Binary Options Trading With Support and Resistance Level

Trading with support and resistance levels refer to price level on charts. These levels usually act as barriers and prevent the price of an underlying asset that is traded to be pushed in a certain direction.

You may be able to see them directly on the charts and this can help you place stop loss or book profits or see the movement of the market easily.

After the market hits a support or resistance level, three things are most likely to happen and these include a change in the direction of the market, stall or retrace.

When you know how to draw these levels, you may be able to make changes to your trading strategy easily. You can make use of the information to decide when to trade, when to move a stop loss or close a trade.

Learn support and resistance levels

Although most traders think it is difficult to draw support and resistance levels, you may be surprised to know that it is actually quite easy and you may be able it learn perfectly after a few practice sessions.

One thing that you need to remember is that you should avoid drawing too many levels on the charts. You may make the entire process of reading a chart complicated when you draw too many levels.

When you learn how to draw support and resistance levels in real time charts, you may be able to plan for the day or week easily. This can help you take important investment decisions in such a way that you may be able to maximize your profits and minimize your risks.

Basic concepts of support and resistance levels

• Remember that is not necessary to draw every level that you find on the charts. Most traders tend to draw at every price level and this can take a lot of time and effort. It is advisable to draw only the significant levels on the chart instead of messing up the entire chart.


• The other thing that you need to remember is that you do not have to draw the level exactly at the high or low of the bar.


• It is also not necessary that you really go back in time to draw these levels on the chart. It is best to focus on a three-month period and draw the support and resistance levels instead of trying to go back several months.


• You may be able to determine the best time to enter and exit the market when you make use of technical analysis for trading.


• This can help you minimize the risks of trading and you may be able to make regular returns on your investments.

Trading with support and resistance levels can help identify price reversals in the binary options market before you place a trade.

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4 Useful Tips for First Time Forex Trading

Forex traders that are just starting out often find the process to be quite tough. Many have unrealistic expectations and hope to get rich in a relatively short period of time. But this is rarely the case with most non-educated traders losing their capital within the first three months of trading. For this reason, it makes sense to learn the basics and only start trading with real money when there is a fundamental understanding of the practices involved in trading.

Here are a few of the best trading tips for beginners:

Buy software

The first time trader will require a decent software program to make it possible to complete the trading activity. There is plenty of competition in the Forex industry, so most of the software options are free. It is worth researching the market and going with the highly rated package that is user-friendly and has a wide range of features.

Learn fundamental and technical analysis

The ability to analyze the basic and technical aspect of Forex trading is certain to benefit the long-term goal of growing the capital. Learning to read the daily to monthly charts can help with all types of trading activity. It is worth learning about things like resistance, support and trend lines, as well as the indicators.

Also, it helps to keep in touch with worldwide news to see to how a country's financial policies and events can have an influence on the trading market.

Use the different markets

When first starting out with Forex, many first time traders focus entirely on currency pairs because of the tight spreads and daily volatility. But, there are several other markets that are worth considering. Popular options include indices, energy futures, commodities, stocks and exotic FX pairs. It is practical to look at trading in several markets to avoid issues with over-trading and also to diversify the investment portfolio.

Write things down

The new trader is certain to benefit when able to develop a mindset similar to a small business owner. A successful business is certain to create the detailed business plan and conduct regular auditing and monitoring. Keeping a record of the day-to-day trading activity can help in many ways. Use a journal to record mistakes and achievements, reasons to close or open a trade, and funds being traded.

Keep referring back to the journal to analyze the good and bad trades to show where you can improve and extract more value. Also, the details of the good trades will help to motivate and boost your trading confidence.

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A Day Trading Technique I Use Myself

Summer's here... time to dust off and fire up the old grill, slather yourself in sunscreen and squeeze into that bathing suit that somehow shrunk two sizes over the winter.
Although we've technically got several weeks before the calendar says so... it's here.

The kids are home from school, campgrounds around the country are booking out quickly and the stock market is about to go into a slumber... and perhaps fall out of bed.

The upside potential in the S&P 500 for the summer is pretty slim. In fact, we've been preparing for a healthy and long needed correction of 10 to 15% before the autumn begins (after the correction we could see a nice strong continuation of the bull market).

So, with that in mind, over the course of the past few weeks, we've covered an array of dividend paying stocks which can act as somewhat of a safe-haven in the event of the coming correction. But what do we do during these lazy crazy days of summer?

We are prepared for the worst, and that's great, but how do we take advantage of the low-volume, low opportunity months ahead? With some day trades of course. Imagine doing two trades a day, in-out-and-done before 11 am while sitting poolside? Sounds like summer to me!

Since day and swing trading is very time sensitive, we won't be sending trade recommendations to your email inbox. By the time you read it, it's already old and useless.

However, I will share with you a technique I personally use that has been my winning strategy in day and swing trades for years. In fact, I use the same strategy when investing for my mid and long-term portfolios.

So you can employ these tactics every morning, or whenever you feel like trading, and be done with your day before the pretty waitress brings you your club sandwich and diet soda.

It's all about the pre-market activity

Each morning around 8:30 am eastern time, I open my trading screen, visit several financial news sites and have a look at all pre-market activity. I'm specifically looking for stocks that are up 15% or more in pre-market... or are down 15%+ in pre-market

Once I find these (and there's usually a few of them every morning), I'll go to the stock's chart and news feed. What I'm looking for is the following:

• News that is moving the stock. As long as it's not a buyout offer, the stock will most likely be tradable. If there's no news out and the pre-market is up or down 15% or more, I stay away.

• A chart that shows movement the day before. You want to see a chart showing the last hour or two of the previous session had the stock ripping either up or down, the same direction as the pre-market activity. This shows us that there are people already in the stock on the news before we make our position. (important)

Now that we've found our two or three stocks that are up, or down 15%+ in pre-market, with news out that is not a buyout offer and a chart that shows people getting in or fleeing in the last two hours of the previous session... we have our potential winners.

This is where we do the exact opposite of what our good-sense tells us. We will short sell the stocks that are up big in pre-market, and we will go long the stocks that are getting crushed pre-market. Why?

Those charts we looked at? If they show people rushing in, or rushing out of a stock in the previous session, that means there are folks already nicely in the money on those positions. The stocks that are up significantly in pre-market have shareholders who are likely to sell within an hour of the open to lock up their gains. These are stocks we want to short as soon as the sucker buyers at the opening bell slow down.

The stocks that are down significantly in pre-market? There's a very strong chance that folks are short from the day before, and plan on covering and locking in their gains within the first hour or so of the market. These are stocks we want to buy as soon as the panic sellers at the opening bell slow down.

Usually by 10 am or so, the charts begin changing course. This is around when you make your position.

So while instinct tells us to buy stocks that are up in pre-market, and sell stocks that are down, we want to do the very opposite, as long as the news is there, the chart is there and we time our entries and exits properly we have a good chance at making some money in a short amount of time.

This day-trading technique is almost identical to our long-term investing thesis. Buy when others are selling, and sell when others are buying.

Here's to good investing!

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Standard Deviations, Moving Averages and Reversion to the Mean

For my money, most people make e-mini trading an exercise in futility, bizarre theory, and interpretation of crazy indicators. Had I started trading outside the halls of an institution I suppose I wouldn't know where to start; this business is fraught with as many crazy ideas as crazy indicators. I don't think it has to be that hard. One of the first principles of trading is that prices tend to move from overbought to oversold and oversold to overbought in a manner that rarely strays from a mean price. You can take advantage of this tendency and profit, though few people actually trade Reversion to the Mean effectively.

Back in my college statistics class, we learned that standard deviation is a measurement that is used to objectively quantify the amount of variation in a given dataset. That definition works pretty well for explaining levels of excessive buying (overbought conditions) and excessive levels of selling (oversold conditions) and can give you an insight into when buying levels have exceeded expectations and sellers are likely to enter the market and vice a versa, when selling levels have exceeded expectations and buyers are likely to enter the market. In e-mini trading, I have been tinkering with this idea for nearly 10 years and defining an optimal Simple Moving Average that best represents an acceptable mean price that is uniquely useful for e-mini scalping. This was not the easiest of things, as e- mini scalping is much shorter in time and market breadth than calculations used in e- mini swing trading. (Where reversion to the mean trading is more common)

Without wandering into a lengthy mathematical explanation of how I have arrived at the numbers that best fit my e-mini scalping style, I can say that for most people and average between 200 and 300 will serve you well. I stick with Simple Moving Averages because an Exponential Moving Average weights the most recent price action in calculating a line plot. This is not a helpful attribute when looking at a 200 period data string and distorts the true mean you are trying to determine.

My standard deviation (SD) settings are higher than I expected, but for my trading style they seem to have worked well over the last 3 to 4 years. I generally use a channel with the inside ring the lowest standard deviation (SD 1.5-2.4) level that will produce a reversion to the mean and the outside ring(SD 2.8-3.5) is generally the extreme point where you can expect a powerful reversion to the mean. With about 4300 trades recorded and charted, I've had a range of results (depending on volatility conditions) that varies from 78% success on the low side and 85% on the high side. Like all things in trading, reversion to the mean is an exercise in probability and market conditions are a prime variable in determining Reversion to the Mean success.

The day got rid of all the goofy indicators and oscillators and learned Reversion to the Mean, order flow, and began to understand price action was an important day in my e-mini trading life.

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Market Trends and Common Filters

One of the trading pearls of wisdom is to always trade "with the wind at your back."

The reasoning here is that the trend, or the overall direction of price for a pre-determined time-frame, is most likely to persist in that direction for a greater period of time than price movement in the opposing direction, and therefore placing trades in the same direction of the trend puts the odds of winning on your side.

Of course there are other things to consider. For example, there is the TIMING of entering the trade in the direction of the trend. You could know the overall trend to be bullish and enter a trade LONG (buying), but if you do so right when a correction is beginning (when prices move counter-trend temporarily), you could turn out a loser if you are unable to withstand the losses that will accrue during that correction. So clearly knowing and trading in the direction of the trend is just part of the equation.

Another thing to consider is the method of determining the trend. You can use moving averages or some other oscillating indicator, or you can use trendlines and note the angle of ascent or descent of the market swings, or some other method. You also have to determine the time-frame for the trends you wish to base your trades on.

For instance, if you are a day trader you certainly do not want to determine the trend based on a YEARLY time-frame chart alone. The reason for this is that the YEARLY chart is far removed in the scope of TIME from the INTRADAY (based on minutes, hours or fractions thereof) time-frame. A more realistic time-frame for determining trend for day-traders would be to use a DAILY time-frame chart. If you happen to trade based on the DAILY chart and hold your trades overnight for one or more days, you would likely want to determine your overall trend using the WEEKLY time-frame chart. The rule of thumb is to use the next higher time-frame for trend determination from the time-frame you actually use for trade decisions.

In this article I'm going to approach the subject by using the WEEKLY time-frame chart to determine overall trend as if trading from the DAILY time-frame (holding my position for one or more days, also known as a 'short-term' or 'position' trader).

The weekly chart that I've decided to use for the examples in this article is the CRUDE OIL weekly chart from around January 2015 to the present (July 2016). No trades will be discussed as the focus is on approaches to deciding on overall price trend for the purpose of trading with the trend at the lower DAILY time frame. You can use the same method for any time-frame you desire, however.

The very basic method is to note the most recent market swing, whether it be a swing top or bottom. If a top, consider the trend bearish. If a bottom, consider the trend bullish. For the very short-term trades this can often have you trading in the best direction. All trades assume you have a good timing method, such as using the FDate method or combination of indicators you are comfortable with. A swing bottom is simply a price bar with a LOW that is 'equal or lower' than the previous bar's low and that the high of the bar has already been exceeded by price (by the subsequent bar or bars). A swing top would be a price bar with a HIGH that is 'equal or higher' than the previous bar's high and a following bar has moved below its low. The occurrence of a subsequent higher-high (in the case of a swing bottom) or lower-low (in the case of a swing top) is called 'confirming' the swing (top or bottom).

To improve on the basic method, you could apply what are called 'filters'. A filter is simply one or more chart indicators, such as moving averages, stochastic, MACD or other alone or in various combinations that you use to help you decide on trend direction.

One filter I have found useful is using the histogram of a MACD indicator set to the standard (12, 26, 9) setting. The histogram reflects the orientation of the oscillator and signal lines. If the oscillator line is above the signal line, the histogram will form above the zero level and is considered bullish. If the oscillator line is below the signal line, the histogram forms below the zero level and is considered bearish.

The thing about the bullish or bearish indication just mentioned is that there are times when the oscillator/signal line orientation is bullish but the market is trending bearish for weeks on end. The reverse is true for the bearish indication where prices could trend bullish for weeks. Thus alone this may not be a suitable filter and could use some adjustment. One such adjustment is to note the histogram range from zero.

For example, if each bullish (above zero) histogram bar is taller than the last, consider the trend bullish. But as soon as a shorter histogram bar forms, consider staying out of the market (neutral). For bearish trend determination, as long as each histogram bar below zero is taller than the last the trend is considered bearish. Once a shorter histogram bar forms, go neutral.

For good stretches you may find this approach works well. However, it too has flaws and used alone could poise a problem. For example, a taller bullish histogram formed for the February 20, 2015 week which would have suggested a bullish trend has started. And the prior 3 weeks was indeed bullish. Unfortunately the bearish wave was just starting and exactly from this week! Had you followed this method alone without the help of another filter you would have been pointed in the wrong direction until week ending March 13, 2015.

What you could do is add another qualifier filter. An example could be using the %R (14 period) along with the MACD histogram.

Using the %R, you could ignore the bullish MACD histogram bars anytime the %R has turned down, or the bearish MACD histogram bars when the %R has turned up. The MACD histogram would dictate trend direction and the %R would dictate when the histogram is to be ignored.

Another useful filter and one of my personal favorites is to apply the 8-bar exponential moving average right on the chart. I would use this along with the MACD histogram, but only use the histogram to indicate whether above zero (bullish) or below zero (bearish) with no consideration of one histogram bar being taller or shorter than the last. If the histogram bars are above zero (on my chart they are colored green) and the last weekly price bar has closed ABOVE the 8-bar exponential MA, I consider trading in the bullish direction. If the histogram bars are below zero (on my chart they are red) and the last weekly price bar has closed BELOW the 8-bar exponential MA, I consider trading in the bearish direction. Anything else and it is considered neutral.

Starting with week March 20, 2015 the histogram is bullish but the close is below the 8-bar MA. So the trend is neutral. Week ending April 10, 2015 closed above the 8-bar MA and the histogram was bullish, therefore signaling taking bullish trades. The market did not close below the 8-MA until week July 3, 2015 and this also turned out to be the last week where the histogram was bullish. It turned bearish the following week, and now the trend is considered bearish by histogram and 8-bar MA. This lasted until week September 11, 2015 although price still closed below the 8-MA but the histogram went bullish (above zero).

Above I have given you some ideas that you can employ for trend determination. There are many other ways and I encourage you to backtest them. The point is to determine the trend by examining the time-frame just above the one you trade from and discipline yourself to only trade in that direction for higher probability trading. Use filters to help you avoid trading in a direction based on a false trend signal. Do not expect any method to be perfect. You are going to get some false signals from time to time. If you have a good timing method to go along with your trend determination method you may still avoid bad trades due to a temporary false trend signal.

Always know the trend. You will be better off with the 'wind at your back'!

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An Introduction to Price Action Trading

What is Price Action?

This is the art of making your trading decisions based off of reading the price movement on the chart. This is done without any indicators, the only thing that really should be on the chart should be your Support and Resistance areas.

Now remember by 'Action' in Price Action, we are referring to the movement of price on any given chart. Remember, every single chart tells the story of a battle between the Bulls (the Buyers) and the Bears (the Sellers). This is what every single chart shows (Forex or otherwise). What influences the movement of price is traders making trading decisions (manual or automatic).

Price Action shows you the most up to date market sentiment, because it's happening right there in front of your eyes! Using indicators are often lagging, which is why sometimes you will enter a trade based off an indicator hoping that it will go well, only to have price turn against you! (Never go in to a trade 'hoping' it will go well, we are looking for high probability - low risk trades, in other words it makes sense to execute!).

Price Action = Trading the CAUSE

Once I understood this, it was a real penny drop moment. I had been trading the EFFECT of price movement, which is why I had been inconsistent. Trading this way meant that I could trade the cause of price movement and get in on the potential move very early on.

How to trade Price Action

There are four main elements to trading Price Action:

(1) Fundamental Analysis

(2) Technical Analysis

(3) Support and Resistance

(4) Candlestick Analysis

On the surface this may seem incredibly overwhelming, but once you have a clear understanding of these elements, you will see that they are very simple to do.

Let us now look at each of these four elements in more detail:

(1) Fundamental Analysis

This is extremely important, always keep an eye on the global economic news, remember we are trading Forex, Foreign Exchange. We are trading currency pairs, there are going to be certain global economic news events that will have an effect on the movement of price.

(2) Technical Analysis

Technical Analysis in Price Action Trading, is recognizing certain patterns on the chart that may give an indication for a potential trade. Remember, the charts are subjective, the reason they move in the way that they do is because of traders making trading decisions.

Traders will look at a chart and see that in the past price moved sharply down from a certain area, price is now reaching the same area and so they look for the same thing to happen. As Human Beings we are always looking for patterns and similarities.

So, Technical Analysis is immensely important in understanding and identifying potential trades. We look for those potential trades at areas of Support and Resistance.

(3) Support and Resistance

Support and Resistance are those areas on the chart where we believe there are heavy influxes of Buyers (at Support) and Sellers (at Resistance). These are our areas of trade opportunities, as they offer the highest probability - lowest risk trades.

This leads us to the final piece of the puzzle, Candlestick Analysis.

(4) Candlestick Analysis

Candlestick Analysis, as the name suggests is analyzing the candlesticks. We do this candle by candle in order to ensure we are aware of the latest, the most up to date and therefore the most accurate market sentiment. This is why trading the higher time frames, is key because it shows us Price Action that spans a larger amount of time. If you had two candles, a 5 min candle and a 12 hour candle, the one that would be of more importance would be the 12 hour candle, because it represents a longer period of Price Action.

So, there you have it a brief introduction to Price Action. Study it, master it and become consistently profitable.

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