At this point, we are not presenting a new strategy, but three ideas, each based on different strategies - the swing trading strategy and the ultra-short-term day trading approach. Swing trading is about taking part of the prevailing trend with you. Swing trading is a suitable strategy for binary options, as the maturities here are also rather medium-term. The day trading approach uses relevant levels at which setbacks in the short-term trend are decisive as an entry for the purchase of an option.
As already mentioned, the trick here is less the analysis and identification of patterns. Binary options trading is about choosing the right term. Since this important point is often neglected, many traders fail. You are well aware that the term limits the risk of a total loss, but not that the term flexibility is lost, which makes it possible to react to market conditions.
Trading idea No. 1: USD / JPY - Medium-term swing trading
We already referred to the USD / JPY currency pair in our Friday analysis. Now the currency pair has actually overcome the resistance between 120-121 Japanese yen per US dollar and is currently pulling back on a 12-hour basis. In many cases, a pull-back is a good opportunity to get started. Why?
Because a pull-back represents a low price within an upward trend, as is currently the case with the Japanese yen. Pull-backs also have a good technical risk-reward ratio. This is not as relevant for binary options as for other products where you have to manage the risk yourself with stops. Nevertheless, many use this methodology. Pull-backs thus represent trading patterns.
In order to determine the duration for trading, traders should first think about the target. The medium-term goal would be in a range from 123 Japanese yen per US dollar. Considering that 122 Japanese yen per US dollar were reached within a day, one could aim for an approximate time between 1-5 days to reach 123.
In this case, this would take a maximum of 2-3 days are sufficient, because with binary options it is usually sufficient if the price is higher than the cost price. However, the currency pair is currently still weakening, as the US equity markets with which the currency pair correlates positively are very weak. This is definitely a potential risk. A trade should therefore only be entered into when the S&P 500 index also turns.
Trading idea No. 2: DAX - short-term short
The DAX index does not really want to be impressed by the US indices. However, as long as the Americans weaken, the DAX is unlikely to climb new highs. At least there is a chance of a counter trade at the last high at 11,600 pts. (Future). This high has already been sold twice, and at least a short-term reset should come the third time. This is a real invitation for seconds or minutes traders. However, it is advisable to choose a duration of at least 3-5 minutes.
Stock Trading: Tradesight Seeker and Comber Signal Bearish Reversal in JPM
Trading idea no. 2: USD / CAD - long medium-term swing trading
Also In the USD / CAD currency pair we have a similar technical situation as in the USD / JPY currency pair. The Canadian dollar fluctuated against the US dollar in a tapering triangle last month and broke out of it a few days ago. This example clearly shows how the pull-back was used to sell the Canadian dollar. Although it would not be a perfect start at the moment, the dynamics of the quotation indicate a possible chance for the trend to continue
As in USD / JPY, a term of 1-2 days would also be conceivable here. Meanwhile, traders should note the WTI price, which has a no less strong impact on the Canadian dollar, and the currently very strong US dollar, which also speaks for the continuation of the upward trend.
As you can see, opportunities for good trades can be found week after week. It is only important that retailers plan these carefully and do not rush anything. It is important to analyze and consider the dependent factors or correlating values, such as the US indices in the Japanese yen or the oil price in the Canadian dollar.