Binary options have become popular with many people over the past few years. With their help you can get a good source of income, it is important only to learn how to properly work with the schedule and analyze the situation. For example, if you know what a big w chart is, then trading binary options will be much easier for you. But in this article we will talk about another effective method, which can be used even by beginner traders.
The whole market is a series of repetitive behavioral patterns, i.e. crowd reactions to both external and internal factors. Analyzing price patterns, we find certain regularities that help us to predict further price direction. The problem is that there is a great number of different patterns, and not all of them are easy to interpret. Today we will understand how to find and use the “Three Candlesticks” pattern in trading – a simple and easily defined pattern on the chart, which can be used as a separate trading system.
The idea of the strategy
Pattern “Three Candles” is located at the junction of the two trends and is shaped like a fractal. If we are talking about shopping, it is a sequence of three candlesticks, where the high and low of the middle candlesticks are below the high and low of the two standing next to each other. In this case, the last two candlesticks should close in the direction of the deal. That is, for buying, the last two candles should be white. If the pattern for buying resembles a hollow, then the pattern for selling is a hood. The high and low candles in the middle should be higher than the high and low of two adjacent candles. Also, in case of sales, the last two candles should be black, which tells us that the trend is changing to descending.
We will not have to manually determine the pattern on the chart – this task falls on the auxiliary indicator 3rd Candle. The indicator signals the appearance of a new pattern with an arrow on the chart of blue or red color. An up arrow indicates a signal to buy a Call option, a down arrow indicates a signal to buy a Put option. The strategy allows you to trade on any symbol and timeframe. The pattern best shows itself on high TF, from 1 hour and above. But you can also trade on the minute chart, just the share of false signals will be higher. The main thing is to filter all signals using an oscillator – it cuts off most of the inputs against the trend.
The CCI oscillator used in the strategy is displayed on the chart as a line, and has overbought/oversold zones – above 100 and below -100, respectively. That is, if the value rises above 100, we do not consider buying signals, if below -100 – we do not consider selling signals. We will trade on corrections and reversals, so these are not the safest deals for beginners. However, if we do everything correctly – i.e., wait for confirmation and only after that enter into a deal – the system will work as it should.
The “Three Candles” strategy is an easy to interpret trading system, which can be used to train the psychology of a trader. The fact is that the price of error or non-compliance with the rules here can be high, because trading is carried out on price reversals, that is, there are frequent transactions against the trend. Otherwise, this trading strategy shows itself on the good side, especially if you use a relatively large timeframe. This way – you will save yourself from unnecessary price noise and increase the share of profit in binary options.
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