Today we will have a look at a simple way of trading the EURUSD binary Option which is using a strategy that is usually used to trade the EURUSD.
Why should you try this system?
One of the reasons we choose the EURUSD as the underlying asset of choice to trade this system is because it is the currency pair which is traded the most in the Forex market. This guarantees that as a Binary Options instrument it is available for trading all day long and will have good liquidity and you can get a good pricing. You will not have to buy expensive bets which will have a greater risk than reward.
If you are a new in the Binary Options market this is a good way to begin your trading. This system can be used to trade the Rise/Fall variety of Binary Options. If your broker does not offer this trade type you can choose the High/Low variety or the Touch/No Touch Binary Option.
Setting Up the System:
Most Binary Options Brokers do not offer charts for trading analysis so you have to get the charts by yourself. Because of the underlying instrument is a Forex instrument you can easily get a chart by downloading a MT4 platform from any Forex Broker.
The strategy should be used on a 30-minute chart and the following indicators are used:
1) MACD (12, 26, 9): This is a momentum indicator that shows the strength of the signal.
2) Parabolic SAR (default settings of 0.02, 0.2): This is a trend signal.
Here are the trade rules for this strategy:
BULLISH SENTIMENT: To go bullish we wait for the Parabolic SAR indicator to indicate a buy Signal that occurs when the stars of the Parabolic SAR indicator appear below the price action on the chart. We also wait for the MACD lines to cross from negative to positive.
BEARISH SENTIMENT: To go bearish we wait for the Parabolic SAR indicator to indicate a sell Signal that occurs when the stars of the Parabolic SAR indicator appear above the price action on the chart. We also wait for the MACD lines to cross from positive to negative.
Once you have got a confirmation of the signals the next step is to choose the Binary Option trade of your choice. For this example we will recommend choosing the Touch/No Touch option. This is easier to forecast than a Rise/Fall or a range option as all you need is a touch (or no touch) to make profit on this trade.
If you are bullish on the EURUSD you can try to purchase a Touch option contract selecting a strike price to the upside. Ensure you identify the resistance points and keep your strike price below the resistance so you can be sure that the price action will actually touch the price barrier you have set. You can then purchase a “No Touch” option contract selecting a price barrier to the downside. In this instance you can set your price barrier well below the nearest resistance so the price action has no chance whatever of touching your price barrier.
Repeat the same trade sequence in reverse Fashion when your signal indicates a bearish outcome. Whichever trade you choose to take you should at least have 4 different trade options to benefit from: