Estimated reading time: 4 minutes
Good binary options traders are always in the loop and always ready to commit whenever the opportunity for a good trade surfaces. The New York Breakout strategy is a binary options trading strategy specifically designed to be used during the early hours of the New York trading session as it’s meant to take advantage of the increased activity and the increased volatility of the Forex market.
More specifically, the strategy is designed to work with currency pairs involving the US dollar. Being the most traded currency indeed, and being the most traded one during the above said time-frame, taking aim at the USD does indeed make perfect sense. The exact time-frame targeted by the New York Breakout strategy is the start of the New York trading session, which happens to overlap the London session, marking a period of maximum activity as major institutional players jump into the market.
The exact period during which this trading system can/should be applied is between 13:00 and 15:00 GMT. The system is aimed at identifying a breakout which binary options traders will then be able to use for the trading of the Touch/No Touch as well as the Call/Put contracts.
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In order to effectively identify the breakout – obviously the key point of the approach – the system is quite heavily reliant on the use of indicators. No fewer than 4 are put to use, two of which are included in the MT4 platform as default indicators, the other two have to be downloaded (they’re available for free so it shouldn’t be a problem). The indicators are the ant-GUBreakout one, (its newest version) and the i-ParamountWorkTime one. Both of these indicators obviously work with MT4.
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Now then, in order to be able to successfully use the indicators, one needs to tinker a bit with their settings, so they’re optimized for the task ahead. If one isn’t in the GMT time-zone, he needs to find out his GMT deviation and enter it in the Custom Indicator window, into the “GMT Shift of Your Broker” section. This is obviously extremely important because the actual time-period used for analysis and for trading is the heart and soul of the strategy. The time-frame will not give traders trouble with this system: it has to be a 15-minute one.
The currency pairs suitable to be traded with this strategy are the EUR/USD, GBP/USD, USD/JPY, USD/CHF, USD/CAD and EUR/GBP pairs, for the above said reasons.
The first step is to apply the i-ParamountWorkTime indicator, which will delimit and shade the areas for the trade analysis. The marking of this area can be done without the indicator as well, manually, with the help of the vertical line tool, but when using this, traders have to account for the time-zone difference, and the possibility for error increases, as the indicator does all these calculations automatically. The trend line tool than comes into the picture, making two vertical lines traced at the candle high and the candle low within the area of analysis.
Once the two trend-lines are traced, the trader keeps an eye on whether there’s a bullish or bearish break-out through these lines. If there’s an upward breakout through the higher trend-line, a Call option has to be purchased, expiring in 30 minutes. If the breakout happens across the lower trend line, a Put option is in order, also with a 30 minute expiry.
The Touch/No Touch part of the strategy is a no-brainer: if the price breaks out through the upper trend line, a No Touch option has to be bought, about 15 pips below the lower trend line. The Touch trade works the same way, above the upper trend line, if the breakout happens through the lower trend line.
Put the strategy to the test on a demo account before using it for real money trading.
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