What is end-of-day trading?
In the article below we would like to present another — definitely safer approach to the BO — based on the end of the day strategy.
End-of-day trading, also known as position trading, occurs when a trader binary options trader includedidentifies a high probability trade set-up on an end-of-day price chart and places a buy call or sell put position the next trading day. As opposed to intra-day trading whereby traders place trades in a higher frequency ie: more often throughout the dayan end-of-day trader places trades less frequently and uses end of day trading data to generate trading signals.
End-of-day trading signals are generated off the daily price bar, after the trading day has closed.
Intra-day monitoring of the price bars is not required. For local markets however, the end-of-day candle will close and open in line with the local exchange trading session times.
Why trade end-of-day strategies? Many end-of-day traders manage full time jobs and this type of strategy is considered less arduous and demanding, allowing traders to fit their trading activities around a normal work schedule.
Plus trading and data feed costs are smaller where applicable. For end-of-day traders, time constraints is not an added pressure for decision making, which is — when using 1 minute price bars for example — often counterproductive. Because Bollinger Band indicator strategy states that when price makes new highs in an uptrend and new lows in a downtrend, price will bounce and break the upper or lower Band, to generate a high-probability setup, binary options traders must filter the trading signals generated by Bollinger Bands by adding a confirmation function: an Inside Day.
That is, traders should place a buy call or sell put trade only when the price candle following the one that breaks through the upper or lower Bollinger Band does not make a new high or low. By doing this, traders end of day in binary options increasing the probability that prices have hit extreme levels and a reversal is imminent. Further, as an end-of-day trader, the longer the timeframe, the more significant the reversal will be.
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- What does the binary options chart show
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Because binary options traders are not concerned with how much an asset moves in price, only the direction, it is important to confirm the Bollinger Band reversal points with the Inside Day. By using the Inside Day candle, which represents a contraction of volatility, if in an uptrend — volatility slows and price fails to make new highs the Inside Daytraders recognise that price strength is weakening and a reversal is probable.
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When combined with Bollinger Bands which are used to signal reversal points, traders will look to sell at the break of the upper Bollinger Band followed by and Inside Day or buy at the break of the lower Bollinger Band followed by an Inside Day.
Place the call trade at the high of the inside bar. Place the put trade at the low of the inside bar.