Pivot point binary options strategy
An example of these levels can be seen in the chart graphic below: Notice how price holds at both Pivot, Support and Resistance Lines. For traders that are looking to gain a more in-depth understanding of the exact formulas in calculating Pivot Points, an internet search will turn up various formulas.
But with modern trading stations, your platform will make these calculations for you and clearly mark them on your price chart. Once these levels are visible, we can start to use this information when placing actual binary options trades. When dealing with binary options, our first task is always to get a sense of which direction prices are likely to travel going forward. If we believe prices will increase, we enter into CALL options.
If we believe prices will decrease, we enter into PUT options. Once prices rise above or move below this level, we can determine our directional bias. Since the pivot area itself is the most important price region , we can expect prices to move sharply once this level is breached. So, for bullish trades CALLS we are looking for prices to rise above the pivot and continue moving higher until prices reach the next resistance area. At this point, the trade should be closed and profits should be taken.
In bearish trades PUTS we are looking for prices to fall below the pivot and continue moving lower until prices reach the next support area. At this point, the trade should be exited. Pivot Points can be a great tool for traders looking to gauge the general direction of the market.
Modern trading stations plot these points easily, and once marked, these areas can be highly influential in helping traders determine whether they should enter into CALLS or PUTS for a given asset. One important point to remember is that Pivot Points are short term indicators , and these levels will change at the end of each session. Binary options trading success is based on making the right calls on price direction. If a trader can correctly predict where price will go, then it is very likely he will make a trade that will be in the money.
One of the ways this can be achieved is by being able to predict price breakouts. This leads us to ask the question: The concept of price action is simply a depiction of the activity of traders in a particular market.
Traders are in the market to make money. If they see something that will present itself as a market opportunity, they will put their money in the market to make the trade. At this time, we will see prices moving in one direction or in the opposite direction. If traders see nothing to convince them of an opportunity, they will sit on the fence and do nothing. At this time, the price action will hardly go anywhere except just trend sideways. Fortunately, the binary options market helps us to trade the price action, whatever that may be.
Unlike in forex trading or other markets where you need the market to be in motion to make money, you can actually make money in the binary options market even if the prices of the underlying asset stay still.
Breakouts occur after periods of price inactivity. They occur when traders get a hint of an impending market event that will affect the value of an underlying asset, so they take position in order to make money from such movements. One way of determining this is to look at the behaviour of the price action at the key levels of support and resistance. Before we get an upward break, prices may have tested the resistance level multiple times, with the points of retracement getting progressively higher.