by Girvan Lambert
While the mechanics of binary options trading are indeed simple and straightforward, becoming a successful trader is a much more difficult proposition than understanding how things work in trading. The odds are usually stacked against the trader, and it takes a solid system/strategy to alter this rather undesirable situation.
One way to find a system which is likely to work and which yields a guaranteed long term positive expected value for the trader, is to go through the systems that are already proven in other markets. The Triangle Touch system is one such system. Used correctly, it is guaranteed to give the trader an edge, and being a chart-pattern based system, it is easy to understand and to apply.
The Triangle Touch system is built on the Triangle chart pattern which is rather self-explanatory. An ascending chart pattern is formed by price action candlesticks the successive highs of which are relatively constant, but their lows are higher and higher. This way, two landmark guide-lines are formed: a horizontal resistance line and an upward-sloping support line. Both of these are important indicators in regards to how the trade should be placed.
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Descending Triangles are patterns made up of candlesticks with relatively constant lows and gradually lower and lower highs. The two indicators defined by this chart pattern are a horizontal support line and a downward-sloping resistance line.
With this strategy, the Touch/No touch contract should be traded. It is also worth mentioning though that the High Yield Touch option does not work with it.
How do you place the trade? Let’s look at the ascending triangle as an example (trading with the descending one works in a symmetrical manner).
The ascending triangle means that there is a bullish breakout of the price in store. What that means is that right after the triangle pattern, the price breaks out upward. The question is: just how high will it go? In order to gain a valuable clue in this respect, one should turn to the automatic pivot point calculator, the first resistance pivot point of which is the target. The Touch trade should be set 20-30 pips above the horizontal resistance line of the triangle. The expiry of the trade depends on the time-frame used for the analysis.
The No Touch zone is below the upward-sloping support line of the triangle, and the expiry on this trade should be longer than on the previous one.
While the way this system works is fairly straightforward, one should always put it to the test on a demo account before tossing it into the real money trading action.
Author bio: Girvan Lambert is a full time options trader.
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