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  1. #1
    Administrator Martin Kay's Avatar

    Hot Range – Bound Trading Strategy for Binary Options !!!

    We have a new great review by Bogdan: Range-Bound Trading Strategy for Binary Options. This strategy will give a real advantage for the more experienced traders to benefit not only from trending but also from ranging markets!

    Originally posted by Bogdan G on bots.com school. Click here for the full review.

    Why the MACD Range doesn’t suck?

    Identifying a range bound market as soon as it begins is difficult even for an experienced trader and although this method is not bullet proof, it can give us a heads up about the possible beginning of the ranging period. Also it allows us to trade in several ways, using Boundary options, normal Calls and Puts and a potential breakout once the histogram leaves the range zone.


    Wrapping it up

    Even if it’s not a sure thing (nothing is in trading), this method of identifying a market that moves sideways by using the MACD histogram is definitely an extra help and I’ll take almost any free help that I receive. The histogram will move outside the levels many times during a trading session, but once we see it remaining inside the zone for a longer time, we can start to look for other hints that indicate a range bound market. One thing is certain: while the histogram is hovering around the zero level, the volume is low and price is not going anywhere. Overall it’s a good tool to have but don’t expect it to work some magic and fill your accounts.

  2. #2
    Rookie Member
    Great article! I like so much to trade ranging markets MACD is a smart choice to filter ranging conditions too.

  3. #3
    Master Member Bogdan G's Avatar
    Glad you like the article. I actually use MACD in a similar way and it keeps me out of low volatility trading more often than not.

  4. #4
    M.J
    M.J is offline
    Veteran Member M.J's Avatar
    By practicing this strategy, we can get some positive results in forex market. But to get similar result in binary options is difficult. Entry and Exit rules in this strategy r based purely on MACD. In binary options, we do not have this choice. It needs a lot of work before adapting it in binary options. How about using ATR with it? ATR will tell level of volatility and by looking at previous ATR levels we can get an idea of how long the current volatility will end. If it matches with the time of our options, we can purchase an option.

  5. #5
    Solid Member Peter Green's Avatar
    Quote Originally Posted by M.J View Post
    By practicing this strategy, we can get some positive results in forex market. But to get similar result in binary options is difficult. Entry and Exit rules in this strategy r based purely on MACD. In binary options, we do not have this choice. It needs a lot of work before adapting it in binary options. How about using ATR with it? ATR will tell level of volatility and by looking at previous ATR levels we can get an idea of how long the current volatility will end. If it matches with the time of our options, we can purchase an option.
    That's right M.J! We have to ask ourselves this question every time we test a new strategy. There are a lot of strategies which simply don’t work for binaries, even if they look quite good for forex trading for example. In binaries we have to master entry points and time frame, not TP or SL levels as they don’t exist here.

  6. #6
    M.J
    M.J is offline
    Veteran Member M.J's Avatar
    Quote Originally Posted by Peter Green View Post
    That's right M.J! We have to ask ourselves this question every time we test a new strategy. There are a lot of strategies which simply don’t work for binaries, even if they look quite good for forex trading for example. In binaries we have to master entry points and time frame, not TP or SL levels as they don’t exist here.
    Yes true. This is the reason, I suggested ATR in this strategy. What is ur opinion on it?

  7. #7
    Master Member Bogdan G's Avatar
    Using the MACD Range for Binary Options

    Let’s assume that we correctly identified a range bound market. Ok, what’s next? Well, I guess the next thing to do is buy a Boundary option with the obvious choice being IN. But this depends a lot on what strike prices are offered by our broker for this type of option. There is another way though, but you will need some knowledge about Support and Resistance: draw the support and resistance levels corresponding to the ranging period and buy Calls when price touches support and Puts when price touches resistance. For this to work you will have to trade after the S/R levels can be properly identified (once rejection is seen and S/R levels can be drawn). What do you know, there’s another way of trading this as well: once the histogram clearly exits the ranging zone, trade the breakout, meaning buy a Put if the histogram breaks the -0.0005 level and buy a Call if the histogram breaks the 0.0005 level. This should be accompanied by a corresponding break of the support and resistance level that you have already drawn. If you can find any other ways of trading using this idea, don’t be shy of sharing on the Forum."

    No SL, No TP mentioned in this article. In the original idea (because it is not a pure strategy) the MACD is used for identifying a ranging market, not for entering or exiting any trades. But once a binary trader identifies a range bound market, he has three choices (read above) about how to trade it. At least, I could think about three ways. Can u think about more? Please share.
    ATR might be a good choice for confirming the range identified by MAC
    Last edited by Bogdan G; 02-15-2013 at 06:18 AM.

  8. #8
    Active Member jephry88's Avatar

    !!!

    Good comment Bogdan! I see that MACD is only the ranging conditions filter and not an entry indicator. There probably exists a lot of ranging options strategies but for me Binaries are best when there is a directional movement. If there is no such movement it is difficult to hedge all the possible outcomes of the range.

  9. #9
    Master Member Bogdan G's Avatar
    Me too. I want to trade direction, not small range because in a range i have no indication about which side price will breakout

  10. #10
    Master Member Bogdan G's Avatar
    So for me MACD is used to identify when not to trade

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