Strategy based on the trend or how the market gives away money. Trend trading on binary options: methods and strategies Forex trend trading strategy

Most often, the strategies on which exchange trading in binary options is based are technically quite simple trading systems. This factor largely determines the high popularity among exchange players of such a trading tool as binary options. But among the many trend trading strategies, there are not only simple ones, but also incredibly effective ones.

Their use will not distract the trader with many unnecessary details, providing an effective tool for making money. Such systems include a group of trend-following binary options trading strategies, the most popular of which we present to your attention in our article today. We recommend that you familiarize yourself not only with the text material, but also with the thematic video. Having learned how to trade the trend on binary options correctly, you will be several steps closer to your success and financial independence.

Trading methods

There are several good trend trading systems that are truly worth the attention of traders. These are the ones we want to tell you in this review:

1. Jumping on the trend. In this case, we will talk about trading on a rebound. To begin with, the exchange player must determine the trend itself and the required level. This technique works best on those brokerage terminals that allow you to use auxiliary tools in trading.
2. Bollinger by trend. The Bollinger Bands indicator is designed to promptly identify trend reversals (and sometimes for intra-channel trading). In this case, its use in conjunction with the Moving Average tool gives excellent results.

In order to trade binary options with the trend within the framework of the strategies under consideration, we will need:

1. Scrolling asset quotes over time and scaling the chart.
2. Minimum limits for trading conditions, that is, the opportunity to trade binary options on a small deposit and with small rates (approximately 10 USD and 1 USD, respectively).
3. Charts in line and candlestick displays.
4. Good visualization.
5. The presence of built-in indicators in the broker's terminal, among which are the Moving Average and Bollindger Bands tools (as a rule, they are present in the indicator kit if it is available on the platform).
6. No platform freezes and the ability to intervene in the course of a transaction throughout it.

I would like to note that among modern brokers there are several companies that fully meet these requirements.

“Rebound” strategy

This type of trend trading is the exact opposite of other trading methods. This is a rather interesting approach to analyzing the foreign exchange market, which has become the reason for the creation of a large number of trading strategies.

We reduce the asset price chart to the minimum using the scaling function in order to determine the direction of the trend movement:

If the price falls on a growing trend, or rises on a downward trend, you should open a trading lot in the area when the quotes are as close as possible to the trend line:

The arrows show the points on the chart where a rebound occurs - at this moment you open your binary options trades.
Doesn't the technology look completely elementary? But that's what she is. And its profitability is really high; on average, such trading brings a trader 70% profit.

2. Expiration.

In this case, a trader can count on the best results by setting a one-minute expiration and trading classic binary options.

3. Money management.

Important! For correct money management, use no more than 2% of the deposit volume. The optimal choice would be the minimum trading lot size set by your broker.

Trend Bollinger Strategy

This is one of the types of trading using indicator tactics. It can bring good profits. This method of trading can be considered a universal forecasting tool with a high level of efficiency.

1. Technology of application of the method.

We add Bollindger Bands indicators (without changing the settings) and a Moving Average with a period of 100 to the chart of the asset being traded. This way we can determine the long-term trend. If the broker's platform does not provide this option, we use standard settings.

A deal to increase quotes should be concluded when the Moving Average line crosses upward with all indicator lines of the Bollinger instrument. Wherever the quotes are at this moment, the deal is opened immediately after the first rollback to the lower border of the Bollinger Band, or immediately at the moment of the crossover.

You can enter into trading with a deal to reduce the price of an asset when the Moving Average line crosses downwards with all indicator lines of the Bollinger instrument. Wherever the quotes are at this moment, the deal is opened immediately after the first rollback to the upper border of the Bollinger Band, or immediately at the moment of the crossover.
When working within the framework of this strategy, a trader receives signals to enter trading approximately three times per hour.

Important! Losses incurred by a trader when working on tick-type charts during reversals of short-term trends are by no means uncommon. Be careful! About 70% of all reversals occur after the third wave of increases or decreases in quotes on the chart.

2. Expiration.

For optimal system performance, set a five-minute expiration for your trades, reducing it by 1 minute for each subsequent contract.

3. Money management.

Important! For correct money management, use no more than 2% of the deposit volume. The optimal choice would be the minimum trading lot size set by your broker.

Having examined two popular trend trading methods today, we can say that they are quite simple to understand, profitable, effective and can be of interest to both beginners and experienced traders. There are many trend trading systems, and everyone can choose for themselves those that correspond to both the level of knowledge of the trader at the moment and the capabilities of his trading terminal.

In order to find out what traders themselves think about the strategies of this group, we will turn to their reviews, after studying which you can watch the thematic video.

The goal of every trader is to increase capital and achieve stable income. The key to successful trading in binary options is a properly selected strategy and trading tools. Beginners and professionals very often prefer to analyze market entry points along a trend line. How does a trend form and work? What signals does the trend provide to the investor and what does it affect? This is a broad topic, which we will explore in this article.

Concept and types of trend

A trend line is a vector that displays the movement of a quote over a certain time period. This concept is figurative, since the exchange rate of a currency or financial asset does not constantly move towards growth or decline. Due to the constant influence of external factors, the quote at a certain stage moves up, then down. The depth and frequency of fluctuations in the price line are directly influenced by news, events in the global economy, and the play of large investors. Therefore, a trend is schematically depicted as a line connecting extreme highs or lows.

Basic rules that are directly related to the trend:

• exchange rate activity is unstable, the trend line will change;
• at any point on the graph there is a high probability of the course continuing to move in a given direction;
• The greatest income is received by investors who take into account the strength of the trend;
• playing against the rules is very risky, it is better to accept the situation as a fact.

In the foreign exchange industry, there are two main categories of trends: direction and duration. The first group is classified into three types: upward, downward, sideways trend. A growing or bullish trend is a stable growth in the price of an asset, each subsequent point of the chart is higher than all previous ones. At this moment, it is profitable to open contracts for the purchase of assets.

The downward (bearish) vector is formed directly opposite to the upward one. Each subsequent stage of the trend turns out to be significantly lower than the previous one. At this stage, traders prefer to sell options. The price movement along a specific horizontal corridor in trading is called a side trend or flat, consolidation. The quote fluctuates, but with low frequency and within a narrow framework.

An important indicator in trend trading is the selected timeframe. The speed of trend change or its constancy directly depends on what interval the trader will trade. For example, on a five-minute interval there is a bearish trend, on a half-hour interval it actively turns into a bullish one, and after twenty minutes it turns into a flat.

If you trade options according to a short-term scheme, the probability of a change in the direction of the quote movement is very small. When an investor plans a long-term trade, a variety of price changes are observed on the chart. It is worth noting here that in terms of the strength of the trend on the weekly chart there is a predominance in comparison with the hourly and even more so the minute.

Education mechanism

The schedule is formed under the influence of a complex of factors, according to a certain pattern. Almost every trend goes through four phases during its existence: origin, development, saturation, completion.

The formation stage is the moment when active investors enter the market. They open many deals to acquire financial assets. Horizontal fluctuations with numerous breakouts are formed on the chart. Trading at this time is dangerous due to countless false signals. After buyers become saturated and the trading situation stabilizes, an active trend begins to form. It enters the stage of development or accumulation.

The distribution and saturation phase is characterized by active dynamics of the quote. It will move in an upward or downward trend. The main feature is that the rate is constantly changing, gradually increasing or falling. The chart is formed by a set of impulsive or short correctional waves. Some active players freeze positions, while others begin aggressive trading.

The final stage is the phase of completion, the end of the trend. This period is characterized by a peak price position. Most traders set stop losses at breakeven and begin withdrawing money. The graph is presented in the form of various figures, the frequency of which is associated with user activity.

Beginners mistakenly think that after the end of a trend, a new one, diametrically opposite in direction, must certainly open. This is not entirely true. After the peak moment is overcome, the quote enters a wide trading range. It is very difficult to predict her behavior.

Trend Determination

How to determine and correctly depict a trend in binary options? Trend lines are actively used in technical analysis. To teach how to accurately and correctly determine the direction of price movement, it is worth acquiring minimal knowledge of the market situation. Each trader builds a chart according to his own principles, but based on the advice of professionals.

Most often, two or three peak maximum or minimum points are used to construct a vector. It is important to understand that the trend line will not be alone in the figure; next to it there will be smaller trends with different directions. The drawn main line often crosses support and resistance levels, which indicates the end of the trend.

An upward movement represents a support level, which is indicated by the line of the minimum values ​​of an uptrend. The resistance limit will be the wave connecting the tops of the bearish trend. A successive combination of lows and highs will form a horizontal price corridor.

Options trend trading is based on four fundamental principles:

1. The accuracy of trading signals directly depends on the size of the time scale. The larger the selected segment on the chart, the more reliable information the trader will receive from the analysis. A line constructed with a daily forecast will be more accurate than the dynamics in a few minutes or an hour.
2. The duration of the analyzed trait is also very important. The further the trend goes, the more informative the graph. If we take a period of fifteen minutes, the investor will not be able to clearly predict the situation for the next hours. Such a picture will be one-sided, with false signals.
3. When constructing a trend line, it is recommended to use a large number of touches. The more often the price comes into contact with the trend, the more stable it is. When the quote bounces off the chart three or more times, the investor confidently opens a trade in the given direction.
4. The strength of the trend is visually determined by the angle of inclination. The faster the trend moves in comparison with the base horizontal, the stronger it is. A large tilt angle is always an indicator for opening a obviously successful transaction. A flat trend will show weak impulses; it is advisable to wait for brighter dynamics and only then enter the market.

Trading Rules

Trend trading on binary options is like a financial pyramid. Traders who are the first to open positions on the market receive good profits due to the activity of subsequent users. The trend line shows the direction of movement of the exchange rate and serves as the basis for predicting the success of the contract and the percentage of profitability.

To build a trend line, it is advisable to choose the most accurate support points. Peaks and troughs are the basis of the indicator-less method of constructing a trend. Indicators installed on the broker's trading platform also come to the aid of the trader. The most commonly used moving averages are MACD.

It is necessary to clearly define the time frame. You should not analyze weekly charts if you plan to trade intraday. The user will waste effort and time because the analyzer works differently for short and long periods.

The second important point is the choice of financial asset and trading session. On popular currency pairs the trend of exchange rate changes is most pronounced, but on rarely used trading instruments it is somewhat more difficult to predict the movement. It's better to trade options that are clear than to risk losing everything because of one wrong move.

Let us describe step by step the investor's algorithm for trading binary options based on the trend:

1. selection of a trading session, financial asset;
2. determining the direction of the trend (upward, downward, flat);
3. calculating the duration of correctional waves by analogy with the previous trend;
4. the transaction is opened after a clear formation of a trend line following the passage of a correction for an expiration period equal to the duration of the correction;
5. The duration of the contract depends on the trader's expectations and the activity of the quote; it is always advisable to advance the stop loss when approaching the take profit.

Professionals advise to beware of opening trades if there are no pullbacks on the chart for a long time. There is a 90% chance that this phenomenon will occur in the near future. You cannot trade without being sure of the strength of the trend. It’s better to double-check ten times and calculate your moves than to lose everything at once. It is advisable to avoid trading if the chart shows abnormal, unpredictable movements in the exchange rate.

Trend trading strategies for binary options

Strategic decisions on conducting trading operations with binary options are made according to the individual tactics of the investor. Important selection criteria will be the size of the starting capital, free time for trading, and expected profit. Beginners prefer to play on a strong trend, while professionals actively use reversals and rollbacks to multiply their finances due to increased risks.

A popular trend trading strategy for binary options is popular among traders, based on opening trades in anticipation of pullbacks. It is obvious that the quote does not always clearly and unconditionally follow the given direction; there are minor fluctuations in the opposite direction.

First, the user forms support and resistance levels on the chart. The signal for options trading will be the third touch of the support line rate in an upward trend. A similar principle is used in a downtrend. Since the probability of the price returning to its previous position after a rollback is quite high, the client receives a decent profit.

The simplest tactic for trading binary options is to follow the direction of the trend. If the trend is upward, contracts are opened for an increase, and if the trend is downward, for a fall. Everything here is logical and simple. It is important to avoid opening trades when the price is moving along a narrow corridor. The only option for obtaining benefits through the price channel is to fix the points of contact between the support and resistance levels.

Very often, professionals use strategies based on the Moving Average indicator. If two or three moving averages on the chart intersect and move upward in the same direction, it is recommended to open a trade at this rate. The trader will take a similar action when the price line breaks through the chart from the bottom up, touches it again and moves up. Often, investors trade on rebounds, when the price periodically touches the moving average or bounces off it.

According to statistics, trading on takeovers brings quite high profits to traders. It is important to continuously monitor the live chart and eliminate all minor fluctuations in the quote. You should not trade on news releases, since the risk percentage increases many times over. Only professionals with a very clear and reliable strategy can cope with such psychological pressure.

The main mistakes of novice traders are impulsiveness. Immediately after detecting a pair of candles in the expected direction of the rate movement, the user draws a trend line and enters the market. Due to haste, the contract will close at a loss in most cases. Therefore, it is important to wait for at least two more figures to appear, confirm the trend with other indicators, and only then start trading.

Trading binary options along a trend line is one of the simple, straightforward methods. It is ideal for beginners and professionals. It is important to be subjective about the picture displayed on the charts, to deeply and in detail study the behavior of the asset in the market environment. It is advisable to exclude emotionality, passion, and impulsiveness, then trading will move forward with confident steps. An additional percentage of success will be added by strict adherence to the rules of the chosen strategy.

During the experiments, we came across the fact that the “Trend Trading” strategy does not work on all trading platforms. In particular, we were unable to implement it on the Olymptrade and Dukascopy platforms. We don’t know why this happened; we attribute it to the technical features of charting. At the same time, “Trend Trading” works great for brokers

Trading with a trend is taking a trading position that coincides with the mood of the market. The trader’s task is to be able to determine the beginning of a trend and the tendency towards its end.

To trade with the trend, if your trading system involves studying the hourly charts, you will also need to pay attention to the four-hour and daily charts in order for the market to clearly know what the general direction of movement of your currency pair is.

Trend trading is not only based on charts for specific time frames, it must also include analysis of charts with longer time frames to create an effective strategy. Many traders still do not know Forex because they use exclusively other people’s strategies that do not suit their temperament and understanding of the processes in the currency market. Are you still underestimating the large time frame charts when opening a long position? Perhaps it's time to change your perspective on this issue.

How to profit from trend corrections

Naturally, you can make money on trend corrections. If a currency pair is approaching a resistance line and its overall trend direction suggests it is moving higher, then you will likely want to short the pair when it hits the line and profit from its reversal. But you need to remember some points:

1. This could be a breakthrough.
   Perhaps the pair currently has enough momentum to cross one line or another. If the general direction is trending upward, then you don't want to be on the opposite side of that trend or you will lose.
2. Corrections may be minor.
   Breakouts of levels in the Forex market are usually stronger than corrections. Many traders use Fibonacci lines to gauge the potential for a correction. Based on this theory, the correction could be 38.2%, 50% or even 61.2% of the swing, while the breakout has significant potential to cover 100% of the previous range, as the same theory suggests.

Breakouts can also be false, which is why they will not lead you to the desired profit results. There are many ways to deal with false breakouts and in many cases, the vast majority of false breakouts are in preparation for the next big swing. The wider the range of the general trend in the Forex market, the greater the chance of a long-term trend becoming winning.

Trying to outsmart the foreign exchange market is extremely unwise and may impress your friends, but you won't be as likely to tout your winnings if your strategy ends up losing.

How to trade sideways

Trading with the trend in the Forex market can become slightly more difficult when your chosen currency pair is moving sideways. In this case, theoretically there is no trend, and both trading directions can work. Therefore, it is best not to trade at this time, but to start predicting under what conditions and in which direction a breakdown of the price level will occur.

In a sideways trend (flat) situation, it is very important to look at what is happening from the other side and try to determine whether any upward or downward trend movement is brewing. In what direction has your pair been trending recently: in a rising or falling trend channel within the current range? What news releases regarding currencies are on the agenda? In some cases, you will be able to predict the potential direction of your currency pair in advance and reap significant benefits from it.