Mastering Options by Philip Cooper

Author:Philip Cooper
Language: eng
Format: epub
Publisher: Business Expert Press
Published: 2019-05-29T16:00:00+00:00

In Figure 6.7 we shall look at a strategy using a 60-minute time frame. The criteria we shall use also applies to a 15- or 30-minute time frame.

First, as per our rules for this trading strategy where the moving average lines have converged or are converging, we don’t trade as no viable or clear trade triggers present themselves. However, once a crossover has occurred, the moving average lines start to fan out. On this chart there is an upward movement with the prices above the 26 period moving average. The strategy is to take advantage of the pullbacks. In other words, as the market moves upwards every now and again, the market pulls back and the prices break the 6 and/or 14 period moving average lines. When this happens this triggers an entry signal to buy a call. There are two pullback moments indicated in Figure 6.7, which both trigger a call buy. The time to expiry of the call should be 30 minutes when using the 1 hour time frame. However, if you were using the 15- or 30-minute time frames, your time to expiry would be 15 and 8 minutes, approximately half of the time frames used. The chart clearly indicates that both binary option trades would have been successful.

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