Trading Binary Options Using Key Levels

Trading Binary Options Using Key Levels

Trading Binary Options Using Key Levels
Trading Binary Options Using Key Levels Getty Images

It is possible during trading, to have placed a trade with what you felt was the best option for the strategy or system you are using. Then, the next thing you know, the market has moved against you and you have lost again. Those days make you wonder why you ever thought you could be a profitable trader.

You may have the best strategy or system, but may not be choosing the best option. There are key levels to look for that will signal whether or not to enter a trade.

The following image shows the first of the key levels for your focus. The bars are 10-tick bars. They are not time-based. Notice levels going across the chart and numbered along the left side. These are deviation levels. These are not standard deviation levels that show the historical levels of the market. Rather, they are diagnostic deviation levels plotted the day before, already on an Apex chart for your reference.

Trading Binary Options Using Key Levels

Notice how the market respects those levels. At strong levels, the market can reverse, hesitate for a bit, or blow right through the level and go on to another level.

Another key indicator used at Apex is Volume Accumulation Distribution or VAD. It measures the volume in a trend, not the volume of each bar. When comparing the volume between consecutive trends, it shows how one doesn’t have as much volume as a preceding trend. This is exhaustion. The market is trying to push itself up or down, but without as much volume, it is exhausting itself. After the market has gone up or down and exhausts itself, it reverses.

Trading Binary Options Using Key Levels

Putting It Together In A Choppy Market

Often times when the market hits a key level, it will start to chop. Some people avoid trading choppy markets. In this particular trade setup, you want to identify choppy markets, especially choppy markets at a key level. It is helpful to mark your chart with a chop box.

The following image shows that the as the market pushed against the bottom of the chop box, the VAD consistently showed volume being exhausted. By watching the VAD as the market broke out of the chop box, you could see the volume did not exceed its previous level.

Trading Binary Options Using Key Levels

This was a fake break since immediately after, the market took off to the upside.

Trading Binary Options Using Key Levels

Notice how the blue bars shown in the lower part of the image, in the VAD section, were increasing in size indicating there was more volume building in this trend.

Trade With Nadex Binary Options

If you want to improve your probability of success, than looking for the key levels is a great way to start. For this trade setup, you want to see the market breaking out of the chop box with increasing volume passing the previous volume bars. Now that you understand the setup, using binary options with limited risk is a choice to consider.

You could enter a binary between $35-50 on a buy, and exit between $80-90. It isn’t necessary to hold until expiration, as this is a trade where you want to take advantage of the breakout move and exit. The market may turn against you causing you to lose your profits if you hold your trade until expiration.

The counter you could enter a binary between $65-50 on a sell, and exit between $20-10. In a nutshell, you want to risk $40 to make $40, giving you a 1:1 risk reward ratio. Of course, this is not a guaranteed strategy. Practice it first in a demo account before risking real money.

Note: exchange fees not included

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