
- At the opening of the next candle we buy Put
It is recommended to select the expiration time of 3 candles. Select the holding period of positions depending on the financial instrument and the results of testing on historical data.
Specifics of Using the Binary Options Strategy Trend Breaker
The Trend Breaker binary options strategy is suitable for traders who are not satisfied with signals from conventional indicators. Those who trust classical technical analysis more will certainly appreciate the ability to use the trend line as a filter for trading signals . Despite its apparent simplicity, this tool can significantly improve your trading.
Pros of the Trend Breaker Strategy
As you know, a trend line is one of the simplest, but at the same time, popular tools. With its help, even novice traders can easily determine the trend direction. This allows not only to cut off some of the losing trades, but also helps them quickly assess the current market situation and open a deal in the right direction. It can be determined by the closing of the current candle behind the trend line, which signals a potential reversal point and the beginning of a new trend.
Disadvantages of the Trend Breaker Strategy
Despite their great usefulness in binary options trading, trend lines also have a number of disadvantages. Among them are subjectivity of construction, false breakouts and instability of trend movements. Therefore, they are not enough for full-fledged trading, and these problems are compensated by the arrow indicator. Another disadvantage of the strategy is the lack of alerts when arrows appear. The trader will have to constantly monitor the market so as not to miss the signal of this trading system.
Conclusion
The Trend Breaker binary options strategy is an unusual combination of a regular technical indicator and graphical analysis. This is not often seen in binary options trading. It is especially strange to see a technical analysis tool as a filter for trading signals. However, despite such originality, the strategy as a whole produces quite a lot of profitable trades.
Before using it, it is recommended to check its work on a demo account with an honest broker . Always follow the rules of risk and capital management. We wish everyone successful trading!
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