Bollinger bands binary options strategy

Some currency pairs in binary options trading are so “cool” that they even have their own names.  Perhaps, the main reason of their difference is not “coolness”, but still they have names. The most “terrible” name was given to the currency pair British pound/Japanese yen. It’s called a Monster or a Dragon. You may ask: why is it called so? The answer is simple and clear: because of its high volatility! The price of an asset changes from an average of 100 to 200, because of this your account may become empty faster than you manage to say “I’m broken”, but at the same time, using  the right strategy for this currency pair, your profit can double in just a couple of days. In short, it is not recommended for beginners.

The main advantage of using the pair GBP / JPY is becoming the whole process of trading easier because of its high volatility the using of “stop loss” tool does not make sense.

Well, it is an incredibly attractive and at the same time, more than a dangerous currency pair. The strategy we will consider today is to “tame” the Monster and drive it to a short timing. By the way, the traders’ interest in short-term trading is steadily growing. And this is not surprising, because you can get a huge profit in short time. If you are in fashion you should pay attention to the 1 minute scalping system for the Dragon, its official name: Bollinger band strategy for binary options (traders mention it on the Internet forums this way).

Bollinger Bands. How does the indicator work? from IQ Option .

How to use Bollinger bands

Unfortunately, the author of this strategy is not known (or at least he is very difficult to find), so if successful, there will be no one to thank. So, here is the trading system itself: we will use three Bollinger bands with the following settings:

  • First: period 50, deviation 2-red
  •  Second: period 50, deviation 3-orange
  • Third: period 50, deviation 4-yellow

Each will be added separately with the specified settings. Please note that it is better to analyze the market and apply lines in the MT4 terminal (Bollinger is in the set of standard tools), and open trades in the interface of your broker. The result should be the following:

We’ll wait for the red Bollinger band’s contact. The price should be at least in the middle between the red and orange bands. The author of the system notes that touching yellow is even better, but it happens much less often. When it happened, we trade backwards and we have to make a profit. Here are the rules in brief:

Below (Put):

The price crosses the upper red Bollinger band and is at least halfway to the upper orange.

Above (Call):

The Price crosses the lower band and is at least halfway to the lower orange.

Bad side of the strategy based on Bollinger bands

You have already noticed that this strategy is completely contrary to trends. Trends do not matter at all so the state of the market should not affect profits.

But together with the high volatility of the “Monster” in the active trend periods, this trading system turns into a Devastator of the trader’s account, especially if it is used by a beginner who does not know how to determine the trends and the state of the market. The picture above shows a regulated market with good signals. In this context the contract will be closed (with money) within 5 minutes.

What good is in scalping strategy?

If the user is able to identify trends and “feel” the market, this trading system can be very useful for him. If the price jumps between the bands like a ping-pong ball, you can quickly get the money. Many experienced traders combine Bollinger bands binary options and moving averages on minute charts.

We should notice that one-minute charts are difficult to understand even for an experienced user, and therefore it is difficult to determine trends in them. The “noise” of the market is exactly what this system wins. While the price doesn’t move in one direction for a long period of time, with the help of this tactic you can make good money. Although the end time should be longer than the time frame of this chart, many will probably want to try experimenting with 60 second trades. Of course, it is difficult to recommend this strategy even to an experienced trader, but who knows…So, maybe it will work. If you have an experience, write in comments (author’s note).

Results: have we tamed the monster?

The undeniable fact is that the success of a trading system at most depends on the skills and experience of the trader who uses it. It’s true about scalping Bollinger: if the user is able to determine the state of the market – the tactic is good and profitable, if not – it will simply empty your pockets.

Of course, its peculiar advantage, which probably places all traders on equal footing, is that it uses one minute time frame, because of which the state of the market is difficult to determine.

One last thing: it is better to test it on a demo account before using. If you think you can use it on a real account … Good Luck. You will need it. You can find out more about other strategies for binary options on our website in the appropriate section.