Options Trading For Beginners: Reversale Strategy

Hi everybody. This is Imba Trader and today, we’re going to make money online by trading binary options. I wanted to introduce the new – it’s not new but I cover it for the first time, it’s short-term binary options reversal strategy. That is one of the most successful and profitable binary option strategies that can be used by traders of all experience levels. On average, the success rate associated with this strategy is not less than 75%. It is based on the concept that if an asset moves in one direction, it is unlikely to stay at the peak but returns to its original position or close to it. Let’s proceed and set up the proper trading settings. I am going to switch to the candlesticks. For the newbies, I know that there are some people over there that don’t know what those candlesticks mean.

Basically, if I switch to the one minute interval, each of these candles shows the period of one minute. If it is green, it means that during this one minute, the candle, the price was rising. If it’s red, then the price was falling. For the green candle, the lower part, the bottom part means the point where the minute started and the upper part means where it ended. These thin lines mean that during this minute, there was a fluctuation of the price and this was the higher, highest price during this minute. This was the lowest price during this minute. The same with the red candles; the lowest price, the highest price, the opening price and the closing price. I’m going to also add a couple indicators, the Bollinger bands with the default settings.

This is my favorite one. It shows the price range and the moving average. I do like using the reversal strategy in conjunction with this indicator because it gives us very certain binary options signal showing us that whenever there is a breach of let’s say for example, the breach of the upper band, there should be the reversal to the bottom. The same thing, if there is the breach of the lower band, the price should eventually start going up. There are two more indicators that I wanted to cover in this session. They are the CCI.

Also, I leave the default settings. There are two lines – no, there is one line. There are two lines in another indicator, the stochastic oscillator also set it up with the default settings. There are two periods: period K and D which are represented by two lines. Starting with the CCI indicator. It stands for the Commodity Channel Index. There are two basic strategies for using the CCI oscillator, crossing the +100 level and -100 level. When the CCI moves above the plus hundred, it means that the price is trending strongly upwards. Whenever it drops below the -100, a strong downtrend is in place at the moment. The short trade is held until the CCI rallies back to the range between the hundred and minus hundred. Basically what it means is that whenever you see the breach, let’s say for example of the upper line, it means that there is an upwards trend happening.

Just like here, there is the breach over here and we do see the upwards trend. Whenever it goes back to -100 level it means that the trend eventually lost its steam and the price is going back to the previous position. The same thing when the breach is here at the bottom, at the -100 level, it means that downwards trend is happening. In this case, it was very short-term. This is basically a very nice binary options signal that helps us understand how the price is going to behave after this sharp movement happens. For example here, we do see like several signals. One is the CCI indicator, is between the minus hundred level. The second one is that the lower Bollinger band is breached, and the third one is that stochastic shows us the breach of the 20% level. We have three indicators showing of the conditions where the price should start going up. In this case, where we had two red candles, it means that the price is going down for two minutes. I would personally make a stake for two minutes for the rise. In this case, it’s going to be pure win.

The same thing over here. We do see the downwards trend that started at this point. The CCI is far below the -100. The stochastic shows us the 20% level breach. We do have one, two, three, four candles showing us the downwards movement. The same thing I would do for the call stake. I would make – after I see that this trend ended, after I notice this green candle and I wait until the end of this minute, I’m going to make the four minutes call stake. In this case, one, two, three, four of this should be a pure win as well. The same thing happens over here. The small trend going up. We have one, two, three indicators showing us the conditions where the price should start moving down. After this candle, I’m going to make four or five minutes put stake; one, two, three, four, five.

This will be the pure win once again ladies and gentlemen. Right now, the conditions are not that good. The profitability is only 50%, but still there is some movement happening on the market so I’m not going to proceed with some high stakes because of the low profitability. I will try to show this strategy in the action and we’ll try to catch some reversal movement. At this point, the Bollinger band is breached. The stochastic is still very up high, but the CCI is showing us the proper signal. Two out of three signals, I don’t think that’s enough at the moment. That’s why I will wait a bit or maybe check out some other currency pairs. A small downwards trend, but still not enough indicators. USD/JPY – not enough movement to be honest. Let’s see if there are any other currency pairs that might show us some nice movement ladies and gentlemen.

At this point, it was a pretty good moment to enter. We see four candles going up and if we make four minutes put stake, it will be also pure victory. This might be – you know what my mistake is here, that I added RSI instead of the CCI indicator. Okay perfect. I was looking into the wrong place. Alright, so a small trend over here. Let’s wait a bit more. It’s four candles up. The CCI is in place. The stochastic is moving there. And so, what I’m going to do, I’m going to wait until the small trend finishes and I’m going to proceed with the several minutes put stake.

Stochastic is moving towards our goal. I didn’t tell much about this indicator. Stochastic oscillator can help traders with the trend based on trading strategy to anticipate any changes in price directions and generate trading signals. Stochastic oscillators sometimes also shortened as K and D. It is a momentum indicator, so by comparing the current closing price of an asset to its trading range, the stochastic oscillator attempts to predict the turning point of the price movement. That’s why it is so important in our reversal trading strategy. We do see that CCI is on the way back. We do have three signals in place already, so I think it should be a pretty good moment to proceed with the put stake. So maybe I’m going to go ahead with the four minutes period. I’m just waiting for this small trend to change its direction. I still see that it tends to go up, but I need to wait until that moment when the trend changes its direction and starts going down.

Again, you see the market conditions were pretty decent before, but right now there is not much movement, so market isn’t really helpful. Let’s see what’s happening on the other currency pairs. This one might be good. Okay, so it looks like we missed the moment and because there was a big drop-down that happened right away. We’re going to skip it. AUD/JPY, this might be good but still not much. The movement is pretty decent here, so let’s wait a bit. We got one, almost two, and the third indicator is on its way. Okay let’s proceed with the three minutes call stake. Since stochastic is still not in the 28% range, but it’s still pretty close to it. It’s in 30. I still think that we should be in the good position here. So as we see, stochastic oscillator consists of the two lines: the K line and the D line. K line is blue and D line is red. The K line measures how the current closing price is in relation to the total price range for the defined the defined time period.

The D line creates the second line which is also plotted on the diagram, and it is a three period movement average of the K line. So it is slower to react, and in all cases, it’s going to follow the K line. So whenever you trade based on the stochastic oscillator, many traders like to wait until the K line crosses the D line before they invest. This adjustment is supposed to generate more refined binary options signals. And you see just like I explained to you, so we had three signals: we had the lower Bollinger band breach, we had the CCI below -100 and we had the stochastic on almost 20% level. Our decision to make the call stake was right – of course we haven’t won yet, there are still like 50 seconds left but this is a good representation of the reversal strategy used. I’m going to wait until the expiration.

Basically what’s happening here, we can go for another reversal because you see how the breach of the upper line is happening, I think it should be a good moment to go for the put stake. The stochastic is still not there, but the CCI and Bollinger band might be enough. So I will proceed with the put stake. Our previous stake won, not a lot of profit but again, I don’t want to go for some high stakes because of the market conditions at the moment.

50% is pretty low profitability because of the time, because most of the markets are closed and this is the main reason why the percentage is so low. The movement is pretty steep. You see how the price was going up and down sharply, but still, based on the two indicators – of course, those were only two indicators, not all three that I like to use. I still think that there is high probability that we are going to win here. The secret to the success is identifying when the asset has reached its peak and knowing why it changed and using fundamental and technical analysis are the key to identifying why the asset will peak and return to its stabilized price. So this is the basics of the reversal strategy. As the price approaches the trend line, the price movement will get more and more erratic. Other traders have recognized the trend line too.

They are no longer investing in the reversal and wait for the price to start moving in the direction of the main trend again. We got five seconds left and it looks like our prediction wasn’t right. Actually no, we just won. Amazing. So again, you see we were not that accurate here. On our previous trade, it was a pure win, and our second trade, our prediction was not that accurate.

Mostly because as I said, we had only two out of three signals, so if I wanted to be 100% sure that the trade is winning, I need to wait until I have all three indicators in place. And again, I made only two minutes put stake and at this point, we had to proceed with the three minutes put stake because there was one, two, three candles of the min trend upwards movement. Okay so again, because of the market conditions, I don’t want to trade a lot, I don’t want to take a lot of your time. If you want to try trading, you can go ahead and do it absolutely for free by registering the demo account, subscribe to the YouTube channel and I will try to teach you as much as I can.

Thank you guys. I will see you later. Bye-bye..

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