The «Breakout» Strategy
The “Breakout” strategy, which we offer to study, relates to Price Action systems, which use clean quote charts to produce signals. This trading strategy is suitable for scalping on binary options and demonstrates high profitability statistics. Having mastered this strategy, any trader can get guaranteed winning trades and high dynamics of trading capital growth on simple signals. Let’s look at the requirements and rules of the system.
The «Breakout» strategy – conditions of use.
Price Action systems do not use technical indicators, so they can be applied directly on the trading charts of the platform for trading binary options. But we must understand that when using this trading approach for scalping on binary options, we still need the right trading platform for this. First of all, the right money management is necessary for scalping options, which requires the appropriate trading conditions from a brokerage firm. Secondly, for high-frequency fast trading, we need the platform to be very stable – the terminal should not hang up during trading and there should not be any slippage. Basically, those are the main technical and financial requirements for the use of the “breakout” strategy, although it would also be convenient if quotes on the platform were in candlestick display. We went through a lot of platforms and ended up with this high-quality trading software – the Binomo platform. This broker offers the most convenient trading conditions: transaction costs of US $1, the minimum amount of trading capital is $10, and it’s a very stable working platform with high speed processing of trading orders – up to 1.7 ms.
So, the “Breakout” strategy is based on a pattern. Our system uses changes in the direction of prices that occur during breaks in short-term trends on the quote tick chart. Many of you have probably seen in your trading traffic when the price moves in one direction for a certain time and then abruptly changes direction:
In quotes charts with short periods of time, this situation happens all the time. Moreover, the price makes those movements during the construction of rising and falling trends on longer time frames (the so-called old or main trends). But we will be using these movements for scalping on binary options, so the older trend direction is not particularly important to us.
The «Breakout» strategy – trading signals
So, we are studying on the Binomo platform (visit website) a situation that has developed in the market of your asset and we identify a short-term trend, as shown in the example below. After that, we wait for the moment when the price crosses the trend line in the opposite direction of its movement, in this case – up, and then we very quickly register the option contract UP:
To trade on a reduction in the price of the asset, it is necessary to identify the signal in the opposite direction – the price builds an uptrend, then quickly reverses and starts a downward movement breaking through the level of the trend. Then we register a DOWN contract:
It is no accident that we used the same segment of the graph as an example of trading in different directions. The fact is that the Binomo platform has no restrictions on trading, the whole process is non-stop, so all price fluctuations can be used to trade – both up and down.
Money management and expiration
Pro scalpers are well aware that scalping is a highly profitable approach to trading, but at the same time, it is also highly risky. Therefore, you should only use lots with the minimum value – at the Binomo broker (visit website), as you may recall, the cost of contracts begins at $1. So, you will be engaged in trading with minimum risks and your account will be quickly restored in the event of losses. You will want to use options with short term expiries of 60 seconds because of the speed of quote movement and construction of short-term trends on the tick chart.