A 5-minute Trading Strategy For Binary Options «The Eighth Sense»

A profitable strategy for binary options is the dream of every trader who wants to dynamically increase their capital. And if you have not found one yet, then in this article we will introduce you to the trading methodology called “The eighth sense”, which works on all foreign exchange assets and allows you to make a profit on about 90% of your closed transactions.

 

A precise 5-minute strategy for binary options – the operating principle

The profitability of this strategy is based on technical indicators which have specific settings – the Bollinger Bands, the Moving Average, and the Relative Strength Index (RSI). In fact, this is another version of channel trading using Bollinger Bands, but the trick is that the channel built by the Bollinger is in a non-standard format, which allows you to filter out most of the incorrect signals from this technical tool when interacting with the Moving Average indicator. In this methodology, the RSI indicator is used as an analysis filter that should confirm the new trend and its sufficient duration for the registering of a 5-minute option. Thus, you will be doing channel trading, but receiving, however, more accurate signals which will be confirmed at once by the two additional indicators.

As you probably know, the most profitable indicator strategies work on trading platforms with integrated technical analysis tools; that is, where it is possible to build an indicator template on the chart. Of course, you can use a third-party live chart service as a technical platform, but this will significantly reduce the effectiveness of the strategy due to the time lost when transitioning between the technical and trading platforms. Therefore, in order to correctly show you the principle of trading on this methodology, we have chosen the terminal from the Binomo broker as this company’s trading software has all the necessary tools for profitable trading.

 

Configuring the template

So, having chosen a trading asset, you need to add the following means of market analysis to its quote chart with these settings:

  • The Bollinger Bands with period 73 and deviation 2
  • The Moving Average with type Simple and period 4
  • The RSI with a period of 14 and extremes of 50/50

In our example, we use the chart timeframe of M1, but this system will also work effectively on the M5 interval.

After configuring all the necessary settings, you should have the following chart markup:

A 5-minute Trading Strategy For Binary Options «The Eighth Sense»

 

Signals of the 5-minute options strategy called «The eighth sense»

For higher cyclicity and accuracy of trading signals, you will need to wait for a wave movement of the market. In this case, the strategy signal will be displayed on the price field as a parallel or extended build of the Bollinger Bands, the intersection of the SMA moving average with the middle channel line and the location of the lines in the RSI window is similar for the two indicators – above/below the 50 mark on the scale.

A transaction UP is concluded in the following case:

  • a parallel or extended position of the lines of the Bollinger Bands
  • the moving averages break through the middle channel line from bottom to top
  • the upward direction of movement of the RSI moving average is above the level of 50

This signal will be displayed on the chart as follows:

Signals of the 5-minute options strategy called “The eighth sense”

A transaction DOWN is concluded in the following case:

  • a parallel or extended position of the lines of the Bollinger Bands
  • the moving averages break through the middle channel line from top to bottom
  • the downward direction of movement of the RSI moving average is below the level of 50

This signal will be displayed on the chart as follows:

Signals of the 5-minute options strategy called “The eighth sense”

 

Expiration

If you are going to trade on the strategy by our example on the chart interval of 1 minute, then the expiration period for contracts should be set to 5 minutes. You can also work on this methodology on a 5-minute interval – in this case, a suitable expiration will be 2 minutes. With the options parameters specified, this system will lead to the stipulated number of profitable options.

 

Money management

An increased level of risk in trading can easily be reduced by lowering the amount of each option in accordance with the size of your trading account. For example, with a larger amount of capital, the transaction size should be limited to 5% of the amount in the account, and for a modest account size, the smallest lots should be used. For example, you can conclude 1-dollar transactions on the terminal from the Binomo company.


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