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Binary options Bollinger band strategies.
Bollinger bands are one of the most popular tools for technical traders looking to find out when markets are overstretched and ripe for reversal. They consist of 2 bands forming a widening and narrowing channel around a central band. When the channel is wide, forex auto cash robot free download price is likely to be volatile and swinging between the outer bands and when these form a narrow tunnel price is likely to be moving sideways and with no particular direction.
How to apply Bollinger bands.
Trading Bollinger bands with binary options requires a separate charting package to that provided by many binary options which are, to put it bluntly, often fairly basic. Luckily, almost all charting packages and online charts will have the option to apply Bollinger bands and most binary options traders will find these easy to come across without having to pay for any additional software.
The general idea behind Bollinger bands, and which can be seen from any historic chart, is that when price moves outside of either of the outer bands, it has a very high likelihood of retracing back to at least the central Bollinger band. This can be described as the market being overstretched and it is visible on any timeframe and all currency pairs, commodities and stocks.
Applying Bollinger band strategies to trading.
As we know, binary options have the beauty of not requiring traders to apply stop losses, unlike all other forms of trading. This gives binary options traders a very distinct advantage in highly volatile markets where wild swings in price can easily trigger a loss and wipe-out a trading account. For those who prefer to trade short timeframes such as the 5 or 1 minute charts, the more volatile the market makes for download robot forex robot gratis enhanced trading opportunities using short expiry binary options. Currency pairs such as the GBP-JPY offer these conditions for traders but are certainly not for forex robot market the feint-hearted. This pair can swing wildly in either direction and, although trading without a stop-loss is great here, the unpredictability of the pair make quick gains preferable to longer term investments when using Bollinger bands.
Applying a lower risk strategy in volatile markets.
A fairly conservative strategy when trading Bollinger bands within volatile markets would be to wait for a close outside of the outer band. Look back at how often price has reversed, even short-term, following a closure outside this level. Additionally, an excellent technique would be to apply an additional band with a slightly higher deviation than the first band (for example using a period of 50 and applying 1 and 2 deviations to two different sets of bands). Waiting for price to close outside the first band and at least touch the second would be an entry signal for purchasing binary options for a reversal.
What are the best market conditions for Bollinger band strategies?
The markets that traders should look for the lowest timeframes (such as 60 second binary options trading) should be volatile as we have already discussed. However, these markets should also be indecisive and without a strong trend. A strong underlying trend can result in price continuing higher or lower even if it moves far beyond the outer Bollinger bands. Indecisive markets will, on the other hand, see this as an overstretching of price and increase the likelihood of a short term reversal.
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