The world of binary options attracts many traders with its simplicity and potential profit. However, success in this market directly depends on the competent use of strategies and technical tools. One of the effective trading systems is the “Binary Etude” strategy, based on two indicators: Aroon and Bollinger Bands. The Binary Etude Strategy helps you to identify market trends and make informed trading decisions using proven technical analysis indicators.
Some Basics of the Binary Etude strategy
The name “Binary Etude” reflects the harmony of the trading strategy. It is like a musical etude consisting of melodious notes and chords. The trading strategy is based on clear signals from the Aroon and Bollinger Bands. The two indicators provide the trader with information about the direction of the trend, its strength and moments of possible reversal, which helps to minimize risks and increase the likelihood of successful transactions. Both tools are available in the Olymptrade terminal, just click on them in the list of standard advisors.
Aroon indicator was developed to assess the strength of a trend and determine when it starts or ends. It consists of two lines: Aroon Up and Aroon Down. The first one measures the number of periods that have passed since the last price maximum, and the second one measures the number of periods since the last price minimum.
In the Binary Etude strategy, the indicator indicates the following market conditions – when the Aroon line Up is above 70, this indicates a strong uptrend. If Aroon Down above 70, then the market is experiencing a downward trend.
In turn, Bollinger Bands is a classic indicator that helps to determine volatility levels and clearly display the price channel. The indicator consists of three lines: a moving average and two lines located above and below the average at a distance of the standard deviation of the price. These boundaries create a dynamic corridor within which the price fluctuates.
The inventors of the strategy recommend to trade options on lower time intervals – from 1 minute to 5 minutes, use Japanese candles chart and choose only highly volatile assets such as currencies, stocks and cryptocurrencies. You do not need to change any other parameters, just leave by default.
How to trade with the Binary Etude strategy?
The main goal of the Binary Etude strategy is to find entry points into the market at moments when clear signals are formed based on the indicators of the above-mentioned advisors. Let’s consider how it works:
CALL: signal to buy call option
- Aroon Line Up crosses level 70, which indicates a strong uptrend.
- The price touches or breaks the lower boundary of the Bollinger band, signaling that the asset is oversold.
PUT: signal to buy the put option
- Aroon Line Down crosses level 70, which indicates a downtrend.
- The price reaches or breaks the upper boundary of the Bollinger band, which signals that the asset is overbought.
The expiration time is the time it takes for two candles to form.
The Binary Etude trading system is an effective tool for traders seeking a reliable approach to earning with digital contracts. By combining trend and volatility analysis, it helps identify optimal entry points. However, like any strategy, it demands focus and discipline. Traders should closely monitor signals and prioritize proper risk management to achieve consistent results.