Bollinger bands looks like a channel with a middle band; works as an excellent volatility indicator. The middle band is more like a pivotal point. Anything above it bullish & anything below bearish.
Usage of oscillators:
There are plenty of oscillators available. You can choose anything you like, in this case, we have used MACD (Moving average convergence divergence). MACD adds extra confirmation on trade signal along with Bollinger band.
MACD generates two types of signals.
In this case, we only need both MACD signals agreeing with the Bollinger band signal.
1. Bullish Breakout
When the market price as a candlestick or a bar form closes above the upper Bollinger band on the chart, then it is considered as a bullish breakout. In the case of binary options trading, you can place call order or rise order when such signal occurs. Trade duration depends on the time frame which you will use.
As we have mentioned about MACD has to be following the same signal. With the example below, see with the trend indicator dashboard for USDCAD, Bollinger band showing bullish breakout signal along MACD both bullish signals.
Indicator buy signal
By looking at the15 minutes chart we can see the Canadian dollar is breaking a range & moving upward. So it is possible to place a call option for 15 minutes.
USDCAD full chart display
With Binary.com online platform we can easily place a buy up/down or rise/fall trade for 15 minutes.
placing binary options trade
With binary.com platform if you select tick “allow equals” that will enable you to make money even if during binary option expiration price stays equals to the entry strike price.
But note, activating this option will decrease your amount of profit return percentage a little bit.
As long as candlesticks are closing above the Bollinger band upper line, the market indicates a bullish trend. When the bar closes below the upper Bollinger band & MACD showing bearish signal, that indicates weakness in a bullish trend.
2. Bearish Breakout
When the market price as a candlestick or a bar form closes below the lower Bollinger band, then this indicates a bearish breakout. In case of binary options trading, you can place put order or fall order when such signal occurs. Trade duration is the same as before based on the selected time frame of the chart.
Bollinger band bearish breakout example
As long as candlesticks are closing below the Bollinger band lower line, it stays bearish. When the bar closes above the lower Bollinger band, the bearish trend becomes weak.
3. Range Market
When the market price as a candlestick or a bar form stays inside the upper & lower Bollinger bands, that indicates the price is in range mode, especially you can see Bollinger band channel is squeezing. In such a case, you can trade range options, like you will get paid only if the market stays within the range top & bottom under a certain time.
Trade duration is the same as before, matched it with the chart time frame. If you use 5 minutes chart for analyzing the chart, then binary options trade duration should be between 5-10 minutes.
Bollinger band in range market
In the picture above, we have marked two arrows where we find the highest top in the range and the lowest low. So A & B is the top & bottom of the range, as long as the price stays inside a range. Also, notice price is not breaking the lower Bollinger band or the upper Bollinger band.
Generally, after a range market, a bullish or bearish trend appears.
Bollinger Band with MACD:
MACD stands for moving average convergence & divergence. It is an oscillator widely used in technical analysis for trend confirmation.
- Indicator Used: Bollinger Band & MACD
- Time Frame: 5 Minutes
- Chart Pattern: traditional candlestick pattern
- Indicator Parameter: Metatrader Default
Bolliner band with MACD
See the picture above, we have plotted Bollinger band & MACD for 5 Minutes EURUSD chart. We have marked all 3 trade best signals on the chart. If you place a trade, that EURUSD will rise or fall for the next 30 minutes. Then with these 3 trades, you could have won positively.
The above statement might sound like hindsight trading. But in reality, it is not. Cause if you have noticed the wave pattern, then these 3 trades can be easily explained.
Here you can see that after a range movement, the market has expanded toward downtrend. At point 1, EURUSD broke the range bottom & also MACD is bearish & MACD value is below the MACD signal. So there is an option to place “Fall / Put” trade for the next 30 minutes.
At this point (marked as 2) EURUSD broke the last range top & with expanded Bollinger band. Bar closes above the Bollinger band. MACD signal & MACD value both showing positive. Therefore another “Rise / Call” binary options trade opportunity it is showing.
A good buy trade signal was visible when EURUSD broke the last top & created a new higher high. Bar closes above Bollinger band upper level. MACD is also agreeing with it.
you might find lots of Bollinger band breakout but none of them are creating any new high or new low. Rather staying inside a range. As a result, we are no longer trading. Our 3 best trade is done.
Using Metatrader Indicator
Metatrader is a free charting software and spot trading platform. You can use this software to load IntraQuotes premium Indicator. The main benefit of using this indicator is it automatically scans for Bollinger band signals among multiple currency pairs or instruments.
Now, as we have mentioned about using MACD & bollinger band signal all together. So on trend dashboard indicator we will use default settings in this case & observe MACD, bollinger band breakout signals.
Bolliner band MACD signal
See with the above picture, we can see signals with EURGBP, AUDJPY, AUDCHF. So we can place sell order with binary options with 5 minutes expiry. For buying binary options we had USDCAD,GBPAUD.
With the trend dashboard one can get instant binary options buy sell signal at a glance.
In order to use MetaTrader, you need to have a demo forex trading account. You can open find different forex brokers with demo account facility with link below.
Placing binary options trade:
Most of the binary options brokers support web platform to execute a trade & also to analyze the chart. You can place a trade put/call or range options trade after logging to your binary options real trading account.
Binary options trading web platform
You need to select trade duration, payout amount & entry price, exit conditions.
Like all types of trading, the basic rule is, do not risk too much. Risk only a small fixed amount or 2% of the capital, which you can effort to lose, thus you will be under less mental pressure.
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