Indicators can be extremely useful in options trading if it is used properly. There are many new traders who often use too many indicators for the better trading result and end up with extreme loss. Professional options traders use the indicators in a very delicate way and make their trade execution much more accurately. Indicators can be used in many different ways but it is highly imperative to know the proper use of indicators .Expert option traders are making tons of money simply by using the envelope indicator in the 1-minute time frame.
Let us see how the expert option traders use the envelope indicator in their options trading.
Professional traders prefer the 1-minute time frame and major currency pairs to trade different option orders in the market. In the above figure, traders use the 1-minute time frame of the GBPUSD pair to execute their options orders. The blue dashed line is the key resistance line for the price. When the price hit the blue dashed line for the first time, there has been a sharp fall in the price which signifies the strength of that resistance zone. When the price retrace back towards the key resistance level after the sharp fall expert option traders look for the confluence of the blue line of the indicator along with the dashed line. If the key resistance level gets in line with the envelope resistance then traders go for the put option order right at the envelope dynamic resistance level. In the above figure, the black shaded region is the place where the professional traders executed their put option order in the market. Advanced option traders also go for touch option order using this same technique. Almost 90% of the time price tends to hit the red line or the envelope support zone after rejecting the key resistance level. The sample principle can be used in the call options trading strategy. Traders should be extremely cautious about the overall trend of the currency pair while trading the minute 1-time frame in the chart .In the above figure, put option order was executed in the market since the overall trend on the daily chart was strongly bearish for the GBPUSD pair. To be precise, while using this option trading strategy expert option traders always make sure that they are trading the market in terms long term established the trend. Though the system is extremely reliable but its highly imperative to use proper risk management factors.