Tip 4 – Do NOT Make An Attempt To Buy Or Increase A Trading Benefit Of Binary Options System

Tip 4 – Do NOT Make An Attempt To Buy Or Increase A Trading Benefit Of Binary Options System

Tip 4 – Do NOT Make An Attempt To Buy Or Increase A Trading Benefit Of Binary Options System

Out of the interest, I asked my Meta Trader 4 (MT4) developer to test many basic Binary Options Trading Systems and as a result I had identified during my research

Most systems were tested across 10 instruments comprising Forex, commodities and indices.  4 time frames were also applied on testing such as the 15 minute, 1 hour, Daily and Weekly.

There are 40 tests for most of the essential systems recognized…

Note: We tried, as best possible as we could to make sure that at least, there were100 “theoretical” bets, however, it was a restriction at times lack of back-test data.

Next, we checked a system of Bollinger Band basing – Place a Put (market will end lower) bet when a candle closes above the Upper band and vice versa if a candle closes below the Lower band.  The thinking takes place here, price is increase, expect a retracement.

Effect:  40 tests.  It is no more than a 52% strike rate for any of the 10 instruments crossing the 4 time frames. We never had a failure with the rate below 45% meaning inverting this system would not operate.

Then, we took a look at Daily Pivot Points (only on the 15 minute and 1 hour time frames, due to their intra-day nature).  We placed a Put bet (market will end lower) if a 15 minute or 1 hour candle closes above the Daily Resistance Level 2 (R2) and vice versa if a 15 minute or 1 hour candle closes below the Daily Support Level 2 (S2).  The thinking takes place here, price is increase, expect a retracement.

Effect:  20 tests.  It is no more than a 53% strike rate for any of the 10 instruments crossing the 2 time frames.  We never had a failure rate below 47% meaning inverting this system would not activate.

Following up, a Simple Moving Average Cross system – Place a Call bet (the market will end higher) when the 10 Period (Fast) Moving Average crosses above the 20 Period (Slow) Moving Average and vice versa when the Fast crosses below the Slow.  The thinking takes place here, the price is gaining momentum, and it is expected to continue.

Effect:  40 tests.  It was no more than a 53% strike rate for any of the 10 instruments across the 4 time frames which are except for EURUSD on the 15 minute time frame.  On this one test, we saw a 55% strike rate; it is the closest we got to an almost break-even system up to now.  The rate of failure never breached 45% so inverting this system would not operate.

We then turned to the next oscillator, it is a system based on RSI – Place a Put bet (market will end lower) if, on candle close, the 14 Period RSI is Overbought (its value is greater than 70).  Place a Call bet (market will end higher) if, on candle close, the 14 Period RSI is Oversold (its value is less than 30).  The thinking takes place here, price is extended, expect a retracement.

Effect:  40 tests.  It was no more than a 54% strike rate for any of the 10 instruments crossing the 4 time frames.  We never had a failure rate below 47% meaning inverting this system would not activate.

Now, with a breakout system – Place a Call bet (market will end higher) when a candle closes above the high of the last 12 candles.  Conversely, place a Put bet (market will end lower) when a candle closes below the low of the last 12 candles.  The thinking takes place here, price is gaining momentum, and it is expected to continue.

Effect:  40 tests.  A 56% strike rate for 2 instruments on the 1 hour time frame…

At last, after having 180 tests, we find 2 ones that would point out a marginal return, 1.6% per 100 bets based on 2% risk per bet!

Failure rate never breached 46% so inverting this system would not operate.

Finally, a “7 Up Candles Will Be Followed By A Down Candle System” – Place a Put bet (market will end lower) after the 7th bullish candle in a row closes and vice versa for 7 bearish candles in a row.  The thinking takes place here, price is extended, expect a retracement.

Effect:  40 tests.  It is no more than a 53% strike rate for any of the 10 instruments crossing the 4 time frames.  We never had a failure rate below 47% meaning inverting this system would not operate.

We expanded this to 8 candles (in a row) which affected in a 60% strike rate for 2 instruments on the Daily time frame.  We never had a failure rate below 45% meaning inverting this system would not operate.

After having 260 tests, we find 2 ones that would point out a 16% return per 100 bets based on 2% risk per bet!

Note: Back test data restrictions and the rareness of this set up meant that the 2 tests combined included of less than 100 bets.  Therefore, infrequently, it would take a lot of patience to set up this in order to use it as the focus of a Binary Options Trading System for serious traders.  It is compounded by factual results based on small number of bets.

It is impossible for you to buy or develop a profitable Binary Options Trading System to predict a market will close higher or lower than the current price at the end of any term of time.

It is certainly that the above systems are quite basic; however, the back-testing highlights the problem of “systemising” the process of regularly predicting that a market will close higher or lower than the current price at the end of any term of time.

You might both mix and match these systems. For instance, you could wait for a candle close above the Upper Bollinger band and for the Daily Resistance level (R2) to be breached.  After that, place a Put bet (market will end lower) on the thinking, price is expand, expect a retracement.  We do believe that this would be useless on the basis one would finish constantly curve matching, may be to the extent that trade infrequency would be so rare that back-testing effects would not have enough sufficiency.

It’s fair to say a long term strike rate of 60% would be quite exceptional based on this analysis.

Take a look at this, it means you yourself believe forecast correctly Heads instead of Tails many more times than not, 60% is really 50% more times than 40%.

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Top 7 Forex Binary Options Tips You Have Never Heard

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