Trading on or around holidays can be pretty dismal due to lower volume in the markets as people head into their vacations. Overall, you tend to see a lot of choppy, meandering price patterns during holidays such as U.S. Independence Day, Labor Day, Christmas, and New Year’s. Normally, this might be a time to stay out of the markets. But in my case, the holiday season is essentially the only reason why I have plenty of time to trade binaries in the first place being that I currently have my own time off.
I was watching both my typical trading pair, USD/CHF, in addition to the EUR/USD. Being these trades took place on December 24, the day before the Christmas holiday, I figured that it could be likely that the USD/CHF would suffer from diminished volume and therefore set up a choppy, unfavorable trading environment. Therefore, I decided to pull-up a chart of the EUR/USD as well, given the Euro always receives more trading volume than the Swiss Franc (CHF).
Indeed, the USD/CHF showed next to nothing in terms of favorable trade set-ups according to how I like to trade. Instead, it was mainly a lot of random chop.
While the EUR/USD showed a pretty similar structure, I was able to get into multiple trades, all at the same price level. There’s a couple things I really like about low-volume trading environments. One is the relatively slow, smooth pace that the market runs at. I find that it’s simply easier to get your desired strike price on a trade, especially on brokers that might not fill trades immediately or at all during fast-moving markets. Second is the fact that sometimes a pair might be moving along so lazily that it continually bounces off a level in the market that sets up several quality trades in succession. And that’s exactly what happened here with the EUR/USD.
Trade #1: After 3:30AM EST, price hit a support along 1.36732, bounced up and encountered further support along that level at 4:00AM. After a doji candle formed (commonly indicative of market indecision and potential reversal), I began to seriously look at 1.36732 as a place for a call option, expecting another bounce off that level. Once price hit 1.36732 on the 4:05 candle I took a call option and saw a two-pip winner by expiration roughly ten minutes later. Two pips in a low-volume environment is definitely a solid winning margin.
A Non-Trade: On the 4:20 candlestick, price touched 1.36732 again. However, as I mentioned in my last post geared toward binaries, I always try to avoid trades when dealing with downsloping triangle patterns, like the one I drew in with the trendline in the screenshot below:
In many cases, this chart pattern can frequently be an indication of an upcoming breach of the support level. Taking a call option there would also violate my distaste for trading into weak retracements, as the previous bounce off of the 1.36732 support level was a mere two pips. Even in a low-volume atmosphere, trading back into an area where potential resistance could be encountered two pips above entry can be pretty risky.
Like all trades, just make sure you’re not fixated on any single factor. Make sure you’re taking into account everything and not just taking every trade that hits your desired price level. Never be antsy to take a trade and always be aware of your emotions when trading. It’s important beyond words yet so difficult to put into practice. Granted, when I first began trading, I often had difficulty telling the difference between taking a trade because I thought it was a rational decision to be in one versus getting into a trade for the adrenaline rush. If you ever feel yourself being nervous/anxious or doing irrational things when in a trade (e.g., talking to the screen cheering on a trade to move in your desired direction), then you’re doing something wrong. Also, if you engage in any post-trade antics like fist-pumping when you win and cursing at the screen when you lose – or probably worst of anything, immediately feeling like you need to win the money back that you just lost – then you’re probably committing both an unsound trading decision and investing too much money in any given trade to begin with.
Trade #2: After price retraced a good six pips above 1.36732, it fell back down to it on the 5:00 candle, which was met with swift rejection. This re-validated 1.36732 as an area for potential call option set-ups. I took a call option on the re-touch of that level on the 5:05 candle and was up over four pips in favor at one point before it settled over two pips in favor.
Trade #3: By this point, it seemed that this seemingly random price level could have some lasting value, so on the touch of 1.36732 on the 5:15 candle I took another call option. This trade also won, by about 1.5 pips.
Trade #4: I repeated this same trade once again on the 5:25 candle, taking a call on the touch of 1.36732. I was in this trade for over fifteen minutes. And while I got nice bounces off 1.36732 to keep the trade in my favor, including the final few minutes, the closing candle actually became the first to finally break and close below the level. Consequently, this turned into a losing trade by less than one pip. Nevertheless, this level did hold well following the trade and wasn’t broken in favor of making new lows until 9:00AM EST.
Overall, a great day of trading at 3/4 ITM, all by using low-volume to my advantage by finding a spot in the market that represented a difficult barrier for price to break.