If you study any price chart it becomes apparent that the market never moves higher or lower in a straight line. It tends to move in waves. The market moves higher, then pulls back, and then moves higher again. Or the market moves down, rallies up, and then continues down again. This is the nature of market movement. It is this predictable nature of ebb and flow that we as Price Action traders want to exploit. The Retracement strategy aims to profit from this market movement by entering into major trends on the back of minor retracements.

The only requirement is that the chosen market and timeframe must display clean flowing price action — no gaps, large candles nor candles with large wicks. Otherwise the predictability of the pattern that the strategy exploits is negated. The example charts below are configured to trade 60 second binary options, though the binary options strategy and setup can be adapted to trade any time frame.

The layout consists of four candlestick charts including a one minute, two minute, five minute, and 15 minute chart. Each chart has two indicators; an eight period Exponential Moving Average EMA and a 21 period EMA. The price charts are arranged side to side, top to bottom, so they can be easily viewed from one trading screen.

This chart configuration has arisen out of personal preference and I urge any binary options trader to adapt the chart configuration to suit their own personal preferences. Please note the time frame on your trigger chart must exactly match the expiry length of the binary option you are trading i. Before we even consider looking at binary options charts or implementing any binary options trading strategy it is best practice to check for important economic news announcements that could impact the markets you are considering to trade.

Important economic news announcements can cause periods of illiquidity and high volatility, especially in the Forex markets. As Price Action traders we want smooth predictable chart structure, and economic news announcements have a history of creating the opposite. So, before every trade or trading session simply note down the times of major news announcements and the markets they are most likely to impact.

One of our first tasks is to identify a market with an established and clean flowing trend prevalent across multiple timeframes. This is the key condition necessary for this binary options trading strategy to work. If the Price Action is not forming HH and HL or LL and LH see market trends then move on and find another chart. An easy way to quickly find a trending market is to simply look at the EMAs.

If the eight period EMA is above the 21 period EMA on most time frames, then chances are you have an uptrend. For The Retracement binary options trading strategy to work the EMAs must be in the correct order on the trigger chart and at least T2.

Ideally, the EMAs would be in the correct order across all the timeframes, but this is not always possible. Once we have identified a trending market with smooth price action we now look for a minor correction in that trend to form — a retracement.

Retracements provide excellent opportunities for all types of traders to enter an established trend at an area of value. Thus generally after a trending market has finished retracing we see a surge of momentum in the original direction as new traders hop on board.

The aim of The Retracement binary options trading strategy is to capture this resurgence in momentum.

The Retracement strategy works by capturing retracements on the trigger chart and T2 only. If the market is beginning to retrace on higher time frames it is likely to result in a change of trend on the lower time frames and the formation of false trading signals. We only want to trade minor retracements in price.

An overextended market is one where the current price is a significant distance away from the moving averages. This generally occurs when a market moves very fast in one direction, leaving the averages behind.

When this occurs there is pressure on the market to revert back to a price of value, resulting in a retracement. If a market is overextend on any time frame we need to leave it alone as the probability of the price retracing back against our position is just too high.

If all of the above conditions are in place it is time to find the last ingredient — our entry candle. All we need now is the green light. The entry candle provides our green light. What we are looking for is a signal that the market has now finished retracing and is ready to continue with its trend.

It is crucial that the entry candle forms around the averages as we know this is an area of value and an area where traders are likely to jump on board the trend. If the entry candle forms too early, the market may not have finished retracing. If it forms too late, the market may wish to continue retracing further.

The Retracement | Binary Options Price Action Strategy | 60 Second Trader

Another thing to avoid is overly large entry candles. If the entry candle is overly large it is likely that the initial surge in momentum that we want to capture is all used up. This leaves fewer traders in the market to propel our trade forward. In all these situations the probability of a losing trade occurring is too high.

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So the easiest solution is to just avoid these signals and only take perfect trading setups. Once we have our perfectly formed and situated entry candle it is time to trade. For bullish signals we open up a call position when the entry candle closes. For bearish signals, we do the opposite and open up a put position when the entry candle closes. When trading 60 second binary options with this method it is important that your entry timing is spot on as these markets can move very fast.

If you enter too late there is a greater chance of the option expiring out of the money, thus leaving you with a losing trade. Before you begin using this binary options trading strategy please revise all the criteria again to make sure you fully understand all the concepts. Your binary options broker should also be able to help you gain a deeper understanding of this strategy if you wish to utilize it in your trading.

See below for a quick reference guide to trading this binary options strategy. Compare Binary Options Brokers Find the Best Binary Options Broker For You Search for: Trusted Brokers IQ Option Wynn Finance 24 Option Broker Of The Month Trading Tools Live Charts Free Demo Beginners Guide Find Out Want To Find Out About Special Offers From Our Brokers As They Happen? Please be aware of these risks and never invest more money than you can afford to risk losing.

The risks involved with trading binary options are high and may not be suitable for all investors. Please evaluate your investment objectives, level of experience and risk appetite before deciding to participate in the binary options market. All information provided by 60secondtrader. Designed by Elegant Themes Powered by WordPress.

Get Started with a Binary Options Guide. The Best Time to Trade Binary Options. The Emotions of a Trader. BROKERS LEARN STRATEGY BLOG ABOUT Contact Us. The Retracement Strategy Retracement Binary Options Strategy The Concept If you study any price chart it becomes apparent that the market never moves higher or lower in a straight line. How To Setup Your Binary Options Trading Strategy for Success Trading Screen Configuration The example charts below are configured to trade 60 second binary options, though the binary options strategy and setup can be adapted to trade any time frame.

Price Chart Configuration Check Economic News Before we even consider looking at binary options charts or implementing any binary options trading strategy it is best practice to check for important economic news announcements that could impact the markets you are considering to trade.

Find a Trend for your Binary Options Strategy One of our first tasks is to identify a market with an established and clean flowing trend prevalent across multiple timeframes.

Uptrend Across All Time Frames Look for a Retracement Once we have identified a trending market with smooth price action we now look for a minor correction in that trend to form — a retracement.

Stalk an Entry Candle If all of the above conditions are in place it is time to find the last ingredient — our entry candle. Final Step for the Retracement Binary Options Strategy: Trade Once we have our perfectly formed and situated entry candle it is time to trade.

Quick Binary Options Trading Strategy Checklist: Check for economic news announcements Clean, flowing Price Action Clear trend on multiple time frames EMAs in correct order on Trigger Chart and T2 The market is retracing back into the averages on Trigger Chart The market is not significantly overextended Entry candle formed on Trigger Chart.

Compare Binary Options Brokers Find the Best Binary Options Broker For You. Trusted Brokers IQ Option Wynn Finance 24 Option. Broker Of The Month. Trading Tools Live Charts Free Demo Beginners Guide.

Find Out Want To Find Out About Special Offers From Our Brokers As They Happen? Click Here For Free Alerts. Jun 19, 60 Second Trader , blog.

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