Box Breakout Ladder Binary Options Strategy

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Breakout Trades

Binary Options Breakout Trades Using Pivot Points

Binary options trading success is based on making the right calls on price direction. If a trader can correctly predict where price will go, then it is very likely he will make a trade that will be in the money.

One of the ways this can be achieved is by being able to predict price breakouts. This leads us to ask the question: what really is price action, and what determines the behaviour of price action at any given point in time?

The concept of price action is simply a depiction of the activity of traders in a particular market. Traders are in the market to make money. If they see something that will present itself as a market opportunity, they will put their money in the market to make the trade. At this time, we will see prices moving in one direction or in the opposite direction. If traders see nothing to convince them of an opportunity, they will sit on the fence and do nothing. At this time, the price action will hardly go anywhere except just trend sideways.

Fortunately, the binary options market helps us to trade the price action, whatever that may be. Unlike in forex trading or other markets where you need the market to be in motion to make money, you can actually make money in the binary options market even if the prices of the underlying asset stay still.

In today’s lesson, we will explain a scenario that occurs when the market is in motion; the breakout. Breakouts occur after periods of price inactivity. They occur when traders get a hint of an impending market event that will affect the value of an underlying asset, so they take position in order to make money from such movements. One way of determining this is to look at the behaviour of the price action at the key levels of support and resistance.

Before we get an upward break, prices may have tested the resistance level multiple times, with the points of retracement getting progressively higher. This indicates buying pressure. When we see this, this is a signal that prices will breakout upwards.

The reverse is also the case for downward breakouts. Support levels will be tested repeatedly with points of retracement getting progressively lower, signifying selling pressure.

At other times, the buying or selling pressure may already be in such forceful effect, that the price action just rams through the key levels. Look at the chart below:

The pivot points show the support and resistance levels. We can see that R1 has been tested several times, and prices do not get back to where they started for the day at S1 before going back up. This indicates buying pressure which eventually breached R1. Price then tested R2 several times, but retracements never get back to the central pivot (marked purple) which was the previous retracement point. This shows increased buying pressure and we see this manifest as a bullish candle that eventually breached R2 all the way to R3.

If I was to trade this on the binary options market, I will do this in three ways.

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Trade 1

I would trade the In/Out binary options trade, betting that the trade would end outside the S1 – R1 range, with a one week expiry.

Trade 2

I would also trade the Rise/Fall variety, betting that the price of the EUR/USD will rise above the R1 point, setting a 72-hour expiry.

Trade 3

I would trade the Touch/No Touch trade, betting that prices would touch a point somewhere between R1 and R2, for a one week expiry.

The lesson here is that pivot points are an indispensable tool for binary options trading and if you can use them to watch price action at key levels of support and resistance, you will make good trade calls most of the time.

The Box Breakout Binary Options Strategy – Think Inside the Box

Full Review of the Box Breakout Strategy for Binary Options Trading

There are two somewhat contradictory schools of thought when it comes to trading price action. The first says “buy low and sell high” and the second says “buy high and sell higher” (in an uptrend) and “sell low, buy back lower” (in a downtrend). Today’s strategy focuses on this second way of doing things and although I found it on forexstrategiesresources.com, it is not anything new; in fact, this way of trading is based on the classic breakout pattern.

What is Breakout Trading?

Jack-in-the-Box… that’s what breakout trading is. Remember that little toy some of us had when we were kids? When you would close the lid of the box you would apply tension to the spring which once released would push that creepy Jack doll out. Come to think of it, it’s a pretty scary toy. Not fun at all. But anyway, it’s a good way of understanding price breakouts. First we need to build the Box and to do that, we will look for an area where price is bouncing up and down, accumulating enough tension to break out… just as if it were trapped in a box. Picture coming up:

Just in case you are wondering, that greenish box is drawn by hand, not by any sort of indicator. To identify and draw it, you will have to look for areas where price touched at least two times each part of the box (upper and lower). Here’s another example:

Notice both parts of the box are touched more than twice and price bounces off of them. In both my examples, you can see that once price entered the box, it had trouble getting out but once it did, it continued strongly in the direction of the breakout. This is what we will be looking for and this is the setup for our trade. Next we will wait patiently until price will get out of the box in either direction. We don’t really care about the main trend direction, but if our trade agrees with the prevailing trend, that’s extra confirmation and it is considered a higher probability setup.

Ok, now that we’ve identified the box and we waited patiently for price to breakout in either direction, what should we do? Should we enter the trade in the direction of the breakout? Nope! We have to wait some more. And the thing we are waiting for is a pullback that will re-test the recently broken box. Assuming price breaks the upper side of the box, we must wait for it to come back down to touch (or come very close) the recently broken level and then to bounce higher. Once this happens, we will join the fun and open our trade. Here’s a good trade according to this breakout system:

Why does the Box Breakout strategy Suck?

On all my pictures above, I have a big advantage: I can see how price moved. But in live trading, you will not see the entire box because it is not completely formed yet. That’s why we consider a valid box is formed only after price touched both the upper and lower parts twice and we will only draw it when that happens. Another issue might be finding the exact entry because that is not very well defined. We wait for the breakout, then pullback to re-test the recently broken level but how do we know when that pullback is complete and price will start to go in the direction of the break? One way of doing it is with the use of an oscillator like Stochastic or maybe even MACD; the other way is to just confirm visually that price started to move and join it.

Why the Box Breakout Strategy doesn’t Suck?

This is a classic pattern and to become “a classic” a good reason is needed. Its high accuracy is the reason for that and also why it has been used for a very long time in stock, forex trading and probably on all assets that can be charted. Keep in mind that the pullback I talked about earlier is very important because it is meant to protect us from false breakouts (a false breakout is a move outside the Box followed almost immediately by a return inside it).

Bottom line: Should I use the Box Breakout Strategy?

The strategy takes a little while to get used to but for all you price action traders, this is a must-know strategy. Even if you won’t use it as your main strategy, it is something you should be aware of because after all, price behavior is more important than any other indicator, considering the fact that indicators are derived from the movement of price. That being said, I believe the profitability of this strategy is highly correlated with the trader’s skill so you should use it with a lot of caution at first.

Breakout Strategy

The Breakout Strategy for Binary Options is an often-used strategy in Forex.

The basic idea of this strategy is one of the best-known economic concepts: “supply and demand”. Basically, a price can vary between two levels.

The higher and the lower level. When the value is close to the highest level, it will tend to go down, and when it reaches the lowest level, it will tend to rise.

That rule is the base of the Breakout Strategy. Sometimes that breakout is only temporary, but it is enough to make money from it.

Tips from our Professional Trader: 6 reasons to have 2 accounts

Do you know that you should work with more than 1 broker?
Check the 6 reasons why you should have account with at least 2 brokers:
  1. Each platform has its differences. If you try different platforms you may find those more suitable to your trading style.
  2. Each broker has his own payouts that keep changing during the day. If you want to open a trade and one offers 60% and the other 80%, you will choose the one with best payout, no?
  3. Sometimes the brokers close some assets, if you have just one account and you want to trade on that asset and it is closed, you will LOSE that trade, no?
  4. If there is an issue with your Broker’s platform, or they are updating it you’re not able to trade, unless you have another account with other broker.
  5. Deposits and withdraws. Brokers keep changing the deposit and withdraw methods, imagine you need cash fast and your withdraw system is closed at that moment on your broker, what do you do?
  6. Each platform has its owns indicators and trading tools, imagine you found a new stratey and it does not work on your broker because it uses an indicator that your broker does not offer.

Below you can find our main trader suggestions on brokers:

How to use Breakout Strategy in Binary Options

There are two ways to use Breakout Strategy in binary options:

Short duration options:

  • For time-frames of 5, 15 or 30 minutes.
  • The market has to be in a neutral trend.
  • We should use the same indicator that is used for 60 seconds.
  • The indicator works on an MT4 platform and will be made available in the training classes that I give.

Long-Duration Options:

  • For time intervals of 4 hours or 1 Day.
  • The market does not need to have a defined trend, the indicators simply need to show the asset oversold/overbought promising a breakage or retracement.
  • The basic idea of the Breakout Strategy in Binary Options is to find points that form resistances, causing a momentary breakout.
  • This breakage can be just for the price to come back to gain strength and follow the same course, or it can be a complete reversal of the trend.

I often use this strategy in Forex, especially for 4 hours and 1 Day. For those who trade with 60 seconds, in News Trading or Following the Trend , you can also use the Breakout Strategy in trades for the end of the day.

Its use is interesting as it combines perfectly with other strategies that are typically for shorter periods of time.

Take a look in the example below.

  • In this asset (EURUSD), 7 operations were carried out, of which 5 made a profit (the green bars) and 2 lost (the red bars).
  • Each operation lasts 24 hours.
  • The robot gives the input signal at the end of the candle and we only have to put the Binary Option choosing the duration of 1 day (expiration time).
  • Since in this example we work with long periods of time, we must use several pairs, or we must combine this strategy with others. Each month, each asset allows an average of 4 or 5 operations.

Breakout Strategy Conclusion

This strategy is interesting because the percentage of trades with profit is high.

If we use long expiration times, such as 1 day (as in the example above) the percentage of possible profits goes up because the longer the expiration time of the binary option, the easier it is to predict the movement of the price of the asset.

Traders who use this strategy normally either use a greater risk, 5% of the value of the account in each trade and multiple assets at once, or use other strategies to diversify and be able to place more trades per month, thus boosting profits.

Although the operation of the two markets (binary options and Forex) is different, my opinion is that the implementation of this strategy in binary options works well, especially for 4-hour or 1-day trades.

As mentioned before, you need to be careful with the economic news and the times of the day the market is more active.

The mais idea to use this strategy is when the market is oversold or overbought, so the economic news or other volatile situations may not be suitable to use this strategy.

Don’t forget to see all the other strategies I teach on the site.

You can test this strategy here: IQ Option

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