Raven A 5-minute binary options strategy

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Raven: A 5-minute binary options strategy

Classic methods of forming trading forecasts using a combination of indicator strategies is not only the easiest approach to high-impact binary trading, but also allows you to comfortably make consistently high earnings. Most professionals say that the best time range for intraday trading on the binary market is a 5-minute contract maturity range. We have attempted to combine expert advice with well-known indicator strategy methods, and have come up with the “Raven” system with trading signal efficiency of 85%.

The “Raven” indicator strategy – conditions of use

The “Raven” trading system utilizes classic high-precision indicators, which puts forward some specific requirements for the trading terminal. Moreover, without effective money management, it is almost impossible to achieve a high result. Against this backdrop, we need a set of optimal trading conditions from the broker. The entire list of optimal conditions of use for the “Raven” indicator strategy is as follows:

  • Trading on a professional platform
  • The presence of an integrated set of automatic indicators
  • A good choice of assets and high liquidity of contracts
  • Quick registration of trading positions
  • The minimum parameters of trading conditions

This trading system was developed and tested over a long period of time on the Binomo company’s terminal. For this reason, we recommend precisely this company’s terminal as the main trading platform. The Binomo broker has established the following trading conditions and technical set of tools for binary trading:

  • A professional set of indicators on their proprietary high-performance trading platform
  • A list of 80 trading assets with contract liquidity of up to 90%
  • The speed of order execution is 1.7 ms in non-stop format
  • Trading conditions with the minimum initial account balance (from 10 USD) and amount of contracts (1 USD)

The “Raven” 5-minute binary options strategy – configuring the indicators

To form high-precision, filtered trading signals according to the rules of the “Raven” trading system, the following set of indicators must be applied to the trading asset quote chart:

  • The standard Alligator indicator
  • The RSI 35 indicator with a trend reversal level of 50
  • The standard MACD indicator

The typical form of the trading system template is shown below in the screenshot:

The “Raven” indicator strategy – signal system

The combination of trading signals for a position UP is configured as follows:

  • The MACD indicator oscillator breaks through the scale level of 0 upwards
  • The trend movement line of the RSI indicator breaks through the scale level of 50 upwards
  • The moving averages of the Alligator indicator reverse to upward movement

The combination of trading signals for a position DOWN is configured as follows:

  • The MACD indicator oscillator breaks through the scale level of 0 downwards
  • The trend movement line of the RSI indicator breaks through the scale level of 50 downwards
  • The moving averages of the Alligator indicator reverse to downward movement

The high performance level (85%) of the “Raven” indicator strategy was demonstrated on contracts with maturities of 5 minutes. However, when trading according to these rules, contracts can also be registered for trading positions with maturities of 120-180 seconds.

Money management

In this regard, the best approach to trading is to follow the classic rules of risk management:

  • Trading on accounts with the initial parameters of trading funds is only carried out with positions of the initial cost
  • Trading on an account with a sufficiently high volume of funds is carried out with contracts with risk limited to the level of 3% of the amount of operating capital

Following these rules of money management provides security for your trading capital and steady profit growth.

5 Minute Binary Options Strategy

A quick look at the best types of strategies for one of binary option’s most popular expiry times: 5 minute.

Best Binary Options Brokers: 2020 Ranking
  • Binarium

    Best Choice! The leader in our ranking!
    Perfect for beginners!
    Free Demo Acc + Free Trading Education!

  • Binomo

    Good choice for experienced traders!

Strategies For Five Minute Option Expiry

There are a lot of ways to trade the 5 minute binary options expiry. This time frame is one of the most versatile in terms of the types of strategies you can use because it is inherently volatile yet at the same time can sustain a trend long enough to be useful to us binary options traders.

You can look at the bigger picture with 5 minute candles or you can drill down to 1 minute charts to see the swings in momentum. When choosing a strategy it really comes down to what kind of trader you are, what types of analysis you prefer and in the end, the asset you are trading.

When it comes to assets there is really no one class that performs best in the 5 minute time frame although most binary traders prefer forex, commodities and indices, not necessarily in that order. These assets tend to have more day to day action because they are traded globally around the clock and will move up/down within their near term ranges with more conviction than less liquid stocks.

When using the 5 minute expiry set charts to 1, 2 or 5 minute for best effect.

Most strategies are adaptable to any time frame, the caveat is that the shorter the time frame the less reliable the signal. A candlestick signal on the daily charts is stronger than one on the hourly charts that is likewise stronger than one on the one minute charts.

  • Price Action Strategies – Price action strategies are trading in it’s simplest form. Traders simply pay attention to price action, the minute to minute changes in prices, and how that action behaves in order to make trading decisions. In the old days this was done by watching the ticker tape all day, today it is much easier and more fun to use a charting package like MT4. These will work with charts set to 1,2 or 5 minutes. Patterns include triangles, head & shoulders, pennants, flags, diamonds and many more that can indicate continuation or reversal in the market.
  • Scalping Strategies – Scalping strategies are very short term form of price action trading although they also incorporate other types of signals as well. Scalping, simply put, is a trade based on what you think the market is going to do in the next period, and this usually means minutes, never more than 10, 5 is perfect. These strategies do not care about trend, only on which direction the market is going now and if it will keep going that direction long enough to place a quick trade. These are best used with charts set to 5 minutes as the signals are generally good for the very next candle.
  • Japanese Candlestick Strategies – Japanese Candlesticks are the premier method of viewing trading charts and give a variety of signals that are at heart price action signals but can also be used for scalping and other types of strategies. The candlesticks are nothing more than an expanded method of plotting price data on a chart but the effect is startling, almost like putting on a pair of glasses and seeing the world clearly for the first time. Candlestick signals are good with any chart setting, depending on which method of trading them you choose.
  • Momentum/Swing Strategies – Momentum is an important aspect of price action and technical analysis. When prices, the market, moves it has momentum. Momentum is the amount of force behind the move, this force is the sum of the people and money moving into, or out of, an asset and can carry prices in once direction for an extended period of time. When this happens you want to trade with the momentum using an indicator like MACD or stochastic. Sometimes the markets momentum will carry it too far in one direction and when it does, prices will swing in the opposite direction in order to rebalance. I would suggest using the 1 or 2 minute charts with this type of strategy/expiry combination.
  • Trend Following Strategies – When there is enough momentum, often described as the entrance of new money entering the market, a trend can be established. A trend is a periodic and systematic movement in which longer term moves in one direction more than offset nearer term corrections in another. Trends, like all aspects of technical analysis, can be both measured and predicted. This means that those nearer term corrections are entry points in trend following strategies. One of the oldest sayings in trading is “the trend is your friend, always trade with your friend” and it’s still around for a reason.

This video shows how to use multiple charts at IQ Option. This can be useful if trying to spot trends over multiple timeframes as mentioned above:

5 Minute Binary Option Strategy

A 5 minute Binary Option strategy involves using one of shortest expiry times available for Binary Options. There are indeed some brokers who will offer expiry times such as 60 seconds and 30 seconds but these are mostly speculative and should be avoided.

What is interesting about a 5 minute binary option strategy is that you can utilise a number of tools and indicators that work best for shorter dated trades. This strategy also allows the trader to enter as many trades as possible within the trading day.

The main technical indicator that the trader will be using is moving averages such as the simple and exponential as well as Bollinger bands. The trader will also be using candlestick indicators with a time frame of 5 minutes.

Setting up the Strategy

Before you trade with a 5 minute binary options strategy, you will need to set up your platform and charting environment in order to provide yourself with the most information in order to trade.

The first step is to plot the individual candlestick bars. These should be set on the 5 minute horizon as this corresponds to the expiry time of the individual options.

You will then need to set up the charts with the appropriate indicators. In this case, we will be using the Bollinger bands as our moving average indicator. This is because they have an upper and lower limit around the mean. These can sometimes also act as resistance and support levels.

The best Bollinger Bands indicators to use for this strategy would be the (2, 20) bands. These bands use the 20 period lookback period together with the upper and lower bands that are 2 standard deviations above and below.

What to Look For

A 5 minute binary options strategy tries to establish whether the candle that starts on the entry of the option will end up above or below the open price on close. This will determine whether the option will expire in or out of the money.

This is why the trader will need to examine each of the individual candles in order to make that decision. This also has to be combined with an analysis of where the price is in relation to the Bollinger bands.

Therefore, the trader will be looking at indicators that are either projecting bullish or bearish sentiment. This could allow the trader to form the right opinion of where the preceding candle will end up.

Resistance Levels and Formations

As mentioned, the Bollinger Bands are sometimes seen as key resistance and support levels for the price of an asset. As such, the trader can form a view around the candle that is likely to form based on where the price is in relation to the support and resistance levels.

For example, in candlestick analysis, a three method formation is a collection of 5 candles where the middle three candles are smaller in size than the 1st and 5th and are also a different color. This can either be a bullish or a bearish three method formation. You can see examples of these in the chart below.

If the three method formation occurs around a bollinger band support or resistance level then the trader is likely to form a view on whether it is likely to break the resistance / support or rebound from it.

When the 5 minute candle is used, the trader can then enter either a PUT or a CALL option based on the readings that he / she is getting from these two indicators.

In the below chart we are going to analyse a 5 minute binary option strategy. This is the price of Bitcoin in USD. As one can see, there was a point at which the top of the Bearish three method formation touched the upper Bollinger band and rebounded.

This therefore confirmed the suspicion of the trader to enter a 5 minute PUT Binary Option on Bitcoin. The trader would have won this trade as it would have ended up in the money.

Band Riding with Three Candles

There are also cases in which the price of an asset rides the top Bollinger band on the way up or the bottom Bollinger bands on the way down. This can either be a bullish or a bearish indicator.

Candlesticks can also be helpful in this case and especially when you have a particular formation of three candles. These could either be the “three white knights” or the “three black crows“. These are three candlesticks of the same color that are either increasing or decreasing in price.

What is important to note for the 5 minute binary option strategy is that the three white knights are a bullish indicator and the three black crows are a bearish indicator.

Therefore, the white knights will sometimes form while riding the upper band of the Bollinger indicator and the black crows will sometimes form when riding the lower bands on the way down.

When the trader observes the candles together with the bands they can form an opinion of what the next candle is likely to be and hence what sort of binary option they should purchase, a CALL or a PUT.

In the below chart of GBPCHF we can see that there appears to be three white soldiers that are on top of the upper Bollinger bands. This is indeed a bullish sign for the trader and hence an indication that he should enter a 5 minute binary call option on GBPCHF.

The result would have been a 5 minute binary option strategy that ended in the money and was hence a win. Indeed, the trader could have also entered a long 5 minute call option on the next candle and this would also have been a win. Band riding is often quite a momentum based strategy.

Engulfing Patterns

One of the more simple candlestick patterns that only involves two candles is the engulfing pattern. With this, a candle is “engulfed” by the second candle with a much larger body and of a different colour.

This can either be a bearish engulfing pattern or a bullish engulfing pattern. In the case of a bullish engulfing pattern, a larger green candle is engulfing the smaller red candle. The opposite can be said for the Bearish engulfing pattern.

When these patterns are observed on the edges of the Bollinger bands then the trader can also take a view on the whether the next candle will be an up or a down candle. Hence, the engulfing pattern can be used to determine whether the pattern is likely to break through the upper / lower bands or rebound from them.

For example, in the below chart of brent crude Oil, we have a Bullish engulfing pattern that breaches the upper Bollinger band. This is a bullish indicator and hence is an indication that the next candle will end up on the open.

Indeed, if the trader had entered a 5 minute call option on Brent Crude on the applicable candle, the trade would have ended in the money and the trader would have got the win on the option.

Keep it Risk Controlled

Although the 5 minute Binary Option strategy can be a profitable strategy, one needs to keep in mind that it can be risky if trade size and draw down limits can not be met. The trader should not enter an option that is more than 2.5% of the capital on the account.

Having a daily trade loss limit is also a prudent move. This can either be based on a value number or number of trades. Moreover, the trader should not trade for the sake of entering a position. All of the indicators should confirm the trade that he is entering. There are a number of other Bollinger Band and candlestick indicators that you can look for.

5 Minute Strategy
By Binary Diaries

For 5 Minutes trades, we can trade with more serenity. This is the reason why some traders prefer 5 Minute trades to 60 seconds trades. The Grail Indicators for 5 Minute trades has made it simple. You only enter a trade depending on the trading signal received.

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12 thoughts on “ 5 Minute Strategy ”

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Best Binary Options Brokers: 2020 Ranking
  • Binarium

    Best Choice! The leader in our ranking!
    Perfect for beginners!
    Free Demo Acc + Free Trading Education!

  • Binomo

    Good choice for experienced traders!

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