One of the most important preliminary requirements that should always be double checked prior to applying this strategy would be to ensure that you have your strategy set up properly. This means that you will need access to a reliable charting solution such as freestockcharts.com or MetaTrader4 along with have high volume stocks or low volatility currency pairs as your assets of choice. Currency pairs such as the Eur/Usd, Usd/Chf, Usd/Cad, Aud/Usd and Nzd/Usd are commonly traded currency pairs with this investment strategy. High volume stocks that you could consider using would be Apple, Microsoft, Google, Facebook and Coca Cola.
Once you have selected between 4 to 5 of these assets to invest with and incorporated them into your charting solution you can then make sure to set the time frame of each of these charts to a period of 15 minutes. You see, one of the characteristics about Price Action Trading Strategy that separates it from other day-trading strategies would be that it doesn’t require investors to rely on technical indicators which can oftentimes crowd and makes viewing the price action of an asset more difficult. This strategy can also can be used on a wide number of time frames as well whereas most other strategies confine you to only certain time frames. So as soon as you have your assets selected and your time frame set to a period of 15 minutes you are able to move onward to the application phase of this trading strategy.
Application of Strategy
The PUT investment application of this trading strategy is exactly the same as the previous strategy minus the set up components, but it is derived from four confirmations which can be better understood through the image provided to you below. It is imperative to remember that when you do have an approved trading opportunity that you execute your investments with an expiration time between 15 to 30 minutes. So sticking with the “classic” style of binary options day-trading would be your best bet since most of those expirations expire quarterly of every hour.
So in order for us to be able to place a PUT investment we need first and foremost the creation of a support level. Once a support level has been created, we can then move onward to our four confirmations listed below:
- Price heads in a bullish direction (upward direction).
- Price breaks our previously established support level in a downward movement.
- Price retraces back above our support level in an upward direction.
- Price moves in a downward movement and strongly breaks our support level.
Once this break has occurred, you can execute your 15 to 30 minute PUT investment. Unlike the other investment strategy where one of the confirmations that could be applied would be that you should wait for the following candlestick to close, this is not the case with this strategy. When applying Price Action Trading Strategy on a longer timeframe you don’t have to worry about this confirmation.
When it comes to resistance levels we have a total of five confirmations that must be met which occurs after the creation of the first resistance level. When all the confirmations have been met, the investor can execute a 15 to 30 minute PUT investment. In order to get a better understanding of this set up refer to the image provided to you below and analyze the steps involved.
- Price heads back in a downward direction below resistance level.
- Price then creates what is known as a swing point (known as a support/resistance level).
- Price then heads back in an upward direction towards our resistance level.
- Price then creates another resistance level (known as a swing point here).
- Price then heads below resistance level and the following bearish candle closes below the resistance level.
Once the bearish candle closes below the support level, you are then able to execute a PUT investment between a 15 to 30 minute time frame. One occurrence that you will tend to notice while using this strategy would be that resistance levels occur much less often than support levels. Now, don’t take this has a sign that they are any more powerful than support levels and double up your investments, if anything I have found better success trading mostly off support level set ups than I have resistance level set ups.