For only 20% of the time are stock market quotes in a phase of impulsive growth or decline. What happens to the price in the remaining 80% of the time? It is being consolidated and keeps moving within price channels.
We have already considered the topics of trading within price channels and the breakdown of their boundaries.
Now let’s talk about another effective approach, proposed by famous Russian trader Viktor Barishpolts.
What is the Barishpolts sliding channel?
According to classic rules of technical analysis, we need two peaks and two depressions to build a price channel, through which we could draw parallel straight lines of a price channel.
And according to Viktor Barishpolts, it is enough to use only 3 extreme values on the price chart for that purpose, and the fourth extreme value can be used as a point for entering the market (that is, for making a transaction).
To simplify the analysis of the price chart, Barishpolts advises using fractals, which we have already mentioned in the previous strategy description, and for building channels – the “Channel” tool of the Binomo trading and analytical platform.
How to build Barishpolts sliding channels?
As we mentioned above, we need 3 extreme values (2 peaks and 1 depression, or 2 depressions and 1 peak) to build a Barishpolts sliding channel, which will help you to determine the fractals (you will find them on the Binomo platform as an addition to the “Alligator” indicator).
After having determined the last 3 local extreme values of the price with the help of fractals, you can draw through them parallel straight lines of a price channel:
Please note that to determine the Barishpolts channels you can use time frames of 1m and above, where quotes are less volatile and allow you to slowly carry out a weighted technical analysis.
How to trade using Barishpolts sliding channels?
According to the rules of the “Sliding Channels” strategy, after you have identified three local extreme values on the price chart and drew a price channel through them, the moment when the price touches one of the channel walls shall be the signal to make a transaction.
You may trade upwards when quotes have touched the lower boundary of a Barishpolts sliding channel:
You may trade downwards when quotes have touched the upper boundary of a Barishpolts sliding channel:
In most cases, the quotes rebound in the opposite direction after the fourth touch of the top or bottom of such a channel. And this consistent pattern enables you to trade profitably.
If you choose to trade on a 1M time frame, you may use the expiration period of 3 to 5 minutes.
When using longer time frames, the lifetime of your transactions varies proportionally.
Do not forget that binary options trading and stock exchange trading in general imply financial risks. To reduce the risk of losing funds, use no more than 3% of the trading account funds per transaction!