5 minute strategy
How to successfully trade at HighLow is what you are asking. Most of you are struggling to maintain winning trades in a longer period, and this is mainly because you are focusing on indicators instead of analysing candlestick patterns.
Maintaining an over 80% win ratio is definitely doable, but first, you need to understand how HighLow strategy works and then stick to it.
Many binary option traders try to set up a winning 5 minute strategy by implementing a combination of indicators on the charts. You can watch people trading with 5 or even 10 indicators all over the chart, and you can barely even see the candlesticks.
The truth is each indicator could be helpful in a particular market, but it actually plays a small part in your trading. Putting price action knowledge into your strategy could be a game changer for your success.
In this strategy, I use the Value Chart indicator, which was originally developed by David Stendhal. The VC alerts you when the asset is overbought or oversold; this is actually what the Stochastic Oscillator does as well.
For example, you are on the AUD/USD chart and the VC indicator shows you the pair is in the oversold condition. This doesn’t automatically mean you should place a High trade. What it means is that you may expect a pull back or reversal, but this is still not confirmed.
Here comes your price action knowledge and screen time. After you get the VC signal, you monitor the next candles and look for confirmation on your trade.
This is the main difference between you and robots. If you use a robot, it will trade every signal the VC indicator gives, which means a 50% chance of winning. If you do the math, you know that with an 85% payout and a 50% win rate, you are losing money.
In addition to the Value Chart, I use support and resistance levels and moving average. These indicators will help in visualization on the chart, and you can easily spot lower lows, higher highs and channels.
That’s it. We use three indicators and nothing more. Of course, you are free to add any indicator you want, but you should keep it simple and clean.
HighLow confirmation candlestick
We are looking for exhaustion or loss on momentum in trends. Momentum could be bullish or bearish; it doesn’t really matter. What is important for us is to spot our entry after the VC signal, but how? That is the puzzle.
By analysing the candles’ size, wicks and shadows, and how they relate to the 21 EMA, you will start to get a picture. For example, when candles’ bodies become bigger, we see an increase in momentum, and when bodies shorten, we see slowing.
The VC alert is usually triggered by overextended candles, which means candles with big bodies and short wicks. What does that tell you? At some point, when you build your price action knowledge, you won’t need an indicator. You will simply monitor the candles.
So, the VC indicator alerts you that the price is in the oversold or overbought zone, and you need a confirmation for a High or Low trade.
That confirmation candle could be a Dogi, Pin Bar, Hammer, Shooting Star or a small candle with a very short wicks. The colour of the candle doesn’t really matter; it is important for you to monitor charts and analyse candles.
Shooting Star candlestick
The Shooting Star candlestick has a small body and a long wick on top. It usually appears on top of a strong up trend, which means the bulls are exhausted and a pull back or reversal is very likely to follow.
The Hammer candlestick is the opposite of a Shooting Star. It also has small body but with a long shadow on the bottom. You may see it in a down trend, and it usually signals that a bullish move is on its way.
HighLow short expiries include 1 minute, 3 minute and 5 minute options. The best payouts, of 90%, you can receive with 1 minute expiry, but keep in mind, the shorter the expiry, the higher the risk.
I prefer trading 5 minute binary options, and I set my strategy on Meta Trader 4 with a 5 minute time frame. As you may know, the higher time frame filters out noise, and you have a better idea of price action.
The HighLow broker pays you an 85% return on a 5 minute ITM trade, which means with an 80% win ratio, your profit will be pretty good. For example, if you place $100 trade and you win 80 trades in 100, you earn $4,800 net profit.
How to improve your strategy win ratio
At first, you may not reach an 80% win ratio in your trading strategy, but keep in mind with 60% winnings, you are still making profit. Not many traders make profit, so even 60% could be considered a great achievement for some binary traders.
The better results will come with your experience and the screen time you have spent on the charts. You need to learn not to rush trades. Be patient and place trades only when you know the odds are in your favor.
Keep monitoring the major forex pairs. Hammers and Shooting starts will come, that is for sure. You also have to be ready to accept losses, but when you are confident in your strategy, you will look beyond OTM trades.
Once you open the chart, EUR/USD, USD/JPY or GBP/USD, it is important to figure out what the price is doing at that moment. Is it trending or ranging? Look at support and resistance levels. Do you see channel formations?
If you are new to price action, I would recommend you start from the basics and build your knowledge.
To perform the strategy in the best possible way, you have to load indicators and a template on the MT4 platform. The VC alert only works in Meta Trader 4. The HighLow platform is browser based, and you simply open it in your web browser.
So, you have both platforms, MT4 and HighLow, opened. You follow the price action on MT4, and you get signals with VC alert. Once you see a confirmation candlestick, you can place a 5 minute trade on HighLow broker.