The Pivot Point Bear Binary Options Strategy
Pivot Point Bear Binary Options strategy is an excellent strategy not only for risk control when trading binary options but also can be used as an indicator or monitoring tool. Binary Options Traders are advised to familiarize themselves with this strategy so they it will provide them with a powerful tool in their arsenal of trading strategies.
By definition, pivot points are a type of technical indicator that is used by technical analysts to verify the primary market trend over a range of different time frames. It is essentially a point derived from the average of the previous day’s high, low and closing price. For technical analysts, pivot points are mostly used for determining the resistance and support levels of a trend. In the analysis of pivot points, technical analysts calculate the first set of support and resistance level by using the asset’s price range from the pivot point to either the asset’s previous day high or low prices. As for the second set of support and resistance level, it is derived from utilizing the full range of the asset’s previous day highs and lows prices.
Calculating Pivot Points:
There are actually a few ways of calculating pivot points. One method is by the 5 points system as we have mentioned earlier above. With this system, in addition to 2 support and resistance levels, the asset’s previous day closing price, its high and low prices are used to derive point.
Uses of Pivot Points in binary options trading:
The pivot points derived can be utilized in 2 ways. Firstly,Binary options traders can use it to determine the primary trend in the market. If prices are breaching the pivot point price level in an upward manner, then the market is regarded as being bullish. If however prices are breaching the pivot point level in a downward manner, then the market is seen as bearish. It should be noted that pivot points are essentially short term indicators of the market trend. It validity is only for a single day.
The second use of pivot point levels is as an indicator as to when binary options traders should enter or exit the market. For example if prices are breaching a resistance level, this is the time that the binary options trader should enter the market. On the other hand, if prices are breaching a support level, this mean the binary options trader should get out of the market. A stop loss order can be set at this support level to be triggered if the level is breached.
With the pivot point bear Binary Options trading strategy, the goal is to capitalize on down trending market. To get an indication of the magnitude of prices moving downwards, the binary options trader will use pivot point levels to plot the movement of price changes. With each passing day, the binary trader will be able to see how low prices are moving to. To confirm the bearish conditions of the market,binary options traders can use the “inverted hammer” candlestick pattern as an indicator. Using the daily pivot point level as a threshold, if the opening price of the opening candlestick is below the threshold, then the binary options trader can be fairly certain that the market is bearish with prices trending downwards for the day. The same principle can also be applied by binary options traders wanting to trade a bullish market.
Regardless of whether one is a new or experienced binary options trader, this trading strategy is simple and easy to apply. With enough practice, binary options traders can easily obtain an accurate indication about the market trend for the trading day.
Thank you for reading our strategy review, if you have some experience with this strategy share it with us and help other binary options traders too.
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