Hello! It’s been over three months since I last contributed to my blog. My university schedule consumes all my time unfortunately. I do try to trade forex if I can, and I did have hopes of trading binaries in a very limited sense, but I just can’t manage to find the time. I’m definitely quite sorry to those who are regular readers. I did receive some nice messages from some of you in the interim so thank you for those. I will be sure to respond to those shortly. I have taken a grand total of two(!) binary options trades since I last posted, but unfortunately haven’t found the time to post articles detailing each of them. But I do have the next four weeks off from school, so I hope that I can trade both forex and binary options and make posts on each.
Writing forex articles is something I had also aspired to keep regular with, which regrettably hasn’t been the case. But I will be sure to write a few of those for some of the readers who requested that I write some strategy articles on that form of trading. The way I trade each is very similar, so I would encourage anyone – regardless if you’re interested in trading forex or not – to check those out. My first forex post can be found here. Either way, I’m definitely glad to be back and contributing again!
My trade here was another typical support and resistance type of trade that I like to make. I started watching the USD/CHF chart when the pair was currently meeting resistance at 0.9022 (top red line) when it started to fall. On the way down, I had a support level marked off at 0.90111. But as a more conservative approach, I decided on 0.90098 as a better potential entry point for the call option. The reasoning was that 0.90098 also tapped into the minor level of resistance provided just after 1AM EST, as can be seen in the very left-hand side of the image.
Waiting that extra pip could provide a slightly higher-probability trade set-up. With the previous touch on the the 2:55 candle and near-touch on the 3:45 candle (forming some additional support at roughly the targeted level), I took the touch of 0.90098 on the 3:55 candle and had a winner shortly thereafter by about five pips. This same level would have provided another nice call option set-up just before 6AM, as I’ve written in on the image below.
This was another USD/CHF trade. Over the course of the morning, the pair had a downtrending feel to it with the formation of a downsloping triangle pattern. These are formed when a pair makes a high, drops down to some level forming a support level, and comes back up before hitting resistance at some point before the previous high before dropping back down again. You can observe the pattern in the image below with the trendline drawn in on the chart.
Usually when you get these type of chart patterns, the pair will come down to the support level that was formed and consolidate. The most common outcome, in my experience, is for the pair to drop lower – i.e., fall through support and continue to make new lows. Of course, it can also continue lower. But in these cases I like to stick with put options if I can.
Before 7AM EST, some minor support formed at 0.89154. Once this was broken and re-hit some support at 0.89110, it went back up and began reusing 0.89154 as a resistance level. It did this again on the 8:20 and 8:25 candlesticks. Consequently, I decided to give the put option a go once .089154 was re-touched on the 8:30 candle for an 8:45 expiry. Once in this trade, 0.89154 was rejected again. However, it did go against me for the next few minutes after that by a couple pips. But fortunately, price saw a nice drop on the closing candle and I ended up with a three-pip winner.
Now on the 8:45 candle (the one following our closing candle), some traders might see that as a call option opportunity. If you’re more aggressive in your trading, then that could be a viable set-up. But for those who have followed my blog know that I’m pretty conservative in the trades I take. I really like the odds to be in my favor before taking a trade, even if that means only finding one trade to take after several hours of screentime. It’s different than when I first began trading – and even about a year into trading – when I actually liked trading 10-20 times per day by watching several assets at once. I don’t necessarily discourage this practice totally, as you can have success this way, but it does take a bit of a thrillseeker’s mentality. But as my trading has matured, I still enjoy trading and love watching the charts for several hours at a time, but I’m essentially never anxious to make a trade. I honestly feel like I could look at a chart for six hours, not take any trades, and be perfectly content. I think that’s a good thing, but probably something I would have had great difficulty doing when first starting out and it’s virtually impossible if one gets wrapped up in the money-making aspect of trading.
But as I mentioned earlier, my experience with these downsloping triangle patterns is for price to actually break through the lowest support and continue to make new lows. In these cases, support might not actually be as strong as you might think and be too close to a 50-50 trade. Also, more volume was entering the markets at this time, as the U.S. markets would open shortly and European trading was entering its early afternoon hours. The call option down at 0.89110 would have worked out, but it’s a trade I would avoid for my own trading.
Of course, if you ever have any questions please let me know (either below or on my thread in the forum) and I would be more than happy to help out.