Basic 120-Second Strategy
My basic strategy toward 120-second options goes as follows:
1. Find support and resistance levels in the market on 1-minute time-frame where short-term bounces can be had. Example of support and resistance levels include Pivots points (daily or weekly), Moving Averages, Supply/Demand zones and Fibonacci retracement levels. All this support and resistance level can be particularly useful, just as they are on other time-frames while trading longer-term instruments. However you can select and focus on any of the above-listed levels as your major reference levels.
2. Take ‘price action’ trade set-ups on the second touch of the level. To have a higher strike rate, I normally look for an initial reject of a price level I already have marked off ahead of time, usually i call this ‘first test’. If it does reject the level, this helps to further validate the robustness of the price level and I will look to get in on the subsequent touch. Expectedly, this leads to a lower volume of trades taken in exchange for higher accuracy set-ups.
3. Focus on one asset/instrument or max two to avoid giving back your profit due to trading multiple assets or instrument. Actually i use this 2-minutes strategy on any type of Volatility index on www.binary.com. The minimum duration for there FOREX currency pair is 3-minutes minimum duration, this is why i only trade this strategy with volatility index on there platform. Moreover the percentage return of 120-second expiration on volatility index is 94% return on each stake.
In other words, when trading 120-second options from the 1-minute chart, you’re dealing with a very small amount of price data encapsulated in each candlestick, and one minute of price action is relatively inconsequential in the grand scheme of things. That said, I believe that it’s fully possible to make sound trading decisions regarding what may happen to the price movement in the next minute.
4. Make sure you use high probable price action trade set-ups like the engulf pattern, pin-bar and hammer as these are my favorites. Do not worry if you have little or no knowledge on price-action, i will write an article to enlighten you about it in future post.
5. To increase wining rate, you can actually apply the scalping method when you notice your trade is already in profit before the 120-second expiration occurs. I call it scalping method because its a term we use in FOREX trading for closing out trades in little profit within a short period of time. However in binary options its referred to as ‘Sell at Market’ which means you can close a trade at a particular point for a particular percentage on return before your initial expiration occurs.
Below is an example of a trade-set up on the daily central pivot on a 1-minute time-frame. A pin-bar emerged after it tested the daily central pivot point which is acting as a resistance level. If you place a put option or lower for 120-second expiration for the asset after the close of the pin-bar formation, you would have won the trade hands down.
NOTE: Have it in mind that no holy grail exists so its possible to have series of loss during bad market. During bad market, your money management will give you an edge to become profitable on the long-run.