3 Candle Binary Options Trading Strategy For MT4

 

Table Of Contents:

  1. 3 Candle Binary Options Trading Strategy For MT4
  2. Key indicators used in this system
  3. Functions of the indicator
    1. Envelope indicator
    2. Forex MT4 System
    3. Stochastic indicator
    4. CI arrows
  4. The long trade setup sequence
    1. Stop loss
    2. Take profit
  5. The short trade setup sequence
    1. Stop loss
    2. Take profit
  6. 3 Candle Binary Options Trading Strategy For MT4 – Useful advice
  7. 3 Candle Binary Options Trading Strategy For MT4 – Conclusion

 

Please note: This strategy was publicly published in the trading community and is free to use. We do NOT make an attempt to decide if this strategy is profitable or not, because we know that the major factors regarding trading results are the skills/experience of the trader who executes the strategy. Therefore, we are mainly explaining the components and rules of the strategy. If applicable, we are highlighting advantages, disadvantages and possible improvements of the strategy.

 

The 3 Candle Binary Options Trading Strategy For MT4 is specially created to trade on the time frame M1 and can therefore be used for trading binary options with an expiry time of 60 seconds. However, if you become comfortable with this system, you may use this strategy to trade M5 and M15 time frames.

The strategy uses three indicators to calculate the entry signals and the execution of the rules is quite easy to learn. The names of the indicators are Envelopes, ForexMT4 Cycle Indicator (is a repainting indicator), Stochastic oscillator.

The cycle indicator works with repainting values but according to the inventor of the strategy, the repainting is not a problem because the rules require to wait for 3 candles after the cycle indicator gave a signal. Signals that are still drawn after the 3 candles closed will stay forever and do no longer repaint. The 3 candle waiting period gave the strategy its name. Now let’s dive into the details.

 

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Key indicators used in this system

 

  1. Envelope indicator
  2. Forex MT4 System
  3. Stochastic indicator
  4. CI arrows

 

Chart setup with the 3 Candle Binary Options Trading Strategy For MT4

 

Functions of the indicator

The indicators used in this system have a much-diversified use. Unless you are well aware of its function, it is will be hard to make the right decision. For instance, the reading from the stochastic indicator can be used in multiple ways. So, if you know its multiple uses, taking the trades in the lower time frame will be much easier.

 

Envelope indicator

The envelop indicator is formed based on the upper and lower period. The default period is set to 8 and you should not have any major problem in determining the support and resistance level while analyzing the major and minor currency pairs.

Input settings in the envelope indicator

However, if intend to trade cross pairs or index, you may have to use a higher period in the settings. But in that case, you should test the performance of the indicator while using the new settings.

 

Forex MT4 System

The Forex MT4 is a simple tool that creates colored spikes on the negative and positive sides of the indicators. Based on the colored spikes, you should be able to analyze the quality of the trade signals. Usually, spikes below the zero line indicate a bullish reversal, and spikes above the reference line indicate bearish momentum.

 

Stochastic indicator

The stochastic indicator is a very popular tool used to find the overbought and oversold state of an asset. When the signal line is trading above the 80 lines, you should be expecting a drop in the price as the asset is trading in the overbought zone.

Analyzing the reading in the stochastic indicator

On the contrary, if the signal line is trading below the 80 lines, look for buying opportunity. Note that the slope of the signal line also gives us important data regarding the direction of the trend. If the slope is positive, look for buying opportunity. If not, it is better to look for the short trade setup.

 

CI arrows

The CI arrows draw a simple colored arrow which gives us the indication regarding the bullish and bearish reversal point. The green arrow below the candlestick suggests that the price might go higher. On the contrary, a red arrow above the resistance level gives us the indication that the price is most likely to fall.

 

The long trade setup sequence

The 3 Candle Binary Options Trading Strategy For MT4 is a very delicate trading method as it deals with lower time frame data. To eliminate the minor mistakes, you have to be careful with the key steps mentioned in this guide. To make things easier, we are going to highlight the critical conditions for sequentially taking the long trades.

 

Conditions to execute the long trade

 

  1. Select an asset that is already in a bullish trend. As a new user of the 3 Candle Binary Options Trading Strategy For MT4, we suggest you pick major currency pairs.
  2. The price should enter inside the lower band of the envelope indicator and have a bullish candle. A candle having a higher closing than its opening price is called a bullish candle.
  3. At the Forex MT4 system cycle indicator, you should see a blue color spike on the negative side of the reference line. The blue spike gives us the indication that the price is ready to move up.
  4. Check the readings in the stochastic indicator. The position of the stochastic signal line should be in the oversold zone. And the slope of the signal line should be positive.
  5. Check the economic news calendar and make sure that there is no high-impact news in the upcoming 15 minutes.
  6. Once you have analyzed these essential factors, you should be able to execute the short trade. But do not take more than 2% risk, because if you do so, you might have to face trouble in dealing with the losses.

 

Execution of the long trade

 

Stop loss

The stop loss should be placed below the lower band of the envelope indicator. Those who are good at analyzing the bullish price action confirmation signals should place their stop by using the candlestick patterns.

 

Take profit

The take profit needs to be determined based on your SL price. Try to use the nearest resistance level as your take profit zone. And those who will take the trades based on the expiry period, need to evaluate the risk so that they can maintain a 1:2 risk to reward ratio.

 

The short trade setup sequence

Dealing with the options market based on the 3 Candle Binary Options Trading Strategy For MT4 might seem an easy task. But in this segment, we will show you the exact way to deal with the critical data in the 1 minute and 5-minute time frames. If you manage to follow these instructions properly, you should have trouble taking the put options.

 

Conditions to execute the short trade

 

  1. Pick a major currency pair that is already in a strong downtrend. And make sure that there is no high-impact news scheduled in the next 30 minutes.
  2. The price should enter inside the envelope channel and form a nice bearish candlestick pattern. The slope of the envelope channel should be negative.
  3. At the Forex MT4 cycle indicator, look for a red spike above the reference line zero. The red spikes represent the strength of the sellers.
  4. At the stochastic indicator, you should see the signal line is trading at the overbought zone. But you have to wait till the slope of the signal lines turns negative.
  5. If you intend to trade in the 1-minute time frame, wait till the signal line falls below the 80 lines. If it’s above the 80 lines, you still should not take the trade.
  6. After checking these important parameters, you should be able to take the short trades with strong confidence.

 

Execution of the short trade

 

Stop loss

Professional currency traders should set their stop loss above the tail of the bearish candlestick pattern. In case the 5 minute time frame is used, the SL can be set above the envelope upper band. But those who will trade the options market, need to select a trade with an expiry period of 60 seconds.

 

Take profit

The option traders need to evaluate the take profit based on their stake amount. The minimum risk to reward ratio for the trades should be better than 1:2. And those who will use the 3 Candle Binary Options Trading Strategy For MT4 to trade without any expiry period, should aim for a 1:3+ risk to reward ratio.

 

3 Candle Binary Options Trading Strategy For MT4 – Useful advice

The 3 Candle Binary Options Trading Strategy For MT4 provides strategic steps to execute the trades in the market. As a new trader, following the key sequence mentioned in this article might be a little tough. That’s why it is better to learn the proper function of the tools in the paper trading account.

While using the paper trading account, you may not feel comfortable with the concept of 60 second expiry period. In that case, you might try to trade in the higher time frame and evaluate the results. If you feel more comfortable with a higher time frame, trade only in the higher time frame.

 

3 Candle Binary Options Trading Strategy For MT4 – Conclusion

Smart traders are very good at managing their risk profile. Just because you know the essential steps of this 3 Candle Binary Options Trading Strategy For MT4 doesn’t mean you will never lose any trade. Losing trades are inevitable and you should always be prepared to accept the losses. And keep the risk factor below 1% of your account balance to keep your fund safe. 

 

Download the complete system description and the files here:

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