Binary options trading is becoming increasingly popular among private traders. In general, there is a trend in the financial industry towards less complexity. What CFDs were for private traders a few years ago can now be binary options.
If you understand the structure of these products, you can see that trading strategies differ only slightly from classic trading Differentiate methods. That is why we are introducing you to another classic strategy today. As is so often the case, it is particularly well known among day traders and is widespread. Traders use a technical indicator for this. We are talking about the so-called pivot points.
What are pivot points
But what are the pivot points? Put simply, pivot points (based on the daily basis) represent the average price of the previous day. Exchange traders from previous days have already used these average prices as they have been able to record strong activities. Therefore, pivot points are considered support and resistance zones and represent breakout opportunities or turning points.
The pivot points are preceded by their reputation for self-fulfilling prophecy. A technical indicator that is used by a large mass of traders fulfills the fact of importance itself, as many traders consider these zones to be important as well. Almost every analysis software therefore comes with this indicator. Pivot points are calculated in several stages. First, the average of the sum of the high, the low and the closing price of the previous day is calculated
The other levels give the resistance and support zones up and down. If we continue the calculation, we will get the points "Resistance 1", "Resistance 2" and "Resistance 3" up, as well as the points "Support 1", "Support 2" and "Support 3" down. The term resistance is the English expression for resistance, support is the English expression for the German term support.
Resistance 3 = High + 2 * (Pivot - Low) Resistance 2 = Pivot + (R1 - S1) Resistance 1 = 2 * Pivot - LowPivot Point = (High + Close + Low) / 3Support 1 = 2 * Pivot - HighSupport 2 = Pivot - (R1 - S1) Support 3 = Low - 2 * (High - Pivot)
If we look at the whole thing in the chart, it immediately becomes clear what opportunities are hidden here:
Price trends above the pivot point indicate an upward trend, while the breakdown of the pivot point decreases with falling Courses. If a pivot point is broken several times in succession in both directions, the course indicates a sideways phase. So we have our direction or rather know what trend the course should take. To optimize the whole thing, you can define the following resistance and support zones as target marks:
Trading binary options with pivot points
How can we do this when trading binary Use options? As we introduced to you in the last article, it is also recommended to subject the higher time windows to a technical analysis on a very short-term basis. This is necessary to find reliable setups (samples). The advantage of pivot points is that they are calculated on a daily basis, but can also be used in very short-term trading.
In the 15-minute chart of the currency pair Aud / Usd, we first see one The pivot point was crossed below or exceeded several times in a row (circled red areas). However, the price in the upper area never came beyond the zone of "Resistance 1". So we have a certain downward trend here too.
What we can do is, on the one hand, to wait and use the break in the first support zone (Support 1). We would be on the safe side. If we are more experienced, we could do range trading. However, you would have to look for a better range setup. In the setup presented in the Aud / Usd, we would have produced too many false trades, since the breaks here are unclean.
If "Support 1" breaks, we see a short pull-back, which is not unusual. The likelihood that the price will continue to fall is quite high, because the tendency we identified earlier has been confirmed.
In this case, we can choose a simple high / low or call / put option. For example the broker Optionbit. This calls his call / put options Above / Below under "Digital". With its sophisticated and appealing trading software, we would have booked a whopping 180% on our stake in profit after a deposit if we had chosen an option "Below" at the said time (Support1).
The broker Optionbit also supplies its own trend detection software. Algobit recognizes trends for the dealer and thus makes it easier for him to make a decision. The trader now only has to decide on the time of the option purchase. This detection software is primarily intended for traders who do not prefer a high hit rate, but instead want to maximize the total profit through different stakes.
Optionbit is a broker regulated in the EU and offers its customers the following options trading options in addition to permanent promotions. "Digital", "Range", "Touch", "One Touch" and "60 Seconds". It is in no way inferior to other brokers for binary options.