In our binary options 100 series I recommend the frames you should analyze when trading specific binary option expiry times. And the recommendation was trading at the time frame that matched the expiry time. So if we’re trading a 60 second option, we should be analyzing the one minute chart. Five options, the five minute chart. 15 minute options, a 15 minute chart, and so forth. This is the way I do recommend analyzing and trading binary options.
But there is a more advanced way that does have some benefits. The more advanced ways using more detailed time frames or smaller time frames for our binary option is if we’re trading five minute binary options, we could look at the one minute time frame. If we were trading a 30 minute options, we could look at the 15 minute time frame. And this is just an example, you could obviously look at 10 minutes or five minute time frames, hourly options, 15 or 30 minutes time frames, and so forth.
The reason why this is more advanced is it requires a bit more brain power. Obviously if we’re trading five minutes expiry times in a one minute time frame, we’re going to have to count every five candles in line with time. And I’ll go into a bit more detail about this and why this more advance way can be beneficial.
To demonstrate this advanced concept further let’s look at this 30 minute chart. And let’s say we are trading 30 minutes binary options. If we’re watching our charts and we come across this candle, a very big indecision candle, or spinning top, we have a small body with even wicks, either side. On a 30 minute chart, we may wonder whether to place a call or place a put. With an indecision candle, it’s probably best that we don’t do either, that we just wait for a signal later on in the day. But if we use a 15 minute chart to trade a 30 minute option, we may get more detail.
So let’s look at this spinning top on a 50 minute chart. Obviously a candle on a 30 minute chart could be made up of two 15 minute chart candles. So let’s look at this spinning top on the 15 minute chart. The two candles that create the spinning top are this one and this one.
So on the 50 minute chart we have this humongous pin bar that is the body and the wick ends here. And the candle previous makes the top of the indecision candle, here’s the wick. So in our 50 minute chart we have a signal to place a call option and price goes on the upside. So by looking at the 15 minute chart we can potentially see signals that aren’t showing on the 30 minute chart. For the danger is, if we’re not paying attention we could get out of sync of our two candles that make the 30 minute candle.
Let’s look at the other example, let’s go back to our 30 minute chart. This is the dollar against the Japanese yen. On our 30 minute chart we have an obvious high here if we join them the trend line. After this indecision candle, price comes on the upside. Price touches this trend line and is quickly rejected. And we have this large bearish engulfing. We could have used engulfing as a signal to place a put and we would have made a profit, but we’ve missed this rejection, or the start of this rejection.
So if we look at rejection on a 15 minute chart, you’ll see we have a second rejection and price closes bearish. And that could act as a signal to place a put option, and then we could have followed that large engulfing candle on the downside, which appears on the 30 minute chart.
A simple concept, but useful. Please check out our website. Please watch our other videos. And please check out our recommended brokers. Thank you for watching.