When it comes to binary options trading, the 15 minute timeframe is perhaps the most popularly traded expiry. These are short enough that you can trade many of them per day, but long enough that the outcome can be anticipated with a degree of certainty. And one of the most widely used trading strategies revolves around the 15 minute expiry, helping you to predict movement when an asset is moving within a given range.
Here’s how it works:
Create a candlestick chart of the asset that you are interested in trading. Ensure that the chart is large enough though you can see back a ways. We like creating three chart here, one with the candles set a timeframe below the expiry, one set at the expiry, and one at a timeframe above the expiry. So, because this is a 15 minute trade, you would have candlesticks set at 5 minutes, 15 minutes, and 30 minutes.
Next, identify that a distinguishable range exists. Draw a line on your chart highlighting the top and the bottom of that range. Many charting packages will do this for you automatically. Otherwise, you will need to use a screen editor. Tablets are great for this, if you have one set up next to your computer.
Now it is a matter of waiting. When a candlestick touches one of the lines, then you take out a 15 minute position against its current movement. If the candlestick touches the top line, that means that the asset is moving upward, and a put option is the appropriate move because of the fact that the asset is likely to correct itself and drop back down in price. If it touches the bottom line, then a call option is the right move as the asset is likely to bounce up in price.
You can alter this trading strategy to fit other expiries, but 15 minutes is the most tried and trusted expiry and will give you the most success.
Adapting to the Channel
Sometimes you will find out that an asset is not range bound, but this same strategy will still work because it is trading within a price channel. Basically, a channel is like a range, except it is not moving sideways. Instead, it is moving in a clear direction, with two parallel lines keeping the price movement contained within.
Although the channel is slightly different than the range, the same concepts still apply. When the asset’s price touches one line, you will notice that the price then moves back in the opposite direction. You can still profit off of this movement, but because the asset currently has a clearly defined trend, it is dangerous to move against that trend. Binary options traders need every edge they can get, and trading with the trend is a big help. It might only increase your chances of success by a few percentage points, but this is still helpful. If the asset is in a bull trend, then only use call options. If the asset is in a bear trend, then only use put options. These should be timed so that they have touched the appropriate line.
Things to Look Out For
Obviously this is not a foolproof strategy. Assets break out of ranges occasionally, and knowing when they are most likely to do so will help you to prevent making needless errors. For example, if an announcement comes out that sends the USD into a tailspin, then taking out call options because the USD/JPY has touched the bottom line is a bad idea. The price is likely to drop far below the line. Be on the lookout for things like this and use multiple analysis methods to prevent mistakes.