Trading Bollinger Bands

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The chance of an asset moving in your direction, or even moving enough in your direction, within the next 60 seconds is so slim as bollinger bands strategy best binary option strategies be near impossible to judge. This is not to say that it bollinger bands strategy best binary option strategies not be done because it can. This is evidenced by the large number of algorithmic traders and options scalpers that exist today. If it were impossible to make money on such a short time frame these traders would not exist.

I personally prefer to use at least a five minute chart but this strategy can be used on any time frame from 60 seconds to one week with relative success. What am I talking about…. Bollinger Bands are all about volatility. Volatility is the movement of the market. Trading is about catching market movements in order to profit. It only makes sense that an indicator that measures volatility would be a good tool for traders. There are lots of such tools, and many ways in which to utilize them but Bollinger Bands are by far the best bollinger bands strategy best binary option strategies for day traders.

Short term binaries are all about catching short term movements. The thing is, when you enter a binary options contract you are not necessarily getting in at precisely the spot price at time of purchase. This is because all the brokers include a small amount of slippage into each strike in order to help them maintain acceptable losses. This is not a scam, just the cost of trading and something explained in every brokers terms and conditions I have ever read.

This is why trading 60 second options and other super short expiries is so hard. Not only do you have to be right, you have to be right at exactly the proper time AND the trade has to move up enough to match and exceed the strike price at which the broker has set the option. Bollinger Bands are excellent for trading short term binary options because they pinpoint times of low market volatility movement and then signals when the market start to moves.

Once the market is moving the bands also provide numerous follow up signals that savvy day traders can take advantage of. This is how it works. The bands are based on a standard deviation of prices and will get narrower and wider as volatility decreases and increases. When the market is very calm and quiet the bands bollinger bands strategy best binary option strategies narrow, when the market is volatile and moving a lot the bands get wide.

The patterns of widening and narrowing are one kind of signal while price action in relation to the bands themselves provide another. There are three lines in the equation. The first is a moving average usually set to 20 periods. Look at the chart above. Notice how the bands become narrow and then widen over time.

When the bands narrow it is because prices tend to trend sideways. When the market trends bollinger bands strategy best binary option strategies it is very hard to profit from binary options.

When the market moves up or down from one of these sideways patterns the bands get wider, indicating that movement. That is the very first signal you look for, a narrowing followed by a widening. When the bands begin to widen you know it almost time to make a trade. The next step is to wait and see which band price touches when the widening starts. This is usually an indication of direction and what kind of trading you will be doing.

If prices touch the upper band the market will usually rally. When price action touches the lower band the market will typically sell off. Bollinger Bands, Volatility and Binary Options. Bollinger Bands For Binary Options Bollinger Bands are excellent for trading short term binary options because they pinpoint times of low market volatility movement and then signals when the market start to moves.

Bollinger Bands Are Best for short term binary options trading.

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Bollinger Bands are a mean reversion technical indicator that is used to inform a trader when the market has potentially over stretched and there is likelihood that it will snap back. There are a number of different technical indicators that can be used to track mean reversion, the Bollinger Bands in one of the most prolific.

Bollinger Bands named after John Bollinger are a statistical measure beyond a specific moving average. The most often used moving average which creates the best returns is the 20 day moving average. When following a specific financial instrument, it is important to customize the moving average and standard deviations to create the optimal channel. The Bollinger band strategy can be used with any type of moving average and any standard deviation. A longer the moving average along with a larger standard deviation will provide fewer signals that potentially could be more reliable.

A trader will also have to determine the appropriate length that works well with binary options. An hourly chart matches up to a number of different brokers market makers that use and hourly time frame when creating their options. The Bollinger band technical indicator is overlaid, and the signals that are created are labeled. In the five examples below, all seem to snap back over a short period of time. On the flip side, a trader can place a below option put when the price bar crosses above the high Bollinger band range.

In the five example below, each instance the market moved lower over a short period of time. The key to this strategy is the ability of the trader to find the correct period of time to place the binary option. Additionally, a trader can speculate that prices will not continue lower a miss options , or that the prices will move into a specific range a hit range option over a period of time.

For a miss option, when the price bar hits a Bollinger low, place a miss option below that level. The same can be accomplished when the market hits a Bollinger high. For a hit range option, a trader can place that range above the market on a Bollinger low, and below the market on a Bollinger high.

This strategy can be customized and back tested, but a trader should consider testing this strategy since it creates strong signals. Brokers Guide Login Open Account. Forgot password Remember me.

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