The «Extension Channel»
Trading on the support and resistance levels – this is probably the easiest and, at the same time, very popular approach to binary trading. The above mentioned levels are always applied to trading in financial markets, because they are the most common regularity in the price movement chart. There were developed many trading systems, based on this: from simple trend and trade in the price corridor – to a complex, multi-level ones, with automatic indicators. We will show you today a few non-standard ways to use the support and resistance levels, which are suitable for trade at the beginning of the day, when the Exchange Stock starts to wake up, and price charts increase the amplitude of their oscillations.
Expansion Channel – method of construction
Almost all traders already know about the night trading system within the corridor price, where the support and resistance levels are arranged horizontally on the peaks and troughs in the graph. This technique is well justified to calm the markets at night. However, when the morning traders awake it always shows a failure and cause damage to the punters, who missed the point of increasing price volatility fluctuations. This very moment – is just the most promising for our strategy of binary trading.
But before embarking on a study of its signals, let’s think about some of the technical parameters of the upcoming trade. We’re talking about proper money management, expiration dates of contracts, and the speed of execution of exchange contracts. These issues need your attention while selecting a broker company for yourself, because later it will be very difficult to do. So, for an effective monitoring of trading risk and capital preservation – we need to find the right trading conditions – ideally, a suitable broker that offers the lowest bets (1 USD) and, thus, does not set the bar high for the start-up capital. In this regard, we will approach the trading conditions offered by traders of the Binomo broker – the initial value of transactions corresponds to the desired minimum requirements (1USD), the initial deposit rate is $ 10, and in addition to these advantages, the platform of the Binomo is being set with a required range of expiry, and the execution of transactions takes only 1.7 ms, which eliminates slippage.
Let’s move onto building of the channel expansion. You will have no complications here, especially if you are already familiar with the trade for the triangles. See – at the time of night channel breakdown, the quotations begin to move with increasing amplitude, and therefore, the support and resistance levels have formed the drop-down angle or as they say – a reverse triangle. Forming levels by the standard – through the peaks and troughs – the form, as a result we get the quotes of just such a graphic layout:
You can see that the price channel has an unconventional shape in which the channel go in parallel to each other. At the same time, the principle of registration of transactions is the same as the classical trade price channel – to retreat from the borders (on the screenshot, the direction is indicated with red arrows). This part does not need explanation, as this is known, even for beginners. Let’s come back to our screenshot, and, in particular, the method of construction of the subsequent expansion of the channel. This phenomenon takes place after the breakdown of the established boundaries of support and resistance and fixing prices beyond their borders. The screenshot shows how the quotes were fixed at the level of resistance, according to this channel, the expansion will be built in the upper direction. The trading principles in this case remain unchanged.
However, you can ask an involuntary question – why to make such a layout, while it is easier to determine the ordinary sloping channel? Yes, but the trading system the «Channel Expansion» works well and subject to finding quotations horizontal flats that occur after the occurrence of the pulse. And in such moments, usually horizontal channels, are pierced, and traders are deploying the direction of trading and quotation after a lull, and continue to pulse movement in the direction of the main trend, and as the result – the loss of funds.
An Exchange Specialist – one of those who carried out a tasting of our strategy – to use our proposed methodology in conjunction with the phenomenon of the correlation of currency pairs. This approach significantly increases the efficiency of trading. If we take it as a basis for trading currency pairs EURUSD and the USDJPY, at the same time build the extension corridors and work in non-stop regime, with help of Binomo broker, the trade efficiency can be doubled:
Money management and expiration time
Trading in the channel expansion is made in the high mode, so, according to this, for the deal to establish a large period of expiry is not necessary, the optimal interval is 60 seconds. As soon as there is an expansion channel price quotation – you can zoom in up to expiry of 5-minute interval. The article mentioned about effective money management, but also to secure repeat. To reduce the degree of a commercial risk – it should be used to bid with a minimum amount of capital – up to 3% of the size of the deposit. A very minimal risk indicators will be established, using the start parameters of the transaction value – $1.