Trading Binary Options with Bollinger Bands

bollinge-bands-smallIn this article, we are going to explain you a binary options strategy that can be used to predict the future of an asset. You can use the indicated points to have a tab at the movements of the data supplied. Before you start with the trade, you need to have a look at the following points :

  • Exponential Moving Average (EMA) of 13 will cross the 20 Simple Moving average (SMA)
  • Exponential Moving Average (EMA) of 30 will cross the 20 Simple Moving Average (SMA) and after it will cross the 13 Exponential Moving Average (EMA)

If any of the above conditions are happening, then there are 95% of the chances that the following things will happen:

  • The values of the listed assets may go outside the Bollinger Band Boundaries.
  • The boundary asset will cross the direction of the movement of the above mentioned points.
  • If the indicators will move up, the assets will break the Bollinger boundary and if the indicators will move down, the asset will break the Bollinger boundary again.

Strategy application

After using the above mentioned points, you would be able use the strategy to your advantage. For example, you could use the current rates of the currency to the use at the upper and lower Bollinger band.

  • The exchange rate of USD is at 1.35
  • The upper boundary of the Bollinger Band is going at 1.37
  • The lower boundary of the Bollinger Band is going at 1.33

Now you can notice that the 13 EMA will be crossing the 20 mark of SMA and the EMA that is at 26, will cross the 20 SMA, which will cross the 13 EMA soon. You will also notice that the three indicators will move at the downward trend.

In this strategy, in the next 30 minutes or so, the value of the dollar will go below the BB line, that is, it will be below 1.33. You have to keep in mind that the values of the underlying asset will return back to the Bollinger Band’s two boundaries always. In that situation, you have two choices.

  • You can buy a boundary option and you can bet on the value that will go on the low at 1.33. You have to remember to use the new strategy so that you will be able to predict that the asset will be at 90% and will drop down to 1.33 in the next 20-30 minutes.
  • You can buy a high or low option and wait to bet on the result that will be out in 20-30 minutes. The values of the asset in this case will be below the current line that is at 1.35.

You have to keep in mind that the strategies always have a bit of risk and you don’t know what will be the exact situation in the next 20-30 minutes. However, if you get the boundary option along with the one touch option, then you have the advantage of high payout rates that can go up to 500%.

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