Pivot Points Touch Strategy for Binary Options

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Pivot Points Binary Strategy

Binary Options trading as well as Forex trading requires determination of entry levels using various reference points. But, most of the newbie binary traders fail to recognize the risk defining point as they rely highly on different technical indicators. Unprecedented risks can definitely be problematic for you but if you calculate your risks, your binary options strategy will certainly become more useful.

In this regard, the Pivot Point and its derivatives is a tool with the main purpose of providing defined support and resistance level while minimizing the risk. As a matter of fact, good old technical tools are proven to work better in best binary options strategies in combination with Pivot Points rather than alone. Binary traders can use Pivot points very effectively and profitably. Read the following article to understand how.

Best Binary Options Strategy: Pivot Points

The Pivot Points were originally developed for traders that use future trades and equity as their main instruments. Since the size of binary options trading market is large, it has a strong protection from possible market manipulations, the levels provided by pivot points used in best binary strategies actually work perfect in this market. In simple words, the Binary Options market follows resistance levels and support levels as well as other technical principals better most of the markets that are not as profitable.

Calculating Pivots for Binary Trading Strategy

At any point of the day, you can calculate Pivot Points for binary instruments. The current trading day’s prices are calculated using the prices of previous day.

The general formula for calculating Pivot Points is:
Pivot Point for Current = /3

Once you have calculated the pivot points, you can calculate the support and resistance levels for the trading day using them.

Benefit of Using Binary Pivot Points

In order to get better idea of why pivot points are useful binary options strategy, take currency pair EUR/USD and create a statistical table showing for how apart each low and high has been from each resistance and support level.

  • Carry out a detailed analyses by estimating total pivot points as well as resistance and support levels for total number of days under consideration.
  • Take the real lowest point of a trading day and subtract support point points from it. (low-S)
  • Similarly, subtract pivot points for resistance from real high. (High-R)
  • Find the mean Finally of each difference.

To make Pivot Points as Best binary Options Strategy more understandable, take the example of how Euros performance since its inception on Jan 4, 1999.

  • On average, the actual low is 1 pip below Support 1.
  • On average, the actual high is 1 pip high below Resistance 1.

For second support and resistance level:

  • On average, the actual low is 53 pips above Support 2
  • On average, the actual high is 53 pips below Resistance 2

Judging Binary Strategy Pivot Probabilities

The above statistics clearly indicates that traders can have decent gauge of actual levels of a trading day with the help of Pivot Points calculated for S1 and R1. Furthermore, the total number of trading days after the inception of Euro according to calculated days for which high was higher than each R1, R2 and R3 and low was lower than each S1, S2 and S3 are 2,026.

The above information is very useful for traders to trade successfully. As for example, according to the data that is presented above , the currency pair has 44% chance to fall below S1. It indicates that probability is favoring you and you can place the trade with confidence. Also, this binary options strategy shows that the real probability of highs for trading day exceed R1 only for 42 times out of hundred.

Although, there can be sudden moves that are unpredictable and this is not certain to happen as they are only probabilities yet the knowledge of calculating pivot points can help you to place trade at right times. Pivot points provide you an opportunity to measure the resistance and support level beforehand quite confidently, help in placing orders by accurately identifying reference points and this is the real power of Pivot Points Binary Options strategy.

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As Binary Options Hub suggests, this is definitely the best binary strategy for those of you, who can understand it. In case you didn’t quite get it, you can always try our other binary strategies!

Pivot Points Touch Strategy for Binary Options

The indicator will automatically draw pivot points. Spot the alignment of multiple levels for stronger signals.

Figure 1 – Metatrader Indicator for Pivot Points

Using this recent example on the EUR/USD we can see how powerful Pivot Points along with the calculated Support & Resistance levels can be. In this case we had a triple top at resistance (red line), price testing the same level 3 times before we see a massive break to the downside. So this could have indicated in advance that the bears are in control and that we could expect a strong bearish movement. The first test of the resistance concluded in a minimal retrace where we hit a support level (green line). From there we moved back into the first resistance zone once again. A classic double top or “M” formation occurred at our point of interest before selling off to the downside. As a rule of thumb we cannot expect a level to hold forever, thus on a third test of the same level we can expect one of two things to occur. A break of the level or a rejection followed by a strong move. As we can see by looking at Resistance 1 (red line), price stopped on a dime. Where most traders would have seen the lower low in between the double top and expected price to break to the upside we had the advantage of our Pivot/Resistance level telling us otherwise.

Figure 2 – Metatrader Indicator S1,2,3 & R1,2,3

Sure, I can see the people getting ready to comment: “We could have easily drawn in those level”. Yea, true! But this is where this comes in handy for first timers and unexperienced traders. There is nothing wrong with making something easier and more convenient if the tools are available. I am not saying this is an easy way out, a shortcut or a replacement for drawing manual S&R levels. The more confluence we have the better our prediction and odds of the market moving in our favor.

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The Pivot Scalping Strategy for Expert Binary Options Traders

Full Review of the Forex Pivot Scalping Strategy

This Forex pivot scalping strategy was brought to my attention in the strategy room by a beginner who wanted to use it for binary options but needed some guidance. I was skeptic when I saw the Parabolic Sar being included but further investigation revealed that you are required to analyze pivot points and not rely on a couple of indicators alone. Since I like pivot points I decided I would review this strategy in case anyone else is interested. The creator of the scalping strategy is Kelvin and he demonstrates how to use his Forex scalping strategy in this video. The scalping technique was intended for making trades that last only minutes in the Forex market, analyzing the five minute charts. If you consider yourself being a rather advanced trader with some prior experience you can give this a try.

What is the Forex Pivot Scalping Strategy?

I am sure there are loads of scalping techniques out there but this one uses pivot points which is the most important part of the strategy. Pivot is the average price and you can either calculate and draw them manually or use an indicator that draws them for you, if you are not confident enough yet.

Basically, these pivot points are support and resistance areas and their strength is measured by the number of candles that has touched them – the more the better. In the comments related to his video, Kelvin states that he prefers the daily fib levels. I believe he has a point because the daily charts are more accurate for determining strong support and resistance levels.
For extra confirmation, Kelvin suggests using two additional indicators for identifying overbought or oversold positions. He uses Stochastic Oscillator and Parabolic Sar both with standard settings.

The idea is to analyze the five minute charts and wait for the price to reach a certain pivot level that either acts as a support or a resistance. When price touches a support line, we are first supposed to observe that it repels the candles – Indicating support is strong. The Stochastic Oscillator needs to be oversold and the Parabolic Sar must draw dots under the candles. That’s our call signal. For put signals; the opposite is true. When price touches a resistance pivot level candles should be repelled and Stochastic overbought. This time, Parabolic Sar should paint dots above the candles. See a put scenario in the picture below.

Call Rules:

When support repels the candlesticks; confirm that dots are below the candles and that Stochastic is oversold.

Put Rules:

When resistance repels the candlesticks; confirm that dots are above the candles and that Stochastic is overbought.

My recommended Pivot Indicator:
Download Fibopiv_v2

Notice all three rules are satisfied in this trade. 1) Price touched one of the Fibopiv indicators lines, blue one in this case and resistance held because the candle got repelled due to its wick. 2) Parabolic Sar indicates price is going down, dots are above candles. 3) Stochastic is overbought.

Remember that the heroes in this strategy are the pivot levels, the other two indicators are just there to confirm the signals.

Why does the Forex Pivot Scalping Strategy Suck?

This strategy sucks for anyone who is not familiar with support and resistance trading. Even with the Fibopiv indicator, you have to understand a certain level of price action or it won’t work. Another reason for why this strategy isn’t as good as it could be is the fact that Parabolic Sar is a repainting indicator. Meaning that a signal can be fake because the dots that appear can flip, indicating change of trend direction. Furthermore, a retracement can be far over when you get a valid Parabolic Sar signal because once you see the first dot, the Stochastic oftentimes already changed position from either overbought to oversold or vice versa. This is confusing, especially for beginners.

Why doesn’t the Forex Pivot Scalping Strategy Suck?

If you understand support and resistance lines then this strategy is a good start towards a more advanced trading technique. The Stochastic Oscillator definitely does not suck. It is a very strong indicator when it comes to identifying entry points. The Fibopiv is also an excellent tool if you want to level up and learn how to draw pivot lines on your own.

Final Words – Tsar Yes, Sar No!

I am not a big fan of the Parabolic Sar. I want to enter my trades at the best possible entries when the candles reach a certain support or resistance level. Waiting for the retracement to be over only to get a way too late dot signal from the Parabolic Sar seems unnecessary to me… The Stochastic Oscillator together with the Fibopiv make a great team already so if I were you I would get rid of the Parabolic Sar as soon as possible. I am sure you will do much better without it when you understand how to use the Fibonacci/Fibopiv levels to your advantage. Why not replace the Parabolic Sar indicator with something else; like your own favorite indicator? Still insist on keeping that repainting and slow indicator? Ok, at least try this whole thing on a higher time frame to see if the Sar performs better or not. After all, you are the Tsar of your strategy!

Have questions? Let’s discuss in the CommuniTraders strategy room.

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  • Binomo
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    Good Broker For Experienced Traders!

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