Thursday, May 29th, 2014 by Tim Lanoue
Price action trading pattern is one of the most dependable trading patterns when it comes to successfully trading binary options. One of the best advantages about this pattern is that it requires the use of no indicators, so you don’t have to worry and learn about how the indicators work. In addition, it creates a more clear picture to watch instead of a crowded one, when using this pattern we will need access to a charting solution, for more information visit the Top 5 FREE Charting Solutions video!
The assets price level history, often displayed is a line form or candle form, is known as the price action of the watched asset. Price action is the derivative of order flow, which is the summation of all the buy and sell orders given over any duration of time. Watching the price action of our targeted assets is key to our success when using this short-term trading pattern.
How To Apply
In the pictures below I will display a couple examples for you on how to use this 60 second trading pattern. When we are using this trading pattern one of two occurrences can happen, the first being a break in our support levels and the second would be a break in our resistance levels. Make sure when using this trading pattern that your time frame is set on 1 minute, since we are placing 60 second trades.
The put trade scenario is the most common occurrence that we have when using this trading pattern. This will result in us placing a put trade. In order for a put trade to be placed, we need to wait for price to break a support level, go above that support level and break it again in a downward direction. A support level is an imaginary level where price bounces off a bearish candle and heads back up. In the picture below you can get a better idea on support levels and how to use the put trade scenario.
The call trade scenario is less common but often displays better trading signals because they are rare. Just the opposite of a support level, a resistance level is an imaginary level where price bounces off a bullish (upward) candle and heads back in a downward direction. In order for a call trade scenario to be placed we need to wait for price to bounce off our resistance level, head back down in a downward direction, then break our resistance level in an upward direction. Once this has happened we can place a call trade.
Assets To Trade
When using this 60 second trading pattern it is best that we stick with low volatility currency pairs and high volume stocks. Volatility is the likelihood that an asset can change directions in a short amount of time due to minor changes in a market condition, so we want currency pairs that are not prone to drastic changes basically. Some common low volatility currency pairs would be Eur/Usd, Usd/Cad, Nzd/Usd, and Usd/Chf. A few high volume stocks to keep in mind when using this pattern would be Apple, Nike and Exxon.
Price action trading pattern works great on any time frame, but if you apply this basic trading pattern to longer time frames you will more often than not find better success, this is something that I have noticed over my years of trading. Trades that deal with a longer expiry time and time frame statistically end up with more in-the-money success. If you have any questions about this trading pattern or comments please feel free to leave them below! Good luck guys!