Binary Options Basic

BInary 0prIons Broker RevIew: BInary0prIonsDaIIyRevIew.
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INTRODLCTION
Big Money! That`s what I wanted but it just wasn`t happening as Iast as I thought it
should. This guide will give you a jumpstart without all the Irustration that I experienced when I
Iirst started trading.
I have been trading ever since I was a sophomore in high school. I've always known that
working in corporate America, like all my peers, was not the way I wanted to make money and
live my liIe. I've seen way too many people slaving away going to their same dead end job 40
hours a week, not having any Iree time or money to do what they want to do. I've never
wanted to live that kind oI liIestyle so I knew I needed to research other options. I stumbled
across trading when I was a sophomore in High School and I`ve never looked back.
The Iirst two years oI my trading career were horrible! I kept blowing account aIter
account, making trading much more complicated than it had to be. I spent a lot oI my time
going through every type oI strategy, system, and EA(automatic trading system) and trying to
trade based oII oI other people`s opinions. I bounced Irom Iorex, to stocks, to commodities, to
stock options! I believe that I went through all the mistakes that any newbies could possibly make.
Eorex is always the biggest Irustration Ior me. I`m a daytrader and my decision always cost me,
even though I`m right about the market direction.
It was only about a year ago, during my usual bout oI internet research that I came
across a Iorum that had a thread talking about binary options. Binary options sounded way too
good to be true! Making an 80 proIit in less than 30 minutes? NO WAY!! But I soon met a
woman on the Iorum who was making thousands oI dollars a week trading binary options...
She turned into my hero in trading very quickly! I started learning about binary options and, as
with my prior trading; I was soon blowing my accounts one right aIter another. What was I
doing wrong?
I reIused to give up on binary options like I had previously done with my original trading.
I spent a lot oI time doing nothing but research. AIter hours and hours oI staring at charts in
order to Iind out why I was having so much trouble, it all hit me. I was making trading too
complicated! I realized that I was spending too much time listening to other people`s strategies
instead oI coming up with my own. I had ten indicators on my charts that were all telling me diIIere
nt
things, making my trading needlessly complex. AIter I had my epiphany, my trading improved
quickly.
What I'mgoing to go over in this guide is everything that I wish I would have known
when I Iirst started trading. In this guide I will go over all the basics that you need in order to
Iorm a solid strategy. As long as you have the dedication and the will-power to succeed, you will
be able to put together a strategy and a set oI rules that works Ior you. Just remember that
BInary 0prIons Broker RevIew: BInary0prIonsDaIIyRevIew.eom
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nothing comes easy. The hardest thing in trading isn`t Iinding your strategy or your rules; it is
keeping yourselI in check! You are your own worst enemy when it comes to trading, especially
when you let your emotions (greed, Iear, anger, etc.) get the best oI you. You have to learn to
control your emotions and trade by your strategy, because when you do you`ll be one step
closer to success. II you put your time and eIIort into it, and iI you stick to the inIormation I
give you, I promise that your trading skills will improve.
WHY TRADE BINARIES?
Why is trading binaries better than any other type oI investment? The answer is simple:
you only have to click two diIIerent buttons! With binary options all you have to knowis
whether it is going to close up or going to close down. Other types oI investment require a lot
more inIormation, such as knowing where to set your stop loss, knowing where to exit, and
knowing when to move your stop to break even. This can become very conIusing and the more
thinking we put in trading, usually results in more severe losses!
Simplicity isn`t the only plus to binary trading. Binary options also have a higher rate oI
return than any other Iorm oI investment! No other investment will give you a 70-95 return
on your money in 60 seconds, 5 minutes or less than an hour. Eor example, one oI the women that
got me hooked on
trading started out her binary trading with $100. With her $100 investment and only one year
oI trading she had enough money to buy a newhouse and pay oII her car. There is simply no
other type oI investment out there that can let you expand as little as $100 to enough to buy
such big ticket items in such a small amount oI time!
Trading binaries is simple and gets you a high return, but is there another reason to try
this Iorm oI trading? The answer is yes, there is one more very big reason Ior you to trade
binaries: anyone can trade them! How many traders have $25,000 in starting capital to day
trade stocks? Probably not very many. II you deposit $1,000 as your initial investment and iI
you risk 5 oI that investment you`re already making $40 proIit per trade. (1,000x5$50,
$50x80 return $40) Those $40 returns will build your account to $1,000 trades beIore you
know it. When you build your account up to $1,000 a trade you only need to make one trade a
day to make a return oI $800 a day! ($1,000x80$800) Binary options will bring you the
Iinancial Ireedom you're looking Ior. You just have to remain patient and disciplined, wait Ior
that perIect setup, and jump on those perIect trades. Treat every trade like it`s a million dollar
trade!
Different type of Binary Trades
There are several diIIerent types oI binary options to choose Irom when binary trading.
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Personally, I like to keep things simple by using the Cash or Nothing options while I trade, but
there are other options available, as well. Some people like these other types oI options better
and some people don`t, it all depends on your own personal preIerence. I will talk about a Iew
oI the major binary options.
Cash or Nothing: This is the most popular type oI option. It is essentially all or nothing
trading. Eor example, iI you think Google is going to close above $300 and it's currently trading
at $300 when you place a call one oI two things will happen: iI it closes $.01 or anywhere
above $300 you will get 75-95 proIit, but iI it closes below $300 you will lose your entire
investment.
In this type oI binary options, and with the other types, good money management is
important. II you don`t manage your money, you will lose your investments. However, iI you
manage your money right, then Cash or Nothing options are incredibly simple. In Iact, the
simplicity oI this type oI trading is why it is so popular among traders. You either place a call
(you think it`s going to go up) or a put (you think it`s going to go down) and you`re done. No
thrills, no worries.
Touch Options/No Touch: This type oI option is also Iairly simple. In Touch Options/No
Touch you are basically betting that the prices will or won`t touch a speciIic level by the
predetermined expiration. Eor example, iI Google is hitting a massive resistance at $300 and it
can`t break through, you would then place a trade saying that Google won`t touch $301 by the
end oI expiration. II it doesn`t touch $301 then you would end in the money.
II Google was sitting on a $300 support level you would guess it's going to continue to
305 dollars, so you would bet that Google would hit $305 by the end oI expiration. These types
oI options are the best during high volatility (Iast moving markets). II the liquidity (volume, how
many people are trading) is low then you might have randomspikes that could mess you up!
Range Options: Another type oI option is the range option. In this type oI option, iI the
asset you are looking to trade is channeling in a range (going sideways) then you can trade
range options. II you say that the asset is going to close within the range and it does, then you
will be itm (in the money). On the other hand, iI it closes outside oI the range than you would
be otm (out oI the money).
Conversely you can also say that the option is going to close outside oI the range, and iI
it closes out oI the range then you will also be itm. In this case, iI the option closes inside the
range then you are otm.
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Why do traders fail?
There is a long list oI reasons Ior trading Iailure that can probably go on Iorever. I can`t
go over all oI them, but I will talk about the main reasons people Iail at trading as well as a Iew
ways to avoid Iailure. I Iailed at trading Ior two years beIore I Iigured out that it was the same
old mistakes I was making over and over again that were causing me to Iail. It was so simple to
Iix these problems once I Iigured them out! I couldn't believe it took me two years to learn
how to become proIitable!
My breakthrough came one morning when one oI my Iriends who was interested in
trading came over to watch me trade. He sat there and watched as my account went Irom
$400 to $1500 within a Iew hours. He couldn't believe it! Then, beIore he knewit, my account
was gone. I told him, "That's why it's harder than you think! Did you see how Iast I lost my
whole account?" His response ended up changing my trading career Iorever.
"Well, Joe... why the h*** did you blow your account? It shows right here in your rules
that you weren`t going to trade over 5 oI your account per trade. It also says that once you
have two losers in a row you`ll quit Ior the dayAND it says you won't Iight the trend. It looks to
me like you took Iive trades in a row that were losers, and iI I saw correctly you were placing
puts (when you think it`s going to go down) during that huge bullish move (when the market is
moving up) The last trade you placed was 60 oI your account... You didn't Iollow a single one
oI your rules!" I was astonished to realize that, even though I had my list oI rules written out, I
was blatantly ignoring them!
There is no point in having rules iI you are going to break them. II you`re breaking your
rules you`re basically playing a high risk gambling game and you might as well lose your money
at a local casino! Thanks to my Iriend I take the time to read my short list oI rules as a reIresher
beIore placing a trade. To this day, I have not broken a single rule. Learn Irom my mistake and
make this your number one rule: Don`t break your rules! It sounds like common sense, and it
sounds pretty easy, but it takes a lot oI patience and dedication to do so. Just make yourselI
get up an extra Iive minutes early to read your rules beIore making any trades. II you do, you`ll
have themIresh in your mind while you are making your trades. Remember, iI you don`t Iollow
your rules, you are upping the odds oI Iailure.
Once you have this Iirst rule down, you have achieved a major victory. Congratulate
yourselI! But don`t think you knoweverything just yet. There are quite a Iew more big errors
that a trader can make that can be just as disastrous as ignoring your rules. Here are some oI
the major problems traders are Iaced with:
1) Having No Plan - It is a known Iact that most new traders don't create a plan Ior
making trades. II you don't write down you're plan, which includes your rules and trading
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strategy, how are you supposed to stick to that plan? When your emotions start going out oI
control during a trade, you need a written plan that you can go back to. Without a plan you will
most likely end up like the other 95 oI traders that never make it.
- Having a plan is very important, but Iirst you have to know what inIormation goes into
your plan. The Iollowing are very good pieces oI inIormation to include when Iorming your
trading plan:
1) What time oI day are you going to trade? (What session?)
2) When are you going to quit trading Ior the day? (AIter x amount oI losers,
aIter a speciIic time oI the day, aIter x amount oI winners/proIit?)
3) What is your trading strategy?
4) Money Management (How much are you willing to risk per trade)
That's it! Keep it as simple as possible; iI you make it to complicated it will be too hard
to Iollow. Make it short and sweet!
2) Emotions - Most oI the time when I lost money this was one oI the biggest culprits.
II I had a single losing trade I would suddenly lose sight oI my plan and let my emotions take
over which oIten led to bad decisions and more bad trades.
Traders all have two modes that we go into while trading: Reactive and Responsive.
When I have a losing trade, I go into the reactive mode. While in the reactive mode you lose
your perspective and you have diIIiculty controlling your actions and decisions. You don't think
beIore you act! II you're like me, you have to walk away Irom the computer when you go into
reactive mode. Eor example, when I get a loser now, instead oI Iorcing trades, I make myselI
take a ten minute jog beIore coming back to the computer. II I don't get away Irom my trades
while my emotions are taking over, I will blowmy account!
When trading you always want to be in the responsive mode. When in this mode your
mind is relaxed and you can look at the bigger picture. This isn't just Ior trading, but Ior
everything in liIe. II you start Ieeling yourselI going into the reactive mode start taking charge.
Stop yourselI! All you have to say is 'I'mdoing it again, I gotta stop that! Once you realize that
you`re in reactive mode it`s much easier to get out oI that state oI mind. You just have to
acknowledge it.
- To avoid letting your emotions ruin your trades, trade like a robot! You can't let
emotions control you. II you have several winners in a row and you get cocky, the next trade
that you throw 50 oI your account balance into will probably lose, because you were trading
based on your winning streak optimism and not your plan. And iI you lose 50 oI your account
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because oI a stupid trade, no doubt you will get angry and depressed and quickly slip into the
reactive mode. You might try to make up Ior your 50 loss by putting your remaining balance
into the next randomtrade at that point, and I can tell you that you will lose this last trade
almost every time. I can saIely make that assumption because I lost money on trades like that
ten times! I never did win that last trade :). Just tell yourselI that you will never be 100
accurate, you simply have to accept your losses and move on. Once you can accept minor set-
backs you will be well on your way to achieving the Ireedom you've been looking Ior.
3) Over Trading - When I Iirst began trading I was in the get-rich-quick mode. I wanted
to turn my $100 into thousands within the Iirst week. I was placing over 30 trades a day, and
was consistently blowing my account on a daily basis. One day I sat down and did the math. II I
could trade 3/3 each day making $1,000 trades, that would be $2,400 a day. Everything
completely changes when you start looking at trading like that. There is no reason to make
thirty trades a day. The key to success is consistency! Take the perIect looking setups and trade
a maximumoI Iive times a day. Instead oI trading with 59 accuracy trading thirty plus times a
day, trade with 75 accuracy with as Iew as Iive trades da y. You will make just as much
money, and log in less screen time. When you overtrade you have a lot more risk oI losing
because the market isn't perIect. The more trades you place, the more chances you have to
lose. II the setup isn't perIect, stay out!!
- I overcame the compulsion to overtrade when I made a checklist to use as a trading
guideline. BeIore I made my checklist, I would take any decent looking trade. With binaries
you can't take "decent" looking trades. You want to take the trades that are going to win! By
making a checklist you HAVE to wait Ior those perIect looking trades. I printed out notecards
with a list oI my strategies. II I can`t check each box on my list, I won`t take the trade. I can't
believe howIast the cash started adding up once I created and utilized a checklist. II you have a
problem overtrading, I would highly recommend creating your own personal list to help keep
trades on track!
4) Making it Complicated - I think it's impossible not to run into this problem at some
point. When we all Iirst start it seems like trading has to be harder than it really is. There`s no
way that it could be simple, right? We all go on a search Ior the holy grail oI successIul trading,
adding ten indicators at a time on our chart and trying out every diIIerent type oI strategy just
because someone else is making money oII oI it. We think to ourselves, 'II they're making
money with that strategy, then it will make me money too! even though that may not be the
case.
In order to show you just what I mean when I say 'making it too complicated, I`mgoing
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to show you one oI my earlier charts Irom my Iirst days oI trading. Let`s take a look:
You might think that this chart is a joke, but that is what my charts looked like Ior over
six months. I tried any and every type oI indicator because I knewthat I had to Iind the holy
grail oI trading. You wouldn't believe howmany traders have charts that look like this! The
problem with this method is that all oI these indicators are conIlicting. You don't need more
than one trending indicator, and you don't need more than one momentum indicator.
The biggest lesson I learned in trading is K.I.S.S. Keep It Simple Stupid! Eigure out what
works Ior you, and keep it simple. You oIten have to make trading decisions in split seconds, so
why would you have ten diIIerent signals conIlicting with each other while you're trying to
make your trade?
Now let's take a look at a more recent chart:
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This is my simple chart. No Iancy indicators, nothing special. Everything I need is on this
chart. The moving averages showme the direction I want to be trading, the pivots show me
the support and resistance levels I want to keep an eye on, and the stochastics show me when
price action gets to extremes Ior a solid entry. Which chart do you think would be easier to
make a split second trade with, the Iirst one or the second one? HopeIully you said the second
one. So many people make trading overly complicated. II you can't see your price action, you
have a problem! You should never have more than THREE indicators on your chart at any given
time: Trend, Momentum, and Support and Resistance. II you can't look at a chart and instantly
tell where to trade, you're not doing it right.
Remember: K.I.S.S!!!
5) Lacking Patience - This is the killer oI binary traders. Having patience and discipline is
the key to trading. II you don't already have these skills, you must make the eIIort to master
them. II you don`t, you will inevitably make one mistake aIter another while trading. It took
me TWO years to master patience and discipline. PerIecting the ability to Iollow your rules
instead oI making impulsive decisions based purely on your adrenaline rush is a lot harder than
it sounds, but it is necessary Ior successIul trading.
As strange as it sounds, we want to make trading as boring as possible. II trading
becomes exciting and you start letting that adrenaline Ilow at critical decision-making moments
then you are Iar more likely to make mistakes. II that chart you`re looking at doesn't line up
100 with your rules, then don`t trade! When I Iirst started trading I absolutely loved every
second oI it. The Iast money, the adrenaline rush, it was great! But I also lost all oI my money.
:) When I started Iorcing myselI to Iollowmy rules and resist impulse trading, I started making
money. Do I enjoy trading now? Not at all! But does Iinishing a day with a $5,000 proIit make
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the lack oI adrenaline rushes worth it? H*** yeah! Trading isn`t really meant to be Iun, it`s
meant to make you money. II you have the patience and discipline to Iollow your trading rules
you will no doubt make money. Sometimes you won`t Iind a good trade Ior more than an hour.
You might not even Iind a good trade all day long. That`s why patience is the key to becoming a
good trader. Only when you Iind a trade that Iits your rules 100 and you can hear it
screaming to you 'TAKE THIS TRADE!! should you invest in it.
I can`t stress this point enough, because when I started trading it was one oI the biggest
Iactors in my constant money losses. I would oIten get into a trade knowing Iull well beIore I
made the trade that it was most likely going to lose. Why would I take a trade iI I thought it
was going to lose? I still can't answer that question, but I have a pretty good suspicion that I
just liked that trading adrenaline rush. In the end you have to ask yourselI, 'Is an adrenaline
rush worth losing my hard earned money? Remember to be patient and disciplined. Without
these two key components, no matter how great your strategy is, you will Iail in the long run.
Your First Decision: Are you going to trade With the Trend, Ranges, or
Counter Trend?
In the trading world you will always hear diIIerent things regarding trades. Some
people will tell you the only way you can make any money is by going with the trend, while
other people will tell you the complete opposite. Be aware that there are thousands oI ways
that you can trade. You have to decide Ior yourselI which is the best Ior you. II someone was
making $1,000,000 a year and they let you in on their strategy, chances are that strategy might
not get you the same results because it isn`t the correct strategy Ior you. It might even end up
losing you money. It took me a long time to understand that someone else`s successIul
strategy does not automatically mean that it will be successIul Ior me. Once I Iigured that out I
was able to discern what trading methods Iit me.
To help you discover your personal strategy, I`ll start oII by talking about ranging and
trending markets. Understanding trending is important because I have heard more people say
that they make more money trading with the trend than by trading any other way. They always
reIer to Newton`s Iirst law: "Law one: Everybody remains in a state oI constant velocity unless
acted upon by an external unbalanced Iorce."
What is a Trend?
The trend is, simply, when price action is moving hard in a general up or down direction.
When a trend is Long it is going up, and when a trend is Short it is going down. No trend is
perIect and nothing goes up or down in a straight line Iorever. Remember that trends work on
every time Irame. You will Iind trends on the one second time Irame and on up to any time
Irame.
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Ways to Identify a Trend
The Iirst way to identiIy a trend that I will go over is my personal Iavorite: Two Moving
Averages. The reason I like this setup Ior determining the trend is because it never lies. II the
shorter moving average is above the longer term average then the trend is up. II the shorter
moving average is belowthe longer moving average then the trend is down. Just keep in mind
that iI you plan on trading with this setup you must have discipline: II it`s saying go long, there
is no reason to go short.
This is a 5 minute chart oI AUD/USD (Australian Dollar/US Dollar) with two moving
averages. The 10 EMA(Exponential Moving Average) is belowthe 30 EMA- so iI you're trading
with the trend you would only be looking Ior short setups.
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This is a weekly chart oI AUD/USD - The 10 EMAis above the 30 EMA-
In this case you
would be looking Ior long setups only.
Another popular way oI determining the trend is by using Higher Highs and Higher Lows
Ior an uptrend, and Lower Lows, and Lower Highs Ior downtrends. I personally like the moving
averages better because I like to see the lines showing me where the market is going, but this
way works just as well.
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HH Higher High HL Higher Low LH Lower High LL Lower Low
When the market is making Higher Highs and Lower Lows then it's in an uptrend and
you only want to be trading long. When the market is making Lower Highs and Lower Lows you
only want to trade short. This method is really popular because in order to make a HH or a LL
the market has to break the previous low/high. Generally when the market breaks the previous
low/high it continues in that direction.
The last method I will be showing you is called Trendlines. To draw a trendline you have
to have two touches, and the third one conIirms it. The problem with trendlines is that they
have a lot oI Ialse breaks. Eor example, you might have a trendline break, but then the next bar
closes back above it. II you're determining the trend with trendlines then just remember to be
careIul oI the Ialse breakouts.
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EUR(Euro)/USD Daily Chart: II you like trading with trendlines to show you the trend,
you would only be going long on this chart. You have over eight touches on this trendline. It is
very solid! Once a trendline gets broken, usually the trend changes. Once the trendline breaks
you want to start looking to draw another trendline, but to the short side!
Rangebound Markets
Rangebound price action is when it's in a channel moving sideways, neither bearish nor
bullish. I like to call it consolidation. AIter a big move it usually takes a breather and moves
sideways beIore it takes oII again. Some traders like to trade when the market is rangebound.
They think it's a lot saIer then trading with the trend because the trend can reverse at anytime.
When you are trading rangebound markets you are looking Ior a channel that the price
is Iluctuating between. You're looking to sell at the top and buy at the bottom. You can keep
trading the channel until it breaks.
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EUR/USD: These are the patterns you would be looking Ior in rangebound trading. Call
at the bottom, put at the top! You could trade this all day long until it breaks.
Some ranges last a long time, but sometimes they only last two touches.
Counter Trend Trading
Counter trending is basically trading against the trend. II the trend is up then you are
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looking to go short, and iI the trend is down then you are looking to go long. Some people only
trade counter trend. Counter trend can be just as proIitable as trend trading, but it's also a
little trickier. I would deIinitely consider trading ranges or with the trend, but iI counter trading
works Ior you then by all means go Ior it! I am now going to go over a Iewways to trade
counter trend:
In the chart above the trend is down, price action is belowthe moving average. Price
was heading down and a massive pin bar Iormed (which I have circled). Apin bar is a very
strong reversal candlestick pattern. In this chart the pin bar went down and touched exactly on
the pivot point. That is a very strong signal, because iI you want to trade counter trend you
want to make sure that there is massive support/resistance backing it up, indicators backing it
up, or some strong divergence.
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This chart shows another major downtrend. It is somewhat diIIicult to see, but the price
was making new lows and the stochastics indicator was making higher lows. There were also
two major pin bars. This indicates another great Counter Trend move. The great thing about
trading counter trend is that you are in at the beginning oI the trend. With binaries you don't
need to be in at the beginning oI the trend, you just have to be right Ior a short period oI time.
Benefits and Negatives of With the Trend, Ranges, and Counter Trend
There are always going to be beneIits and negatives with any type oI trading that you
try. These beneIits and negatives don`t make any one type oI trading better than another, so it
still depends on what kind oI trading you want to do. I would recommend trading the channels
or trading with the trend iI you are a beginner, but iI you Ieel comIortable with other methods
oI trading then use them. You can trade all three types, iI you want, but I would recommend
picking one and mastering it beIore moving on to the next type.
It is always a good idea to do some research to Iind out what type oI trader you want to
become. Do you want to trade against the trend, do you want to trade when it's ranging, or do
you want to trade with the trend? It all comes down to personal preIerence.
Trading Tools
Now that we have gone over a Iew types oI trading strategies, we are going to move
into the diIIerent types oI trading tools that you have at your Iingertips: support and
resistance, price action patterns, and candlestick patterns. Some people trade solely oII oI
indicators, some oII oI candlestick patterns, etc. My recommendation Ior you is to determine
how you would want to trade and then combine the diIIerent types together. Understanding
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these tools is an important part oI being a successIul trader.
5 Energies in Trading
Something I learned Irom Barry Burns that I think traders will Iind useIul in relation to
trading tools is the 5 Energies in Trading. The Iive he uses are:
1) Up or Down (trend)
2) Momentum
3) Cycle high/low (when do you get in?)
4) Support and Resistance
5) Time Irame x 3 (example, iI you`re trading oII the 5 minute chart Ior your
entries, you would times that by 3 15. You would look at the 15 minute time
Irame to determine the trend.(the direction you will be placing all your
trades)
When you combine all oI these trading energies together in a checklist, trades that meet
with every energy is a high probability trade.
Support and Resistance
Support and resistance basically shows you where price is likely to stall out and reverse
or at least consolidate in a trade. You don't want to be entering a call when price is starting to
hit a resistance, because, while it could easily blow through the resistance, it could just as easily
tank. You always want to have some type oI support and resistance indicator on your chart.
When you combine support and resistance with other indicators and patterns it is very reliable.
There are several ways to Iind support and resistance, but I will go over the most
accurate and the most popular.
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Price Action Support and Resistance:
When you're using price action as support and resistance you are going to look Ior two
points on the chart that you can connect. Most oI the major s/r (support and resistance) is
going to be horizontal, but you are also going to have diagonal support and resistance (Iorming
channels and triangles). II you look at the chart above you can see that the price action just
Ilowed around the support and resistance.
When I Iirst started drawing support and resistance on my charts I had a hard time
Iinding the major levels. To make it easier on yourselI, just start out looking to the leIt and put
a horizontal line on all the major tops and the major bottoms. AIter you Iinish drawing the
lines, look Ior any lines that don`t have at least two touches and erase them. Now you can sit
back and watch howprice Ilows around your levels as time passes. When prices start breaking
out, simply create new highs and lows in order to update your support and resistance lines
when newtops and bottoms are Iormed.
Fibonacchi Levels
This is another Iorm oI support and resistance. Eibonacchi numbers seemto be
random, made up numbers, but Eibonacchi levels are Iound everywhere in nature and reality.
Why do Eibonacchi levels work? Who knows! They just do, and I`mgrateIul Ior it. My best
guess as to why they do what they do is because we can all only lose Ior so long. Eor example,
humans all tend to react the same way with Iear and greed, selling when we reach a certain
point and closing out oI the position when the trade is going against us. I think that is the main
reason that Eibonacchi levels work, because even though we don`t realize it our brains Iunction
to the beat oI Eibonacci`s. The only thing you need to know about why they work is that the
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do.
With Trading we use the 23.6, 38.2 , 50, 61.8 and 100. My personal Iavorites are the 50
and the 61.8 retrace, because that's halI the move. You would be REALLY surprised at how
oIten price pulls back and touches the 50 retracement to the dot!
You draw Eibonacchi lines in an uptrend Irom the previous low swing to the next top. In
a downtrend you draw Irom the previous high to the new low. When using Eibonacchi levels
you are waiting Ior price to pull back and making observations about howprice reacts to each
Eibonacchi. In my own charts I have removed the 23.6 and the 38.2, because I Iind the highest
probability to be the 50 and the 61.8, but I have talked to some traders that only use the 23.6
and 38.2. You have to Iind out what works Ior you. Eibonacci is another great tool to use Ior
S/R.
Pivot Points
Pivot points are another great tool Ior supports and resistance. Quite a Iew pit traders
use pivot points. The reason pivots are so popular is because they're leading instead oI lagging.
They are calculated Irom the previous day`s high, low and close. Generally there are seven lines
that are shown on the chart: R1, R2, R3, pivot point, S1, S2, and S3 (R Resistance, S Support)
.
Each level is a major support and resistance. The nice thing about pivots is that they are pre-
determined. You don't have to go back to look at previous highs or lows. They are
automatically calculated, so they are a lot easier to use than price action support and
resistance.
Eor those oI you who like to knowthe mathematics behind indicators, the math behind
pivots are pretty simple:
Resistance 3 High 2*(Pivot - Low)
Resistance 2 Pivot (R1 - S1)
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Resistance 1 2 * Pivot - Low
Pivot Point (High Close Low)/3
Support 1 2 * Pivot - High
Support 2 Pivot - (R1 - S1)
Support 3 Low - 2*(High - Pivot)
II you take a look at the two charts above you can see how proIitable pivots can be
Page 21
Almost every time price gets close to a pivot, they usually stall. OIten they reverse when the
y hit the next pivot. II price is hitting a pivot and you're looking to go long, wait until it at
least closes above the pivot. There is no point in chancing the price reversing at the pivot.
Round Numbers
Round numbers are another great way to look at support and resistance. The reason
round numbers work so well is because they are seen on every time Irame. II you are drawin
g support and resistance oII oI the Iive minute chart, you are not going to be seeing the same
support and resistance on the daily chart. II you are looking at round numbers, it doesn't
matter what time Irame other traders are looking at, because they're all looking at the same
round number that you are. Alot oI institutional traders place their stops and take proIits at
round numbers.
Page 22
The above two charts show all oI the lines that are automatically put on the charts at the
major/minor round numbers. Notice that price stalls and reverses at these major round
numbers!
The reason I love round numbers so much is because everyone is looking at the same levels.
Prices don't always reverse at these levels, but most oI the time they at least stall. You don't
want to be jumping in iI price is just hitting support or resistance at a round number.
There are several other ways to Iind support and resistance, but these are the most
popular and most accurate that I know oI. You don`t want to have Eibonacchis, round
numbers,and support and resistance all on the same chart. Choose which one Iits you best
and stick to it!
Price Action Patterns
Some traders like to trade using nothing but price action patterns. They like to trade
with patterns like Double Tops, Double Bottoms, Symmetrical Triangles, Ascending/Descending
triangles, Ilags and channels. These patterns have been around since the beginning oI charting.
II you scroll back on any chart, time Irame, currency/stock/commodity you will Iind each and
every one oI these patterns. I am not going to go over all oI the patterns that traders use, but I
will go over the ones that I Iind to be the most proIitable.
The Iirst patterns that I am going to talk about are Double Tops and Double Bottoms.
These are my Iavorite patterns to trade, because they are high probability trades. The reason
that these two patterns are such high probability trades is because price is trying to break a
previous high/low. II price stalls out and can't break, it usually turns into a pretty high
probability reversal. You would want some type oI conIirmation prior to entering the trade,
such as a candlestick Iormation (pin bar, doji, hanging man etc or an Indicator conIirmation
Stochastics, William Retc)
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EUR/USD Daily: In this chart the price made new highs, then pulled back and was retesting
the high, but it couldn't break it. The trend changed Irom bullish to bearish.
S&p500- This chart shows what started as a major down trend, which retested the low and
couldn't break it. Very bullish!!
The next patterns that I am going to talk about are Triangles. Triangles are my second
Iavorite patterns to trade. Triangles patterns are basically like a spring tightening up waiting to
explode. These are perIect patterns Ior binaries because they tend to go in the direction oI the
breakout long enough to hit expiration aIter which you can buy on the retest oI the triangle.
Triangles have to have a minimumoI two touches. The third touch conIirms the
pattern, but you don't have to wait Ior it. Everyone trades triangles diIIerently. There are three
types oI triangles: ascending, descending, and symmetrical.
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Spy: Symmetrical Triangles are neutral patterns. They usually occur aIter strong moves; either
up or down. Some people say that they are continuation patterns, but because it seems like it
is a 50 chance that it`s going to continue and 50 chance it's going to reverse I always tell
people that they are neutral. Wait until price closes outside the triangle.
Page 25
Ascending Triangles have to have a minimum oI two touches on the base (like a double
bottom) and a down sloping trendline with at least two touches. Ascending triangles are bullish
triangles, so you wait Ior the break and close above the downward sloping trendline.
Descending Triangles have a minimumoI two touches Ior the upward sloping trendline
and a double top (two touches minimumIor the top). You would short at the break and close
oI the upward sloping trendline.
The next pattern that I`mgoing to talk about is Flags. Elags are continuation patterns.
When a stock is trending hard it has to pull back, thus creating a Ilag. Elags are a very easy way
to enter with the trend.
Page 2
This chart is an example oI a bullish Ilag pattern: Oil is trending up, pulls back and a Ilag
Iormation Iorms. You would buy on the close above the upper trendline.
This chart shows an example oI a Bearish Elag: The trend was heading down, a minor
counter trend Iorms the bear Ilag. Break and close belowthe lower trendline would trigger
your put.
Page 27
The last pattern that I`m going to talk about is a Channel Breakout. Channels are one oI
the most popular patterns because they are so easy to recognize. You can easily tell when the
market starts consolidating. This pattern is great because when the market breaks out, it
usually breaks out hard!
This chart shows the market when it was trending up hard and then started to
consolidate, Iorming the channel. Be sure to notice all oI the wicks. iI you didn't wait Ior the
close below the channel you would have gotten whipsawed all over the place. It is very
important to wait Ior the CLOSE outside oI the channel. Once the candle closed belowthe
channel it tanked.
Now you have an overview oI the main patterns I would be looking Ior during trading. II
you like this way oI trading, then there are a lot oI other patterns you could be looking Ior. I
would deIinitely recommend picking a Iew oI your Iavorite patterns and mastering one or two
at a time. There is no reason to try to learn all oI themat once when you only need to Iind one
perIect setup a day to make a living.
Another recommendation I would give to those oI you who are serious about trading by
patterns is to do a Google search Ior the speciIic patterns that you want to master to Iind a
good comparison, and then go back through all oI your charts to look Ior those patterns.
Trading is all about experience. II you master one pattern you will soon start to recognize when
the pattern will Iail. On that same note, I would also recommend adding in some kind oI
indicator to go with your pattern trading (I will go over indicators in another section).
Page 28
Candlestick Patterns
Candlesticks were originally Iounded in Japan. Homma created themIor his rice
exchange, but later went on to use themto make millions in the stock exchange. He made over
100 winning trades in a row by using pure candlestick patterns and nothing more. Candlestick
patterns are great because they show you what is happening within the price.
II the trend is going up and all oI a sudden the candles are getting smaller with a lot oI
wicks above them, it shows that the trend is weakening. The trend, in most cases, will
consolidate beIore taking oII again, or it reverses. You want to combine candlestick patterns
with support and resistance and indicators. II you have indicators saying to go long, and the
price is sitting on support and has bullish reversal/bullish candles, then you have a great setup!!
There are hundreds oI candlestick patterns and hundreds oI diIIerent names Ior those
patterns. You don't need to knowthe names oI the patterns; you just have to learn to read the
patterns themselves! Always ask yourselI whether or not the price is closing at the high or the
low oI the candle, are the wicks getting longer, are the bodies getting bigger or smaller, and are
the candles red or green.
I am going to go over the main candlestick patterns that I look Ior which are the most
reliable. I don't really look at the diIIerent type oI patterns (bullish, reversal, bearish) because iI
you just watch how the candle Iorms then you know which ones they are. The main patterns I
watch Ior are dojis, engulIing patterns, pin bars and inside bars.
Doji- A doji is when the candle has a wick above and a wick below the opening price oI the
candle. The price is moved up and below, but when it closes it closes at the open. It shows the
bears and the bulls are neutral. II the price has been going up hard and a doji appears, it shows
that the trend is weakening.
Engulfing- Engulfing Patterns are great because they show howstrong the momentum is. An
engulIing pattern engulIs the entire previous bar. II price is trending up hard and then pulls
back, you're waiting to re-enter with the trend. Abullish engulIing pattern would be a good
way to get back into continuation with that trend!
Pin Bar- Pin bars are my Iavorite candlestick patterns. Pin bars have a really small body and
really long wicks! Pin bars show the rejection oI a price level. II price is going up hard and then
has a really nice upper wick and a small body closing closer to the bottom, that shows that the
trend most likely is going to reverse.
Inside Bar- Inside bars are another great setup. The candlestick basically has to close inside oI
the previous bar. When you are trading inside bars you want to trade when the "mother bar
Page 29
(bigger bar) gets penetrated.
The chart above quickly shows you an example oI each type oI pattern. Candlesticks will
increase your trading success by an enormous amount. Candles tell you the story oI the price
action. II price is closing near its highs then don't be Iighting that. Go with it!
You don't want to use candlesticks alone, you want to use candlesticks in conjunction
with support and resistance and indicators. You are looking Ior conIluence between the three
in order to make the best probability trade.
The reason I particularly like candlestick patterns is because they show you the
momentum. Momentumis the key to binary options. II price is tanking like a rock, and it hits a
really solid support and then has back to back dojis, it is showing that the trend has completely
neutralized. II it then breaks out to the upside, you are getting in on the beginning oI a new
trend. The great thing about binary options is that it only has to go one bar in your Iavor to end
itm (in the money)!
Don't make trading overly complicated by trying to learn every single candlestick
pattern and what they're called. Just stick to the candlestick patterns that I have listed here,
pick your Iavorite ones, and research themuntil you have themdown.
Page 30
My Strategy
AIter like 10 thousands oI hours staring at the chart, I started to realized how the market
works and how to make a living Irom it. Now I`m able to trade consistently, pulling oII
Binary Options market every month and make a pretty good living Irom it. I have 3 to 4 trade
entries that I could take everyday, iI you have patience to wait Ior it to develop, the winning
rate is around 90, most people Iail because they don`t have enough patience.
This method is deIinitely a Ireebie Ior you guys because I don`t want others to have to endure
such diIIicult times like me. The method is combination oI price action: supply/demand level,
trend-line, Eibonacci and candlesticks patterns. A little patience to wait Ior it to materialize
and you`ll be In-The-Money 90 oI the time.
Let take a look at the chart below:
Notice and uptrend line, so deIinitely we`ll only look to CALL here, price goes back to test
trend-line, test the resistance-turn-support line and a pin bar is being painted. CALL there
and 90 In-The-Money, pretty easy, all we have to do is wait Ior the combination oI it.
When it all bolds together, it`s time to make money.
This kind oI set-up work well in all time-Irame, Irom 1m chart to 5m, to hourly chart to daily.
Take a look at this 15m Aud/Usd chart:
Page 30
My Strategy
Page 30
My Strategy
Page 31
It happens again and again and again, every single day. All you need to do is wait Ior it to
happen. It`s one oI my strategy that I use, Ior this set-up, you`ll need a lot oI knowledge
about price action and a lot oI patience. I have 3 others strategy, it`s easier to spot and I make
pretty good money with it.
I`m also doing 2 hours private tutoring and will be sharing all my strategy Ior those who
register with iOption Binary Options. I have a lot oI accounts on diIIerent brokers but
iOption is the only broker that I keep a large portion oI my income on, they`ve served me
pretty well, so I would recommend it to anyone. Read more about Binary Options review
here: BinaryOptionsDailyReview.com to get honest reviews about Binary Options brokers.
Now iI you want 2 hours oI tutoring and 3 oI my other 90 winning-rate strategies, open a
Binary Options account here: http://bit.ly/ioption12
You will need to register with above link so that I could track who has been registered and
with that link, you could be able to get 100 bonus. With 250$ deposit, the right money
management and a winning strategy, I`m sure you`ll drive it to $10k in no time.
II there`s anything, contact me at my skype: binaryking138, I`ll be very glad to help you out.
Page 31
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It is one of the strange ironies of this strange life that those who work the hardest, who subject
themselves to the strictest discipline, who give up certain pleasurable things in order to achieve
a goal, are the happiest men."
- Brutus Hamilton
"Nothing of importance is ever achieved without discipline. I feel mvself sometimes not whollv
in svmpathv with modern educational theorists, because I think that thev underestimate the
partthat discipline plavs. But the discipline vou have in vour life should be one determined bv
vour own desires and vour own needs, not put upon vou bv societv or authoritv."
-Bertrand Russell
"Hands untrained in the use of tools destroy what they want to build. It takes skills to use tools
to achieve the result desired, whether its tearing down an old house or building a new one.
Skepticism is a tool serving both purposes. But it must be used bv a trained mind, a mind
capable of disciplined thinking."
-!.B. Charles
"No horse gets anvwhere until he is harnessed. No steam or gas drives anvthing until it is
confined. No river is ever turned into light and power until it is tunneled. No life ever grows
great until it is focused, dedicated and disciplined."
-Harry Emerson Fosdick

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