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Binary Options Strategies: Range Trading

Touch and No Touch binary options strategy

Most binary brokers offer Touch or No Touch binary options that are a perfect match for ranging trading markets. You can use the Moving Average Convergence/Divergence (MACD) indicator to help yourself to detect ranging markets.

The MACD Indicator

The MACD is an exceptionally adaptable indicator. Traders generally use it to identify changes in the movements and versatility of the market. However, you can also use this tool to detect a ranging market. In order to do this, you just have to change some of the MACD settings: in the histogram, add 2 more lines above and below the zero line. See the diagram below for reference.

MACD settings diagram
As an adaptable indicator, MACD chart is used to identify changes in the market's movements and versatility.

The number of decimal places your chart platform uses will determine the value of the lines. For instance, if your chart platform has five decimals units, then you should change the lines to four decimal units. When you change this setting, any activity you see that lingers between the two lines above and below will indicates a ranging market. The advantage that this option gives you is that you can do it while trading in real time. When you confirm that the market you are trading it is in fact ranging, all you have to do next is use the Bollinger bands to restrict the resistance and support levels of the market.

How to set the Resistance & Support Levels with the Bollinger bands

When you finish identifying the ranging market, you will want to define its scope of prices, also know as the resistance and support levels. Though Bollinger bands were conceive to measure the volatility of the markets, you can also use it to set the resistance and support levels because the two bands are indicators of the limits of the ranging market. When completing this setting change, you will get two strike prices that will allow you to work with your binary options. Next you have to do is decide the type of contracts that you want to use in your trades.

Bollinger Bands and Ranging Markets
The Bollinger Bands - Upper, Middle, and Lower Band - are used as indicators of of the limits
of the ranging market.

Reliable Signals

This will leave you with very reliable signals of the market status because you will be using two inicators to check it changes. Another advantage you get from this method when you trade in ranging markets is that you will be able to define your strike prices using the Bollinger bands. This means that you won’t have to do more guesswork because you this methode will give you an estimation of the strike prices you should use in your trading taking your options into account.

This post has been contributed by Binary Options Hub, best site with binary broker reviews and their bonuses!

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