Tuesday , August 14 2018

How to trade perfect put option using trend line

Binary options trading can be extremely profitable if mastered properly. There are many traders in the world who are making tons of money by using simple binary options trading strategy. There are many different types of trading strategy but trend line trading system tends to generate the most stable profit in this industry. Trending with the prevailing trend is always appreciated since it reduces the associated risk to a great extent. In the next section, we will learn how the professional traders set put option in the different financial instrument using the bearish trend line.

Before you enter into your first binary trade you must know how to draw a valid bearish trend line. In a downtrend, the market will make successive lower highs associated with lower lows. There are many professional traders who consider these phenomena as a strong indication of the downtrend. So, how do we draw a valid bearish valid trend line? In order to draw the valid trend line, we need at least three connecting points. Professional traders use this three connecting point and wait patiently for the price to retrace back to the trend line resistance where they will enter into the put option.

Let’s see how the professional traders use the bearish trend line to trade financial instrument

put option
Figure: Trading the bearish trend line using the put option


In the above figure, the price has formed the nice ascending structure by making successive lowers highs and lower lows, a classic example of the bearish trend in the EURJPY pairs. So how the trained professional does enters into their put option? There are two ways to enter the market. Set your strike price near the trend line resistance or wait for the price action confirmation signal. Conservative traders prefer to use price action confirmation signal in the key resistance zone since it reduces the risk significantly. In the above figure, a bearish harami candlestick pattern has formed just near the trend line resistance which triggers the put option for the options traders.

Trading the option requires an extreme level of money management skills. It’s highly recommended not to use all of the trading capital in a signal trade. No matter how reliable the trade setup is, it might fail sometimes. So, the precautionary measure is a must since you need to have enough capital to execute your next probable trade in the market. There are some traders who try to set call option in a bearish trend to make some quick profit. Binary options trading are just like any other business and you can’t afford to take any unnecessary risk. So always go for the put option in presence of bearish trend line. If you are comparatively new in binary trading then make sure you limit your risk by following proper money management. This type of bearish trend line put trading strategy works best when the market is trending. You should avoid this trading strategy in the event of major economic news release since most of the breakout happens at that time.

You can also set touch trade setup within the trend line resistance zone during extreme volatility. But touch trade setup should only be executed by extreme professional. If you can truly master the art of put trade setup using bearish trend line then you can make the decent amount of money easily by trading binary option.

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