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  1. #1
    Rookie Member TheBinaryAdvisor's Avatar

    Trend Reversal Strategy !!!

    Surprisingly, it is not only experienced binary options traders who apply the reversal strategy but also novice traders. Despite being not a straightforward technique, the reversal strategy is still a powerful approach to use when a trader has a solid grounding in the mechanics of asset price movements. With this particular strategy, a trader should closely monitor the asset price movements and forecast the moment when the price direction changes. Once the moment of changing the price direction is predicted a trader should place an opposite to current trend option.

    Here is a simple example.
    A price of oil is growing, however, there is a rumour that the price will go down after noon. Knowing that, a trader places a put option while the price is still growing, however, the expiry date of the option apparently should be after noon so that the option expires when the price is expected to be decreased to be in the money.

    Indicators to validate reversal points with asset prices.
    There are two technical indicators that will help better understand and apply reversal strategy:
    • Moving Average Convergence Divergence (MACD). The indicator is used to determine the difference between 12 and 26 day exponential moving averages. 9 day moving averages are used to formulate trading signals. If MACD rises above 9 day moving average, it a good opportunity to place a call option. Opposite to that, when MACD falls below 9 day moving average, it is a good time to place a put option.
    • Relative Strength Index (RSI). The RSI measures the overall ratio of gains to losses, thereby showing whether an asset is oversold or overbought. There is not a strict rule involving RSI. If the indicator falls below 30, the asset is oversold. If it is over 70, the asset is overbought.

    I hope you will add this strategy into your trading tool kit, however, make sure you completely understand the concept behind this strategy and the nature of technical indicators.

  2. #2
    Master Member Bogdan G's Avatar
    Quote Originally Posted by TheBinaryAdvisor View Post
    Once the moment of changing the price direction is predicted a trader should place an opposite to current trend option.
    How would a trader predict "the moment of changing the price direction"? A trader would be rich if a trader would know that. A trader would be a happy trader.

    For how long have you been using this way of trading?
    Insanity: doing the same thing over and over again and expecting different results. Albert Einstein (attributed)

  3. #3
    Master Member Bogdan G's Avatar
    Quote Originally Posted by TheBinaryAdvisor View Post
    A price of oil is growing, however, there is a rumour that the price will go down after noon. Knowing that, a trader places a put option ...
    How would a trader hear that rumor. Do you have any advice on where to get this information on a regular basis? If not, then a trader cannot call this a strategy, just a one-time happening or maybe just a rumor.

    A trader does not clearly understand the strategy
    A trader is not even sure this is a strategy but a trader is open to further clarification.
    Insanity: doing the same thing over and over again and expecting different results. Albert Einstein (attributed)

  4. #4
    Legendry Member Michael Hodges's Avatar
    This trader is sure that the poster of this strategy doesn't really know what they are talking about.... sure, trend reversals are good ways to trade but making that trade based on some rumor, and by the way where do you hear these rumors?, and before the move begins is the worst kind of gambling.

    this strategy talks about divergencs, recommended for advanced traders only ... http://www.binaryoptionsthatsuck.com...to-15-minutes/

    here's another one about divergence ... http://www.binaryoptionsthatsuck.com...inuation-tool/

    This is a review of how to actually use the MACD tool .... http://www.binaryoptionsthatsuck.com...-as-it-sounds/

    This is a review of how to use the RSI ..... http://www.binaryoptionsthatsuck.com...s-good-school/


    if you are going to lay out a strategy for us BinaryAdvisor next time pick one you actually know how to use, OK?

  5. #5
    Legendry Member Okane's Avatar
    I think it would be smart to include some price action with the strategy.
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  6. #6
    Rookie Member TheBinaryAdvisor's Avatar
    Quote Originally Posted by Bogdan G View Post
    How would a trader predict "the moment of changing the price direction"? A trader would be rich if a trader would know that. A trader would be a happy trader.
    Right, that's actually our job to predict the moment of changing the price direction. I do not think that anybody would ever be 100% sure when the price moves direction. Don't you think so?

  7. #7
    Legendry Member Michael Hodges's Avatar
    Quote Originally Posted by TheBinaryAdvisor View Post
    Right, that's actually our job to predict the moment of changing the price direction. I do not think that anybody would ever be 100% sure when the price moves direction. Don't you think so?
    It's not so much about predicting when price will reverse, but recognizing that it has and then trading appropriately. There are lots of ways to anticipate a reversal but those methods never guarantee one and trading on them is akin to gambling, once the reversal takes place then using the right strategy to follow the new trend, however long it lasts, is the goal of consistently profitable traders.

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