Numerous trading systems have been developed for electronic contracts, but many of them contradict the rules of trading in stock, commodity, or currency markets. Binary options, for instance, are often traded against the primary direction of movement, instead relying on corrections or trend reversals. This approach is largely driven by the short-term nature of transactions in the electronic contract market. As a result, traders do not have to wait for significant price changes in one direction; a short impulse movement that occurs during the “break” of the current trend or its minor correction is often enough to generate a profit.
This article will focus on the “Peak” strategy, which provides a highly precise method for identifying the start of a price movement shift. The strategy derives its name from its ability to work with peak values during both upward and downward movements.
The “Peak” strategy is based on the analysis of price movements and their peaks. Traders using this strategy aim to identify the beginning of a new trend, as it provides a valuable opportunity to enter the market at an early stage and make a profit. To achieve this, the strategy relies on a combination of technical indicators and price action analysis. Traders look for key levels of support and resistance, as well as patterns such as double tops or bottoms, which can signal a trend reversal. By combining these elements, traders can make informed decisions about when to enter and exit trades, with the goal of maximizing profits while minimizing risk.
The Basics of the Peak Trading System
The “Peak” strategy for binary options will allow you to open trades with maximum accuracy at the trend reversal.
The “Peak” strategy was developed based on two widely used Expert Advisors: the Bollinger Bands trend indicator and the Stochastic oscillator. This is a significant advantage of the system because these tools are readily available in the trading terminals of most brokers, including Binomo.
However, before traders can start searching for peaks and reversals, they must set up their workspace correctly. This process typically starts with setting up a Japanese candlestick chart, which is the preferred chart type for this strategy. The ideal timeframe to use is typically M5, as it allows traders to make multiple trades per trading session.
When selecting assets to trade with the “Peak” strategy, it’s essential to choose only those with sufficient volatility. This means that the price chart should exhibit directional movements that are occasionally interrupted by opposing ones. The strategy does not work well in sideways markets where there is little price movement. By selecting the right assets, traders can increase their chances of success with the “Peak” strategy.
Let’s now discuss the indicators used in the “Peak” strategy. Bollinger Bands, as in their traditional application, indicate the trend direction and the price channel on the chart. Traders do not need to alter the parameters of the indicator when installing it on their workspace.
On the other hand, the Stochastic oscillator plays a crucial role in generating buy signals for contracts. To set it up correctly, traders must adjust the periods of the fast and slow lines to 5 and 3, respectively. By following this approach, traders can increase the accuracy of their buy signals and potentially improve their overall trading performance.
How to apply the Peak Trading Strategy
It’s time to talk about trading. When candles exit beyond the Bollinger indicator, it is the best signal for the beginning of a correction or a trend reversal. In this case, the transaction is opened after the price returns to the channel, which sometimes acts as a belated signal.
We get the signal to buy after the chart exits the price channel by the Stochastic signal lines, or more specifically, the intersection.
So, the CALL option should be done when the price goes beyond the lower limit of the Bollinger Bands, and the fast Stochastic line crosses the slow line from below upwards under level 20.
Contrary, buy a PUT contract in the opposite case, when the candle is above the upper limit of the Bollinger Bands, and the Stochastic MAs cross from top to bottom above the level of 70.
The expiration time is 15 minutes.
In conclusion, the “Peak” strategy is a popular trading system that has been shown to be highly effective in generating stable profits. The strategy relies on a combination of technical indicators and price action analysis to identify the beginning of new trends in volatile markets.
However, it is essential to note that the strategy is not suitable for all market conditions. The strategy works best in markets that exhibit significant directional movements and occasional reversals. In low-volatility markets with minimal price movement, the strategy may be less effective, resulting in less profitable trades.
Caution! This article is not intended to be investment advice. No strategy can guarantee 100% correct trading results. A successful trading result in the past is not a guarantee that it will be repeated in the future. Any information contained in this article is for informational purposes only.
