Classic Option Trading Pattern

By | October 5, 2014

Sunday, October 5th, 2014  by Tim Lanoue

There are so many styles of trading offered by binary option brokers that much of the time as traders we forget about the most practical style of trading, the classic style option. This was the first style of trading offered by binary option brokers and to this day many brokers still offer this style of trading so that must mean it is a profitable style of trading.

This trading pattern requires the use of three exponential moving averages set at a period of 5, 13 and 50. For those of you who are not familiar with moving averages, they are technical indicators that plot the average price level for a particular asset over a set period of days. So for example, one of our moving averages is set at a period of 5 so it is plotting the average price of our selected asset of the last 5 days. The way these moving averages cross one another oftentimes signify trading set ups and signals.

In the picture below you can see an example of how this trading pattern is set up and executed. In order for a CALL trade to set up we need our 13 exponential moving average line to cross our 5 exponential moving average line in an upward direction. The next thing we need to make sure of is that the 5 and 13 moving average lines are above the 50 exponential moving average line, if it is then we are good to place a CALL trade. In the second picture below you can see an example of how a PUT trade is set up and executed. It basically is the opposite of the CALL trade set up; we wait for our 13 EMA line to cross our 5 EMA line in a downward direction. Next we make sure that the 50 EMA line is above both the 5 and 13 EMA line and if it is then we are good to place the trade.

Classic Option 1 (1)

All trading expiry times should consist of 5-15 minutes, it is difficult to say exactly when because Classic Options often expiry at the end of a quarter, half or whole hour. As long as you stay within the 5 to 15 minute expiry time frame you should see a successful investment payout. Also, when trading with this pattern we want to make sure that the time frame that we are watching our asset is set to 15 minutes. Lastly, I found this trading pattern to have the best success rates with low volatility currency pairs. A few popular low volatility currency pairs that you could use this pattern with would be the Eur/Usd, Usd/Chf and Usd/Cad.

Binary options is the most profitable and easiest style of online trading provided to online traders and will only continue to grow in popularity. Having a reliable trading patternlike the one given above is key for your success. Make sure you always have a game plan and stick around for more articles to come! If you have any questions, comments or suggestions please feel free to leave them below and I will get back to you as soon as possible!

4 thoughts on “Classic Option Trading Pattern

  1. Sam Forex

    I’m new in Forex Trading, is this type of strategy works!!

    Please inform me!

    Reply
  2. Foster Leo

    Interesting for sure Mike, but shouldn’t it be the shorter term moving average (5) that crosses the higher one (13) to generate the signal?

    Reply
  3. Tim Lanoue

    Hey Eric,

    Thank you, I am excited to see that you are having such great success with this trading strategy! I believe this strategy could work with high volume stocks such as Apple, Nike, Amazon, and Exxon. Best of luck and I wish the best for you!

    Tim

    Reply
  4. Eric Lapin

    Tim,

    This is quite a unique strategy here, I tried it today and won 5 trades out of 6 placed, I am quite excited to see how tomorrow results will be!

    Do you think this strategy could work with stocks as well?

    Please let me know, thanks!

    Eric

    Reply

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