Monday, December 15th, 2014 by Tim Lanoue
Today we are going to cover a binary options trading strategy known as the Shooting Star, it actually feels weird to submit a strategic article for you guys that I haven’t composed on my own but in all honesty this is one of the those binary options trading strategies that should not be forgotten and should be utilized when trading binary options.
For those of you who are unfamiliar with the Shooting Star strategy it is a relatively simple trading strategy that can easily be used by traders of all experience levels, meaning novice and experienced traders would both benefit by learning and using this trading strategy. The main purpose of this trading strategy is to trade what is known as a reversal. For those of who not familiar with reversals they are exactly what they sound like they are, they are reversals that take place in the market.
The whole function of this trading strategy is to help traders predict when the price action of our targeted assets is going to conduct a reversal. Meaning that it will change directions and go the other way. This is relatively simply and straight up, one of the best advantages about this trading strategy is that it can be used by all assets. Meaning it doesn’t matter if we use a currency pair, stock, commodity or indice. However, when it comes to trading online with binary options I tend to trade only certain times and only certain assets if possible, below I will discuss my set up for using this trading strategy and how to implement it.
Before we dig deeper into the strategy portion, it is important to understand that with any binary options trading strategy you are more likely to find better success if you trade during market hours with a market hour trading strategy. The shooting star is a market hour oriented trading strategy and should not be used during intra-trading hours. When using this trading strategy or any other trading strategy you guys may have noticed that I tend to stick with only a handful of assets depending on their type. For example, I tend to only trade low volatility currency pairs, high volume stocks or highly popularized commodities. Rarely do I trade more than 6 different assets a week, it all depends on the trading strategy that I am using and the current market conditions. Moving forward, when using this trading strategy I would highly recommend using an asset from the following list: Eur/Usd, Usd/Cad, Usd/Chf, Nzd/Usd, Apple, Exxon, Facebook, Twitter, Gold, Silver, and Oil. Once you have chosen your asset then we are good to finish setting up our charting solution. The charting solution that I use is a web-based charting solution known as www.freestockcharts.com, for those of you not familiar with www.freestockcharts.com it is the best charting solution in my opinion and offers free access to all the indicators that I need.
In the picture above you can see an example of how this trading strategy would work. As you can see that the time frame that we use is Daily, meaning each Japanese Candle stick represents a time period of one day. The Shooting Star trading strategy is a strategy that is meant to take place over a period of two days, where the second day is the indicator of our reversal. As you can see in the picture we have four example of how this trading strategy would work. The first thing we need is a bullish candle by itself and then a bearish candle right next to it. The second candle is known as the origin where the shooting star takes it reversal. As you can see after the second candle we had a following bearish candle after, confirming that the trend did indeed reverse and our trades ended up in-the-money.
The Shooting Star trading strategy is a classic binary options trading strategy that should be used more often and not forgotten. Average expiry times that you should use when using this trading strategy should be 4 hours to End-Of-Day expiries, meaning the option will expiry at the last available time during market hours. As always guys if you have any questions, suggestions or comments please feel free to leave them below and I will get back to you as soon as possible!
Check out the BinaryoptionsChannel.com Extended Binary Options Indicators Explained List!