It is easy—and usually smart—to be wary of the ultra short term binary options because of the fact that they do have a higher degree of variance associated with them. However, variance isn’t necessarily a bad thing, especially if you are a high frequency trader with enough capital backing you that you can stomach the lows that will inevitably occur. The following strategy has earned itself the nickname “The Legend” thanks to the fact that it takes 60 second binary options trading and attempts to reduce the variance. And when it’s done correctly, this can often be achieved if the conditions are correct. Let’s take a look at how you can start using the Legend today.
There are many conditions that need to be in place if you want to use the Legend with a degree of accuracy. We will go over what’s need for your call options in this, but do note that if the situation is flipped, the Legend can also be used for put trades, too.
How To Apply The Legend Strategy
The first step is to look at candlestick charts. Make sure that you look at one hour charts primarily, but confirming your findings on shorter term charts is also a must. Candles should start out at one hour, but you should also look at candles much closer to your desired timeframe for increased accuracy. You are looking for a chart where the price has closed outside one or more of either the support line, the pivot point, the demand zone, or a major Fibonacci number. These should be primarily found on the one hour chart, but finding them on smaller increments is a big plus in your favor. The more of these qualifications that are established, the higher the degree of certainty you should have with your trade. You also want the candle to close outside of the bottom of the Bollinger bands. You should also look at sentiment charts so that you can get a good idea if the asset is overbought or oversold. For calls, you will want the asset to be oversold as this increases your likelihood of success.
When all of these conditions are met, you can place a call option, ranging from 60 seconds to five minutes in length, and be fairly certain that you will be successful often enough to negate enough of the variance associated with 60 second trades to create a long term profit. Adding multiple trades with these same conditions can act as a safety net or a hedge of sorts, too.
This strategy can be used both with and against prevailing trends, although it is far more conservative to use it with the trend as this adds an extra layer of safety to your trades.
This is a very technical type of trading strategy, and it is definitely an advanced method. If you are a beginning trader it’s not something that you should attempt as there is a lot of room for user error here.
The biggest drawback, other than the technical knowledge needed to be able to read charts quickly enough to draw accurate conclusions, is the fact that even though this improves the level of variance you will face with 60 second trades, it does not make it foolproof. Even with an advanced strategy like this, it is still possible to be on the losing side of things for days or even weeks at a time. You need to have a larger than average amount of cash in your trading account if you want to have a decent long term chance of success with this trading method.