Some binary options traders prefer the fast pace of the binary options trading game. Others, however, while they do enjoy this type of trading, require just a little bit more time with trades.
Still, some of these individuals may find that five minute trades take too long, nonetheless. For traders who are looking for something in between these two extremities, two minutes is often found to be the ideal time.
The only problem with this is that not many binary options brokers offer these intervals. Furthermore, there are a precious few strategies available as well. Thankfully, a new strategy has begun to surface. It has yet to be named but it was first created by Italian traders. Here is what you need to know about it:
What Are the Factors?
This particular strategy is based on two different trading tools – the Bollinger bands and the ADX indicator. In case you are wondering what these are, let’s take a brief look at them. The main purpose of Bollinger bands are to determine whether or not the market is currently undergoing a volatile time. If the bands are moving apart, this means that there is a drop in the volatility. Conversely, if they begin to come together, there is a sharp increase in the amount of volatility.
The Average Directional Movement Index is a tool that will help you determine the strength of the trend. ADX will not be able to tell you whether an asset is going to appreciate or depreciate in value. What it will do, however, is determine whether or not the current trend is going to hold. Once a particular ADX level is crossed, you will be able to tell with a large degree of confidence that a trend has been achieved.
What Do You Need?
Well, the two most important things that you are going to need for this particular strategy is the right charting tools and a good broker. Remember, not all brokers offer the two minute or 120 second option, so you should try to find a good one that does. As far as the tools go, you are going to require a charting package that offers both Bollinger bands as well as an ADX indicator. This strategy will not work without both of these tools.
Utilizing the Strategy
Once you have the necessary tools, here is what you have to do. With this particular strategy, you can use the default settings for the Bollinger bands. This is with period 20 and deviation 2. The ADX should have a level that has been set manually at 20. After you have placed these indicators on your charts, you should opt for the one minute chart.
Once this has been done, you will be able to see blue arrows and red crosses. The arrows indicate in the money trades while the crosses are referring to trades that will ostensibly be out of the money. You may notice certain grey portions on the chart, these are the points that the ADX indicator was above the 20 level. You will not be making any of those trades.
When the price touches the upper Bollinger band and when the ADX is below 30, you can place a Put with a two minute expiry time. Preferably, the ADX should actually be below 20 at this point. For a Call option, do the reverse. According the trader who created this strategy, the best time to place a trade was between 08.00 am and 12.45 pm, Italian time.
This is all that you need to know regarding the two minute or 120 second trade strategy.