This trading system is perfect for novice traders due to its simplicity and a sufficient number of profitable trades.
In order to trade, you do not have to download additional indicators or make complex calculations. You just need to have an understanding of resistance and support lines and be able to plot them on a chart.
Features of the strategy
If we carefully study the quotes of popular trading assets, we will come to the following conclusion: most of the time the price is in a flat state, without being subject to significant fluctuations. It rises and falls, moving in a certain channel and practically not crossing its boundaries.
A clearly defined strong trend is not a long-term, but rather a short-term phenomenon. To work, we need a period when there is relative calm in the market and no important economic news is expected.
You can determine support and resistance yourself. The price seems to bounce off the virtual lines several times, moving in the opposite direction. Through these points (close to the minimums and maximums of a certain segment of the graph) we draw the upper and lower boundaries of the range.
Trading recommendations:
- timeframe: 15 min. - 1 hour;
- We buy a Put option in such cases: the price touched the resistance line 3 times. We wait until the third signal candle closes and the next one opens. It is important that there is a touching of the level, and not a breakdown;
- “Call” is purchased under opposite conditions: we wait for the third touch of the support line and the formation of a new candle;
- Expiration time: 3 candles. For example, with a timeframe of 15 minutes it will be 45 minutes, etc.
If the next candle after the signal confirms the breakdown, that is, the quotes have left the channel and rushed up/down, most likely the price will continue to move in this direction, so we purchase the corresponding option. It is better to take a longer expiration time, for example 4 candles.
The ideal period for trading using intraday channel strategies is morning, evening or night, when the market is not “stormy”. In fact, the main condition for concluding transactions is that quotes remain within the range determined by the support and resistance levels. The probability of a breakout during a flat is insignificant, so most options will be closed with a profit, but for this it is important to strictly adhere to trading recommendations.
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