Trading Reversals with Double Tops and Bottoms

By | January 30, 2014

Thursday, January 30th, 2014 by Tim Lanoue

Trading online with binary options is “no walk in the park” that many people are led to believe, it requires quite a bit of research and experience to pull off a winning portfolio that is often sought.  Many ambitious people believe that they are going sign-up and win a few hundred dollars in a couple of days and do this on a consistent basis however the harsh reality is that many of these people will victim to binary options due to improper use of strategies and money management.  Moving forward the aim of today’s article is to provide you with a reliable binary options trading strategy that can help you move one step closer to that winning portfolio.

The basics of this strategy are relatively simple and require elementary knowledge of price action charting and the ability to spot double tops and bottoms.  For those of you who are unfamiliar with the term price action it is simply a term designated to trading that means the summation of all buy and sell orders within any given moment of time.  This summation of buy and sell orders is what gives our assets movement, direction and value.  In addition, this strategy requires a great amount of reliability on the ability to accurately detect patterns associated with what we are looking for.  In the pictures below you can see the basic patterns that we are seeking.  As you can see we are looking for double tops or double bottoms to occur during the assets trend.

 

 

As you can see in each of the pictures above there is a pattern to them, either they display a double top or a double bottom.  These double tops and bottoms are perhaps one of the most repeated patterns in an assets trend therefore giving us traders quite a bit of opportunities to place trades on a day to day basis.  There are a few important guidelines to follow first though; the first guideline would be that we want to use this strategy with a reliable asset such as the EUR/USD, USD/CAD or USD/CHF.  The second would be that the timeframe on which we are charting the asset must be on 30 minutes, meaning that each candle presented on the graph displays a half hour, I have found the best accuracy using this charting timeframe.  The last guideline would be that when we place our trades we want an expiry time consisting on one hour to end-of-day, this allows optimal time for our asset to continue their reversal and increase our chances of winning.

Trading reversals with double tops and bottoms is perhaps one of the simplest and utilized strategies in today’s market which is probably why it is one of the most successful trading strategies.  Patterns are easy to seek and the number of signals generated on a day to day basis is substantial enough for full-time traders to benefit financially.  If you have any questions please feel free to comment below and also checkout the previous article on Reversals and Retracements!

4 thoughts on “Trading Reversals with Double Tops and Bottoms

  1. Tim Lanoue

    Hey Cassie,

    That is a great question and I am glad you asked that. Ideally, our double tops or bottoms must bounce off of the same price level, this is known as a support level or resistance level. Candle length placys no roll in this strategy, just where the candles close/open (depending on candle type). As you can see in all the pictures above our candle bodies end near each other at the double top or bottom.

    Thank you for your compliments and have a great day.

    Sincerely,

    Tim Lanoue

    Reply
  2. Cassie

    Hi Tim,

    Thank you for these very good tips. Even a newbie like me could understand this strategy. I wonder though, do the tops/bottoms have to be approximately at the same price level? And how about the candle pairs of the tops/bottoms, do they have to be equal size (length of the body)?

    Keep doing this good thing and offering readers good advices. All the best to you and Mike!

    Reply
  3. Tim Lanoue

    Hey Tony,

    Thank you very much for the compliment! Well success rate between different traders vary quite a bit but I average around a 74% win percentage when using only the best signals generated with the double tops/bottoms. If you want to look out for possible false indicators I just recently wrote an article available on this website for determining the difference between retracements and reversals. Here is the link: http://binaryoptionschannel.com/difference-between-retracements-and-reversals/ Anyway, other than a possible retracement there are no false indicators that you should look out for.

    Thank you for your time.

    Sincerely,

    Tim Lanoue

    Reply
  4. Tony

    Hi Tim,

    Very nice article! I’m researching as much as I can on different strategies as this is a completely new field to me. Have you estimated your winning percentage with this strategy? Also, are there any false indicators that I should look out for when using this?
    Thanks a lot!

    Reply

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