Signal VS Social Trading – A Strategic Analysis for Forex Binary Options
Signal VS Social Trading – A Strategic Analysis for Forex Binary OptionsJune 6, 2013
Woke up the other day at Monday morning at 5 AM to get a feel for the markets and try to identify a few potential entry signals on the EUR/USD. I decided to give Optimarkets a try since they were the only ones kind enough to answer my continuously badgering questions without slamming the phone in my face.
The coffee was fresh and so were the formations on the candlesticks on my MT4 account, so here we go. Chart A represents a Bear Trap formation on today’s EUR/USD signals, or is it the beginning of a cup & handle pattern? Well, after executing some mirror trades earlier it came to my understanding that the euro must receive some type of a catalyst in order to pass through the tough confluence zone, otherwise my contract would expire out of the money. So I had my eyes and ears glued to the Bloomberg financial feed waiting for a much anticipated news briefing of the ECB’s Mario Draghi concerning possible bailout plan and the negative impact of the austerity measures in taken in Greece and the banking crisis in Cyprus.
Then I saw the latest Eurozone Unemploymnt report for Youth under 25 years is looking bad also in part due to the QE (quantitative easing) policies (See Chart B).
Eventually I cut my losses short and sold my contract back by using a special plan Jason whipped up for me. Anyoption calls it Option+ (see below).
He cut me a special deal specifically on currency pairs trading since I bought in at around $6,000 with 14 open positions and a balance of ~15,000 (down from $24,000). I was advised by a few of my colleagues to steer away from excessive bonuses because unlike the traditional brokers, the CySec incentive structure is designed to do two things. First, to get you coming back and trading, and secondly to lock you into trades due to trading requirements needed in order to cash out winnings.
While this may be true, these perks enabled me to extend my trading sessions significantly at in many cases bounce back with a few winning trades. I have an account with MT4 and 5, Ninja Trader, and Oanda. All three software signaling platforms were aligned on a “sell”, and I had to do some serious technical analysis on my trades and go with the charts, despite my interpretation of the candlesticks (which was exactly the opposite). Luckily I was extra careful and my broker was kind enough to offer me a bailout package.
My secondary position was a a tight formation on another EUR/USD I had an open contract on, and it was about to expire in 24 hours. It was a classic scenario to use a Chuvashov’s Fork pattern for a mechanical trading system (See Below).
The fractals indicator is used to draw the “Chuvashov’s Fork” pattern. Fractals are used to dissect larger trends into simplified, but more importantly predictable reversal patterns. The fractals are represented numerically in the image above. The dominant trend line is connected by fractals 1 and 2 as shown in the price chart on the left side. The significant uptrend line connects the two lower fractals, while the main downtrend line connects the upper fractals.
I waited for an additional fractal (3) to be formed after the main trend line started breaking out exactly in the opposite direction (reversal trend). You can clearly see a lateral line connecting fractals 2 as well as 3 with the main trend line formations.
Eventually in this contract I was able to cut through the clutter using fractals and the Fork System and made a killing. When my contract expired I was left with $4,540 on that single position, but I had originally invested over 1K and had a growing bankroll that was about to get even bigger.
To sum up, I used a variety of strategies and managed my risk in a way that eventually made me money. Furthermore, due to Optimarkets being such a considerate broker I was able to partially recoup and eventually cash out my winnings less the bonus. To be specific, the mirror trading is actually a very social method that’s commonly used in a way to decide the community sentiment. Sentiment charts show the percentages breakdown according to bearish and bullish sentiment shared by traders over time. The fork method is a more technical strategy used to break down large formations into smaller and more simpler ones (fractals) in order to understand them better, and of course my ability to get a good deal from my broker and leverage their bonuses eventually helped me make significant gains.