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Binary options channel strategies are an excellent example of using classic technical analysis approaches. Strategies of this type are considered the easiest to use and, at the same time, highly effective in binary options trading.
Today we will consider trading in channels, the basis of which is a signal in the form of a breakdown of the border of market price fluctuations.
The channel trading system "Channel Breakout" is characterized by a high level of versatility and trading efficiency.
So, the main rule of trading in the channels of fluctuations in quotes is the correct definition of the boundaries of such market movements.
The construction algorithm is simple - it is necessary to determine the boundaries within which quotes move with the help of trend levels.
We will choose the second option, as it is the most convenient.
Let's go to broker platform (you need to register before that and replenish the deposit), then select the “Channel” tool below:
In addition, the trading platform of this broker offers the market participant a number of advantages in trading on the binary market, including:
- A stable trading terminal with a wide range of technical capabilities: indicators, graphical tools, an optimal set of assets, chart formatting and quotes history;
- Trading conditions that have the most minimal parameters on the market: the amount of initial capital from 10 USD, the volume of a trading position from 5 USD;
- Wide range of analytical information;
- Free education;
- Set of payment services;
- High-speed profit monetization;
Given these indicators of the terminal, this platform is the best option for a brokerage company for highly productive and stable binary trading.
Building channels and defining signals
To generate signals according to the strategy, we need to build a price channel using a graphical service.
To do this, you need to connect market extremes (minimums or maximums) on the quotes chart, then, using the capabilities of the service, determine the second border of the channel - this will be a simple parallel line.
Thus, we will get a quotes channel, limited by the levels of support and resistance of the trend, in which the quotes move.
This system uses the only classic trading signal in channels - a breakdown of the border of the price range identified on the chart:
As you can see, the purchase of an option must be carried out in the direction of the breakdown and in the immediate vicinity of the point where the price quotes cross the channel border.
In this case, the direction of the channel construction does not matter. For all binary options contracts, one rule applies - we buy only in the direction of the breakdown of the channel level:
In the downstream channel, the same rule applies for making a trade:
This indicator for trading on the binary market often depends on the timeframe of the asset chart. On the broker's trading platform a chart with a price candlestick time range of 5 seconds is used.
For this reason, when trading on this terminal, it is recommended to use contracts with an expiration of 60-180 seconds. With such an expiration, the strategy on channel breakouts brings the highest results.
Considering the use of short-term options in trading with a channel strategy for binary options, we get a fairly high level of trading risks.
Losses can be minimized by using contracts with an initial value of 5 USD in binary trading, which, according to the trading conditions, are available on the terminal
With the growth of the deposit, the bar of trading risk indicators can be raised to the level of 3% of the amount of working capital.