Strategy for binary options “Effective Bollinger. Bollinger Band Trading Strategy for Binary Options

Bollinger waves are a unique tool for identifying overbought and oversold areas. The indicator has three lines, of which the central one shows the boundary between two opposite market states.

Up from the central curve and to the upper outer border is overbought territory, and down from the middle line to the bottom is oversold territory ().

The indicator was developed back in the eighties, and today it is widely used, although most traders prefer to use waves together with other tools. Today we will look at the Bollinger Wave strategy without additional algorithms, which is well suited for binary options trading.

For example, let's use the Olymp Trade platform. In the main terminal, go to the "Technical Analysis" tab in the upper right corner (of the Olymp Trade trading terminal). Then an additional window is loaded with the ability to configure indicators on the chart.

Bollinger Wave Strategy

Typically, when using a tool that shows oversold/overbought areas, signals for action are given by passing certain levels. In the case of the Bollinger Wave strategy for binary options, the control levels are the upper and lower boundaries of the corridor.

When the price passes through the upper limit, this is a signal to buy a downside option, since after such a breakout a downward movement is expected. If the market has passed the lower limit, then the up option is purchased. This means that the market has reached oversold conditions and, accordingly, should go up.

An example of an input is shown in the following illustration. As you can see, after passing through the upper line of the indicator, a downward movement occurred. Expectations were justified even after reaching the bottom line.

Expiration of options within the strategy

Reviews of two more quality strategies:

Advantages and disadvantages of the system

Still, in most cases, when moving sideways, Bollinger Waves are right and this is their advantage. The indicator is very easy to use, but it also has disadvantages.

A significant disadvantage is that protracted series of repeated border breakthroughs occur. This may be acceptable when working on other financial platforms, but for binary options this circumstance is dangerous. On "binars" important role plays the time it takes for the market to pass through the opening price.

The default settings for Bollinger Waves are 20, 2, where:

• 20 - the number of periods on the basis of which the moving average is calculated;
• 2 is the number of standard deviations, that is, the distance from the center line to the two outer lines.

The creator of the indicator, John Bollinger, believed that these were the optimal settings, but they could be changed if desired.

If you increase the periods of the moving average, then center line will be more averaged, that is, it will be less sensitive to market movements. As the number of standard deviations increases, the distance between the center curve and the outer lines increases. In this case, the number of signals will decrease, since the market will reach the borders less often.

In this article we will look at what kind of trading strategy using Bollinger Bands for binary options and Forex. Also here you will find tips on its use and settings.

To make stable money on binary options you need to learn how to correct analysis graphs. Based on such information received, further movements in the price quotes of various assets are predicted. The process of training traders is associated with practical training, and novice users always run the risk of losing their own funds very quickly.

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It is important to correctly use strategies based on Bollinger Bands when trading in order to close most trades with a profit. All the nuances can be worked out in practice using a demo account.

• During an uptrend, it is necessary to purchase CALL options with a maturity depending on the time period used on the open chart. The most appropriate moment is when the value of a currency pair moves up in the upper channel, after which it has reached middle lane.
• During a downward trend, income from binary options trading should be obtained by purchasing a binary PUT contract. The trade completion time is selected in accordance with the chart timeframe. The ideal time to open an order would be after a rollback to the average line of quotes, but the price should move in the lower channel.
• If a sideways trend prevails on an international financial exchange, then the value moves from the upper to the lower Bollinger Band. This means that binary options CALL or PUT are traded according to following rules: when the quote of a currency pair has approached the upper line of the upper channel, it means that it is necessary to open a deal to forecast a fall in value (PUT option). If the value of an asset has fallen on the lower channel towards the lower border, then it would be logical to buy binary options for a further rise in price (CALL binary option).

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Both indicators, in addition to the direction of the trend, clearly show the level of dispersion of price quotes - volatility. If the Bollinger Bands are gradually narrowing and the trend is strictly sideways, then this moment the most important is when to be patient in order to then confidently take profits.

It is necessary to remember that the more the Bollinger Bands narrow, the stronger and sharper the price will jump in a specific direction. With such a jump, you should purchase binary contracts. It is best to work with time frames H1 and H4, since price jumps will be more confident and longer, and the expiration time of binary contracts is 30 minutes - 1 hour, respectively.

Graphical parameters and indicator functions

One of the best binary options trading strategies is based specifically on the Bollinger Band indicator. This strategy demonstrates very strong signals for opening CALL and PUT contracts.

Unlike many others, it can be used to trade not only classic, but also OneTouch or Range contracts.

To work, you need to apply the Bollinger indicator to a live chart. In trading we will use the standard settings of this indicator.

Trading rules follow from the capabilities of the indicator itself - the approach of the value to the extreme lines of the bands signals that there has already been enough movement and you need to wait for a market reversal. It looks something like this.

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This approach is very simple, it has both its advantages and disadvantages. In particular, the advantages include universalism (suitable for any timeframes and assets), accuracy ( high percent profitable transactions). The disadvantages include short-termism.

It is important to know that the approach of the price to the bands does not provide an unambiguous signal about a powerful change in trend. Often this will be a local correctional movement.

Because of this, transactions are opened, with rare exceptions, 1 - 3 candles ahead. In most cases, opening more than one candle ahead is pointless. If the strategy is often used in binary options, then in Forex it is used only for scalping.

Trading signals

For demonstration trading signals Let's take a time frame of 1 hour. The basis is binary options, but for Forex the situation is similar.

Signal to increase

It is necessary to purchase a contract for an increase when the following conditions:

• The lower band was crossed by the candle from top to bottom.
• The candle closed below the lower Bollinger Band.

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This is a great signal and a good buying opportunity.

Down signal

The opposite situation is observed when an opening signal for a downward trade appears:

• The current candle was opened within the Bollinger Bands.
• The candle crossed the upper band from bottom to top.
• The candle closed above the upper Bollinger Band.

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Important Terms

The situations discussed above are classic. Quite often they give very accurate signals, but not one hundred percent.

To improve the performance of this system, users can change the standard deviation (the basic parameter when setting up the indicator) from “2” to “3”. As a result, the Bollinger Bands become wider and the price approaches them.

This will reduce the static probability of receiving a false signal. In this matter, practice should be used to determine for which underlying assets which deviation is considered optimal.

Another very popular modification of this system is when the user does not wait for the cost to go beyond the range. For binary options, this strategy is classic. In it, the purchase of an option is made directly when the cost approaches the bands.

This method especially relevant in flat market situations and small time frames.

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The screenshot shows an example of this modification of the system using Bollinger bands. It can be seen that during a calm market, which is not subject to a trend, such a modification is well suited. Out of 12 signals, 2 closed with a loss, and 10 brought profit.

How to use a binary options strategy. Instructions for beginners

Created for binary options a large number of strategies using Bollinger Bands. There are many similar techniques that are developed for Forex, but are suitable for the binary options market.

For beginners, it is better to start with the most understandable and simple strategy, which does not use many indicators to avoid confusion. The experience of many traders says that it is the most simple strategy will be the most effective, it allows you to “feel” the market. This largely determines the success of a binary options trader. The candlestick chart is very eloquent; you need to learn how to read it correctly.

You can trade successfully using only Bollinger Bands and the techniques described above. Sometimes they are enough to make successful bets, but you can use indicators that will act as a safety net for a trader who doubts his own decisions. Will fit better total and value oscillator. The screenshot below shows the basic chart view.

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Bollinger Bands also go well with the RSI indicator (relative strength index. Together with it, a powerful financial instrument, which very accurately determines the direction of cost.

The signals arrive very rarely, but are quite accurate. Like Bollinger Bands, RSI can be found at most brokers in base list. It is also present in all trading terminals.

In the settings for operation, you need to set the level to 30 and 70. You can use 20 and 80, but there will be fewer signals.

To enter the market, the signal will be the price crossing the lower (30) or upper (70) level on the RSI, while simultaneously crossing the corresponding Bollinger line.

When using these indicators, it is not advisable to choose an option time of more than 4 candles, and a time frame indicator of less than M15. In other cases, losses cannot be excluded.

Today I decided to tell you about the Bollinger scalping strategy. This trading technique is intended for use on short time frames, namely one-minute and five-minute. As for the currency pair, according to the author of the strategy, it can be any, but it is advisable to use assets with high and medium volatility. Today we will use the pound/dollar pair as an example.

Indicators for the Bollinger strategy

The Bollinger strategy involves the use of several indicators. Now let's transfer these indicators to the chart. The first main algorithm is the Bollinger indicator. In total, you need to transfer three indicators to the chart at once, all of them will have the same period equal to 50, but with different deviations, which should be equal to 2, 3 and 4.
The second indicator is called . This instrument must have a period of 8, and in the “Levels” section you need to add levels 30 and 70. This algorithm is needed in our strategy to filter out false signals.

The third indicator is called Stochastic. It should have the following settings: 14, 3 and 3. In the “Levels” section you need to indicate additional levels, namely 20 and 80. We need this tool, like RSI, to filter out false signals.

And the last indicator is an exponential moving average with a period of 50. This algorithm is intended to more accurately identify points for entering the market.

If you correctly construct the indicators described above, you will see the same picture as in the photo below.

In order not to have to build indicators yourself, you can download ready-made template for this strategy. You can do this using the link below.

Rules for entering the market using the Bollinger strategy

So, we’ve figured out the indicators, now it’s time to look at the rules for entering the market. To open buy transactions, the following conditions must be met:

• The downward price must break through the upper boundary of the Bollinger channel, which has a deviation of 2, after which it must go at least halfway to the curve with a deviation of 3.
• The RSI indicator curve should be located in the oversold zone.
• The Stochastic curve should also be located in the oversold zone.

You can see an example of opening a buy transaction in the following picture.

Sell ​​positions are opened subject to the following conditions:

1. The price level above crosses the red Bollinger line. In this case, the price must travel half the distance between the red and green lines.
2. The RSI instrument curve should be located above 70.
3. The curve of the Stochastic instrument should be located above the 80 mark.

The picture below shows the situation for opening a sell position.

The average profitability of trades opened using this strategy is 25 pips. There are two methods for setting Take-Profit:

1. You can apply a fixed Take-Profit at a distance of 25 pips from the place where the position was created.
2. Take-Profit can be placed close to the moving average, which has an orange tint (period 50).

The Bolinger strategy does not involve setting Stop-Loss. But if you want to make trading safer, you can set a Stop-Loss, the value of which is twice the Take-Profit.

Relatively recently, an automatic trading robot was created based on the Bollinger strategy. This advisor allows you to earn income from creating transactions using the Bollinger strategy without the direct participation of the trader.

Experienced speculators tested the advisor based on the Bollinger strategy. The test was carried out over a year at currency pair pound/dollar You can see the results of the testing in the following picture.

During the first six months, the robot managed to double the deposit. The second six months were less successful, as a result of which the balance of the account decreased by 70%. In just one year of testing, the robot generated a return of 29.4%, which is a pretty good result. During the entire trading period, the maximum drawdown did not exceed 51%.

In parallel with the first test, this advisor was tested with optimized parameters. Changes have been made to the parameter responsible for closing positions. For the Close type characteristic, the value 5 was selected. The following picture shows the performance of the advisor with optimized parameters.

According to the test results, the adviser showed quite high profitability in the amount of 200%. But at the same time, a fairly high drawdown value of 83.88% was recorded.

Also, the optimized version of the robot was tested on the euro/yen currency pair. The robot's profitability on this currency pair is shown in the following photo.

When testing the robot on the euro/yen currency pair, its profitability was 100% of the size of the deposit used. At the same time, a drawdown of 34% was recorded, which is an acceptable result. During the entire testing period, the robot created only 59 positions.

Having analyzed the results of testing the advisor based on the Bollinger strategy, we can come to the conclusion that the best option is to use an optimized version of this trading robot on the euro/yen currency pair.

The Bollinger strategy is an effective trading technique that, if used correctly, can provide a small but stable income.

Before you start using this technique for creating positions to trade for real cash, it is recommended to test it on a demo account. Only after you learn to correctly interpret the signals of this trading strategy and use them to open positions, you can start trading with real money.

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Trading tactics rules "Super Bollinger" are really simple, but before we begin their description, we want to note a certain feature of this strategy. The fact is that you need to trade it only on a trading platform with built-in technical indicators. Indicators working in live quote services will not be suitable here, since there will be significant discrepancies between the timeframe (time interval) for quotes on the broker’s platform and the timeframe of the analytical service (1 candle of quotes from the broker is equivalent to 5 -ty seconds, and 1 candle on the service with live quotes - to 1 th minute). The strategy was tested on the Binomo broker terminal.

The best strategy for binary options – indicator parameters

This method works for binary options based on very accurate indicators - Moving Average And Bollinger Waves. These indicators are shown in the chart above. Therefore, it is necessary to apply them to quotes using the following mechanism:

• First add Bollinger Bands and leave its settings at default.
• Then add Moving Average, and in its settings set the period to 1, and the method to weighted:

“Super Bollinger” - rules for using a simple strategy for binary options

When you already have the two indicators indicated above installed on your chart with quotes, you need to wait a moment to:

But the main thing about using this simple strategy for binary options is that it allows you to trade by closing more 70% your trades for profit. Having tested this strategy, we managed to achieve about 100% income to the deposit in just a week. And this is already an excellent trading result, with which you can steadily increase the size of your deposit.

As you can see, this strategy is quite simple, so it will be easy to use even for beginners.

Additional conditions for the best strategy for binary options

Expiration dates should be set approximately 1 minute. At the same time, you can use this strategy regardless of the time of day. According to the rules of risk management, for each trade in this tactic you need to risk no more 2% from the volume of the deposit. That is, with a deposit amount of $100 , the transaction amount should be only $2 .

During the existence of binary options, many indicators have been created that allow you to effectively conclude transactions. Some of them “migrated” from financial market Forex, as well as the Bollinger Band indicator, which is well known to many traders.

Thanks to the famous trader John Bollinger, who invented this indicator, many traders became successful people and earned their first millions. This is why every self-respecting trader must study the legendary Bollinger indicator.

Typically this indicator is used to complement the candlestick chart and limit the price. The strip allows you to use a minimum of additional indicators and signals and not overload the chart.

Who is Bollinger

John Bollinger is a star of the trading market, giving traders the know-how that makes the work clear, simple and profitable. This man, who is not yet sixty, has been awarded dozens of awards and prizes. He also gave the world a legendary book, which was subsequently translated into 11 world languages ​​- “Bollinger on Bollinger Bands.”

The book describes recommendations for working with various assets, and not just instructions for using the indicator. It is ideal for beginners as it is written in a simple and in clear language, without intricate phrases and derivation of formulas.

John Bollinger has been developing ways to simplify financial market trading since 1977, long before modern powerful computers with great possibilities. He developed the Group Power system, which accurately identifies leading trends in various industries. He is the head of several financial organizations and created a website with reviews technical analysis back in 1996. Despite technological progress, the site is still popular.

Bollinger Bands display the volatility of an asset, and in other words, show within what limits its price will move. The indicator consists of three lines:

• Upper limit SMA20+;
• Lower border SMA20-;
• A simple moving SMA20 in the middle of the band.

These lines are constructed by calculation standard deviation. But trading platforms perform automatic calculations, so the trader does not need to know these subtleties.

As you can see in the image, the upper and lower boundaries form a corridor in which the price moves - this is the essence of the indicator. The opportunity for profitable trading appears when a candle or bar crosses the upper/lower border of this corridor. The Bollinger indicator is an oscillator, of which there are a great many. But thousands of traders use it in their work. Clarity and simplicity make it unique. Some traders affectionately call him "Bolly".

The width of the band depends on the volatility of the asset. The higher the volatility, the wider the band; at low volatility, the band is narrow, and price jumps are so slow that it’s difficult to call them jumps - so, jumps in slow motion.

As mentioned above, the width of the Bollinger band depends on the volatility of the asset. The long-term chart clearly shows that the band periodically narrows greatly and the price movement slows down, then widens and the price begins to move at breakneck speed. Therefore, after each contraction, it is possible to predict the expansion and speed of price movement. The expansion moment provides good opportunities for trade.

Most of the time, all candles are inside the band; the price does not make sharp jumps up or down. This is a period of calm for trading, but if the price begins to approach the border, this may mean an imminent breakout, and then a rapid movement into the opposite side. Any breakout means a change in trend, but only if there was no obvious trend on the chart. If it was, then the breakdown will indicate its continuation, and not a change.

When a breakout occurs during a pronounced trend, the trend continues. This phenomenon is called "Streak Walking". The price comes close to the border or crosses it, then a short time falls and shoots up again. The first breakout or touch does not indicate a change in the trend or its continuation, but if there have already been touches, then each subsequent one is a confirmation of the trend.

It is impossible not to recognize a strong upward or downward trend on the chart, since it is long-lasting and literally shouts about itself.

Important! Each touch or crossing of the line is an opportunity to make a successful bet. Best time for a transaction – price rebound to the middle line after touching.

Reception "W and M-shaped figures"

This technique allows you to understand whether there will be a trend reversal or not, since even the longest price movement in one direction ends sooner or later.

For the first time, such a phenomenon as the W-shaped figure was discovered by another legendary analyst - Arthur Merrill. At the bottom of the graph there is a clearly defined letter “W”, most often it right part located above the left.

This phenomenon can be observed both with a stable trend and in its absence. The price reaches the lower border, rebounds and touches the middle line, after which it touches the lower border again. After the second touch, it rises again and if the middle line is crossed, then this is a signal for a trend reversal.

With M-shaped figures everything is exactly the same - they mean a change from an upward trend to a downward one. At the top of the chart, the price rises to the border, bounces to the middle line, returns to the border and bounces again. If the chart falls below the middle line, the trend will change. Sometimes it happens that when the letter “M” appears on the chart, the MACD indicator indicates an upcoming price drop. Such a contradiction in readings is called divergence, which foreshadows an imminent price change (which is what happened in the end).

M does not always look familiar, sometimes it can be skewed or crooked, but this does not change the meaning. In the picture below, the letter M is difficult to guess, but all the conditions are met, which means that a trend change has occurred.

M does not always look familiar, sometimes it can be skewed or crooked, but this does not change the meaning

Many strategies have been created for binary options using Bollinger waves, as well as many similar techniques developed for the Forex financial market, but also suitable for binary options.

It is better for a beginner to start with the simplest and most understandable strategy, without using many indicators, so as not to get confused. According to the experience of many traders, it is the simplest strategy that is the most effective, as it allows them to “feel” the market. The success of a binary options player largely depends on this. The candlestick chart is also very “eloquent”, you just need to learn how to read it.

You can successfully trade using only Bollinger waves and the techniques described above, namely:

• Letters W and M;
• Walk the strip;
• Line breakdown.

Sometimes they are enough to make successful bets, but you can also use indicators that will back up a trader who doubts his decisions. It is best to use a price oscillator and the MACD indicator. The basic graph looks like this:

Bollinger Bands also combine well with the RSI (relative strength index) indicator and form a powerful financial tool that can accurately determine price direction.

The signals arrive quite rarely, but are quite accurate. RSI, like Bollinger Bands, can be found in the basic list of most brokers and in all trading terminals.

To work, the RSI settings are set to levels of 30 and 70. In principle, you can try to set them to 20 and 80, but there will be fewer signals.

A signal to enter the market is the price chart crossing the upper (70) or lower (30) level on the RSI and simultaneously crossing the corresponding Bollinger line.

When using these indicators, it is undesirable for the option life to be more than four candles and the time frame to be below M15. Otherwise, losses cannot be excluded.

The optimal time intervals for its use are intervals of 15 and 5 minutes. Some traders manage to successfully trade on a 1-minute interval, but this is the exception rather than the rule. Interesting point– the ability to temporarily switch to longer timeframes. For example, when trading on a five-minute chart, you can go to the half-hour chart and see the full picture - the presence of a trend, its stability, “lifetime”, etc., and then go back and open a profitable trade.

Conclusion

The Bollinger indicator is considered one of the most effective for binary options trading, although it was originally created for Forex.

Before you start using Bolly, you need to become as familiar with its capabilities as possible. Therefore, it is advisable to read a book about him. Success depends on understanding the factors that influence the indicator - volatility, economic and political events, news, etc.

To understand whether additional indicators are needed or whether a candlestick chart and Bollinger Waves are enough, you need to hone the basic strategy on a demo account, and then move on to trading with minimal bets. Not everything will work out right away, but over time, persistent players identify the necessary trading nuances that lead them to success.