Binary Trading Strategy for Oil

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The price of oil is a critical global economic factor, which means that trading is influenced by political and commercial concerns. In general, higher oil prices tend to undermine economic growth as this increases travel and shipping expenses, which increase inflationary pressures. If the price of oil remains high over a long period, the cost of downstream products like plastics and fertilizers are affected as well.

Crude oil

Among the most commonly traded product is oil. Crude oil is a naturally occurring petroleum product commonly used in energy production and manufacturing. It is typically purchased with the intent to be refined into everyday uses such as diesel, gasoline, heating oil, jet fuel, plastics, cosmetics, medicines and fertilisers. As such its price has a dramatic impact on the global economy. It is traded in high volumes all around the world.

In line with the world’s standard, there exist two major classifications of crude oil, and different platforms trade each. US oil is referred to as West Texas Intermediate (WTI), and UK oil, called Brent Blend oil. The WTI is considered light with low sulphur content, is used commonly in US. The light density coupled with less impurities makes WTI oil a sweet crude oil, meaning it has a low density, and is more economical to refine and transport. Typically to demonstrate its worth, it trades higher at a dollar or two to Brent. The Brent Blend although not as light as the WTI is a sweet crude and contains approximately 0.37% sulphur. Being refined in Northwest Europe, it is used in production of petrol and middle distillates.

For example: at expiry time 12:00 GMT the old contract closing price was at US$35.50 per barrel and the new contract price is trading at US$40.50. At expiry, the old deal will be closed automatically at US$35.50. Any profit or loss will be reflected in the margin and thus in the free balance. You have to give special instruction to the dealer, and so the dealer will open a new deal at a price of $40.50 (the price of the new contract at 12:00 GMT), and place an amount equal to the remaining margin on the old deal, unless you provide other instructions.

Oil Trading Binary Options

Crude oil futures are standardized, exchange-traded contracts in which the contract buyer agrees to take delivery, from the seller, a specific quantity of crude oil (eg. 1000 barrels) at a predetermined price on a future delivery date. Forex platforms now provide ways for you to trade into oil futures, without actually having to trade the futures themselves, and thus avoiding the necessity of ultimately taking delivery of the oil which is a concomitant of the futures trade..

Traders everywhere would easily be lured towards it. It is after all a very influential element of the global market. It is greatly affected by the supply and demand thereby trade opportunities are basically always present. The only challenge is to know the right time to trade and where to go. If these problems will be solved, your bank account will always be full. As mentioned before, a lot of factors influence oil and with binary options you can have more gains when the prices go up or go down just as long as you can identify where it is heading. That is what the US Oil Trading System will try to achieve.

How oil trading works

To understand this fully you need to have basic knowledge trading binary options commodities. However this strategy is quite easy to grasp and fully works. Technically, it is a strategy that follows trend. It uses two indicators to recognize trend and retracement which will then be succeeded by trend resumption. This means that price may strongly move in a single direction and then it moves towards the opposite side. Once the first direction resumes, you then enter a trade. In order to achieve this, US Oil Trading system makes use two custom indicators specifically TCCI. This is an indicator that is based on Moving Average. The other indicator is called the Oil Biz where and arrow is placed at your point of entry. The two indicators are readily downloadable. Here is how it will look when you add it:

Necessary Indicators:

  • TCCI Indicator
  • OilBiz Indicator

When you download and install it, you will see a Meta Trader 4 terminal. On the chart you will see the TCCI. It will look like a moving average that comes with changing colors. You will see the arrows near the Oil Biz indicator. For trading according to this strategy you may need two indicators to have the same color. The strategy’s author persists on a certain condition that is a bit complex to understand especially for a novice trader. The author noted that when the TCCI turns green on the two sides of the candle that is when a trade is finally confirmed. Additionally, the bur arrow must be up or both sides of the candle must be red with an arrow. The strategy also denotes that sometimes TCCI changes on similar candles where the arrow shows. This will appear that the candle’s half matches up to the TCCI’s green zone and a half to its red zone. These signals need not be traded. This will be easily understood when you see the charts yourself.

Advantages of Oil Trading Binary Options

  • The great thing about this strategy is that it is very user friendly and back test.
  • It’s so easy especially when indicators will not re-paint.
  • Chart signals may look good however you can see much better results.
  • If the results are not that good, nothing can compete with a constant strategy such as the US Oil Trading System.
  • Thereby, it is all right to gain losses just as long as your in the money trades are more than you’re out of money trade.
  • This will surely happen regularly. It may not be true that huge money can come quickly but once they come they will be very promising.

Disadvantages of Oil Trading Binary Options

  • You may have used dozens of indicators but you may notice that only a few stand out.
  • When you try to use a promising strategy such as TCCI or Oil Biz you can see a different view on trading. With this, you may not feel too comfortable with such strategy using indicators that you have not heard about.
  • There may be some repainting issues but it can be a major problem.
  • Moreover, there it is possible that there is an additional trend filter necessary because the arrangement of the strategy is not so good.
  • With it arrangement, you may be trading retrenchments and not trend resumptions.

The Bottom line

So it is very important, when trading oil on your forex platform, to be aware of any restrictions or time limitations that may apply. But clearly, the ability to gain such easy access to this fantastically liquid and fast-moving world market is a terrific opportunity for traders.

This system was created for trading related to oil or oil futures which allow traders to manage their money in a better way. It also allows traders to go for higher ratio in risks to rewards. This goes to show that traders may lose two trades and can make up for such losses with just one winner. However, this luxury cannot be attained in Binary Options not unless initial trades are double. However, this is something that you should not do. This may not be the most appropriate strategy but its power can come from the idea that it makes use of good risk to reward relation.

image courtesy: binaryoptionzone

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Analytics for oil

You want to be aware of oil prices and be able to make money on this? In the section “Analysis of the oil market,” you will see everything you need to make the right trading decisions: analysis of relevant quotations, the reasons (technical and fundamental review), forecasts, the analysts of oil and more. We are closely watching what happens with the main asset of commodity markets and try to share information with you as soon as possible.

If you have your own view on the oil market, you can always share it with readers, for free by signing up on our website as an analyst.

Views of analysts in the oil market

Analytics of the oil market allows to answer the questions about the mood of investors and what is the aim of their interests at the moment. Oil prices are weakly governed by the laws of supply and demand, as the main component in them is speculative capital. Because oil, like gold, USD or the yen, is an indicator of the global economy.

What affects the dynamics of quotations of oil?

  • agreement between the countries-exporters of oil. The greatest influence on quotations has OPEC, in particular Saudi Arabia, Iraq and Iran. Even the most insignificant statement from the representatives of these countries may move oil to both sides for 3-5%;
  • the weekly EIA report (USA) on the oil reserves in the repositories;
    the number of working drilling rigs in the US (shale oil mining);
  • political decisions in the long term (development of new mines, construction of oil storage tanks, etc.).

The analysts opinion on oil can also affect the quotes, but only slightly – a fundamental factor remains the leading one.

How to make money on oil prices?

  • speculative strategy: trade on news. Since the most important factor influencing oil prices is the news and analysts at the oil. It is enough to follow the publications of the United States, Saudi Arabia, OPEC (individual countries of the cartel) to open position in right direction. For example, the growth of oil production for the month or the growth of oil reserves in the United States, failure to comply with the terms of the agreement of OPEC lead to a decline in oil prices, the decline in the number of drilling rigs to higher prices;
  • medium-term strategy: buying oil futures. Horizon — 1-3 months;
  • long-term strategy: the purchase of securities of oil companies with the expectation of earning not only on the growth of oil prices, but also on the payment of dividends.

Please note: analytics of oil market can help to capitalize on correlated assets. For example, if the price of oil increases, the Russian ruble is strenghtening at the same time.

Binary Options Trading Strategies

Opportunities in flat or volatile markets.

You have undoubtedly heard, binary options offer opportunities in all market conditions. And that they do. From up or down trending markets to flat or range bound markets and even to the most volatile or whipsawing markets there is a strategy using binary options.

It is very important though, to understand which strategy to use in each situation and in every event, you should have a well thought out strategy for every market condition.

Before we dive into the basic strategies for binary options, it is important to reiterate that binary options are not a different market, they are simply a different way to express an opinion about the same markets you already love.

Whatever analysis or indicators you are using to signal moves, or lack of moves, in the market now, are the same you would use for binary options. Additionally, as with any type of trading, even before having a sound strategy, you need to employ sensible money management.

That part is perhaps a bit easier with binary options as you always know the maximum risk up front, before the trade is placed. If it doesn’t meet your risk tolerance, don’t take the trade. If it does, then determine what type of market it is and if you are willing to place the trade or now.

So, let’s look at a few different binary options strategies for different market conditions.

Binary options strategy #1 – Flat markets.

A flat market is defined as a market demonstrating very little directional movement. For most types of trading this can be very frustrating as it provides almost no opportunity.

With a binary option, because of the non-linear nature (meaning the price of the binary option can move, even if the underlying market does not) of binary options, this can provide great opportunity.

The key point to remember here, a binary option will always settle at 0 or 100, there are no other outcomes.

In flat markets, traders will tend to buy binary options which are well in-the-money (options trading over a price of 50, often a price of 70 or more) and sell binary options that are well out-of-the-money (options trading under 50, often at a price of 30 or lower) with the goal that time erosion, rather than price movement in the underlying market will push the price of the option toward their ultimate goal of 100 or 0. This is very similar to what is called a premium collection strategy in traditional options.

In this strategy, traders are putting up more capital to make less, and are willing to do so as they believe the probabilities of a positive outcome are in their favor.

Binary options strategy #2 – Volatile markets.

Volatile markets, as one can probably conclude, are the opposite of flat markets. These markets are typified by wild price swings, often of a magnitude several times larger than under normal conditions. Just as a market in this condition is the antithesis of a flat market, so also is the strategy required to trade.

In volatile markets, binary options traders will typically look for a lower risk to higher reward strategy. They are estimating that these large swings can take a deep in-the-money binary option, out-of-the-money quickly, and vice versa.

In this strategy traders may look to sell binary options at a price of 70 or greater and buy binary options at a price of 30 or lower.

With volatility being the key to this strategy, moves can come quickly and just as quickly reverse. Because of this characteristic, experienced traders will often not look for the ultimate payout of 0 or 100, but will utilize limit-orders at various levels to take off a full or partial position and lock in profit, before the market turns against them.

No strategy is perfect and all trades are unique. The above outlines the basics of how strategies for different market conditions can be implemented; however, this is just a first step and it is the responsibility of every trader to fully understand their strategies and follow their trading plan on every trade.

For more detail on these strategies, and many more strategies for binary options, register for an upcoming webinar, or check out our archived webinars covering a wide range of topics and strategies, from basic to advanced.

Reversal Trading Strategy for Binary Options – How It Works

What is a Reversal Trading Strategy?

How to Use Reversal Trading Strategy?

If you take any chart with a 15-minutes timeframe as an example, you will see that prices rise all the time during some continuous trend. All of the oscillators, most probably, are in the overbought zone and it seems like a reversal is going to happen very soon. But it would be a huge mistake trying to catch a reversal with such a strong trend. It is much more productive to bet according to the trend. Most of the profitable strategies are based on exactly the same approach. All of the bullish candlesticks have an upside shadow which means that the price was not going up all the time, there were bounces happening. We could use those bounces to enter the market and get a good profit as the result. It is obvious, of course, when you look back on the history. But how can we identify an entry point in real-time conditions? It is rather easy to do and we will tell you how.

If you like this strategy, you might also be interested in this Hanging Man Trading Strategy

Advice for Trading Reversals

If you see a strongly marked trend on any chart, then it would be very easy to find an entry point using a shorter timeframe for the same chart. It is very important to understand that every bullish or bearish candlestick consists of many full-size candles of a shorter timeframe, which can be analyzed as well.

We change the timeframe from 15-minutes to 5-minutes and we add the following indicators:

  1. Bollinger Bands;
  2. MACD;
  3. MA with period 10.

Examples of Signals from Reversal Trading Strategy

Now as we remember that the longer timeframe has a strong uptrend, we can start trading on retracements. The bets have to be done in the direction of the longer timeframe trend, in our case, upside only.

Look at what signals do we get from the strategy:

  • Deal opening rules for the uptrend of the longer timeframe:
  • The chart has to be between the upper Bollinger Band line and MA with period 10;
  • MACD histogram has to raise;
  • Bets should be made on the candles’ bounce to MA10 with expiration for 1-2 candlesticks ahead.
  • Deal opening rules for the downtrend of the longer timeframe:
  • The chart has to be between the lower Bollinger Band line and MA with period 10;
  • MACD histogram has to decline;
  • Bets should be made on the candles’ bounce to MA10 with expiration for 1-2 candlesticks ahead.

We can catch such awesome deals in this simple way on price bounces from the main trend. We called the binary options trading strategy as profitable not just like that but because it is suitable for all of the timeframes. But if you are going to use timeframes 15-minutes and 5-minutes as we showed you the example above, you will be getting much more binary options signals than say timeframes of 1-hour and 4-hours.

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