The Three Point Chart Pattern binary options strategy is actually quite simple. For a three point Down, the first point needs to be the highest move within the pattern. For a three point Up, the first point needs to be the lowest move within the pattern. This technique is primarily a reversal method, and the three point Down is going to show up following an uptrend, or after moving up. On the other hand, the Up pattern is going to appear following a downtrend or move down.
The market is moved into as soon as support or resistance is established by the second point being broken. On the other hand, we really don’t have a legitimate pattern if the third point is lower than the first, and we do not have a legitimate three point Down pattern if the third point is higher than the first. In any event, should point one be exceeded by point three in the opposing direction, this binary options strategy is no longer applicable.
Challenges Of the Three Point Chart Pattern Strategy
Everyone recommends trend trading, and for good reason. The likelihood of success is more significant when utilizing trend entries. Whenever attempting to recognize reversals, it’s easy to make a mistake if the movement ends up being only a retracement. But by using the Three Point binary options strategy, this can be avoided by adhering the basic rule: if the first point is exceeded in the opposing direction, walk away.
This keeps you from entering the market and safeguards your funds. Of course you can also then trade in a different way, based on the new market conditions. This binary options strategy may perplex novice traders just a bit because it easy to become perplexed by the three highs and lows, at least within the initial stages of making use of the strategy. But before too long it will be easy to see how each step and setup works together to provide you with accurate price motion predictions.
Advantages of the Three Point Chart Pattern Strategy
This binary options strategy has been around for quite some time and it is utilized by those who trade Forex, Stocks, and Equities. Being a genuine price motion strategy, with solid support and resistance guidelines, it is primarily known as a reversal strategy. However, it may be applied in accordance with the asset price trend. With many possible applications, this is one strategy that traders will want to know how to use.
How To Execute the Three Point Chart Pattern Strategy
First off, you’ll have to utilize suitable binary options charting software and build an practically bare chart due to the fact that your focus will be on price swings, and not lagging indicators. Below is an explanation of the Three Point Down pattern, but remember that these same rules do apply to Up patterns as well, inverted obviously. Following an uptrend or solid move up, watch for the three point pattern to form, beginning with the initial peak, or point one. This also becomes the top of the price trend. If the price goes on to move up, tag the new high as the first point.
At this point a reverse move will start and you will tag the base of that movement with point two. At the time you’ll note an upward trend, a retracement which just ended, and the asset price starting to move upward. Should this new movement exceed point one, abandon this binary options trade and wait for a different setup if you wish. Should the new upward movement not exceed point one and begins moving down, tag the greatest point for this new upward movement as point three.
At this point the three point pattern ought to be complete. However, there does remain a very important guideline which needs to be followed: the asset price must shift downward to break through the low point which was produced at the second point. On if that occurs are all of the conditions met. At that point you could enter the binary options trade by choosing the Put option. The final result is not guaranteed, but you’ll at least know that you positioned yourself well by using this solid binary options strategy.