Due to the nature of binary option trading, those trading without a tested and proven system never really stand a chance to generate long-term, consistent profits. Sure, the short-term variance may reward some of these gamblers every now and then, but because over the long-haul their mathematical expectation is negative, they’re doomed nonetheless. The bottom line: the use of a trading system is not optional. It’s a must. Trading systems are made up of several different components, and one of these could well be the Tweezer, a strategy based on a candlestick pattern known as the tweezer. As any chart-pattern-based trading system for binary options, the Tweezer comes with advantages and vulnerabilities, a major one of which is the relatively difficult nature of pattern-identification. Fortunately, in the case of the tweezer, there are a few ways to defeat the problems tied to pattern-identification – and I will cover those at the end of the article.
For a less hands-on approach to trading, try an auto trading binary option system. Forget about greed and disappointment. Don’t let such emotions negatively affect your trading performance.
Before all else though, we need to define the Tweezer pattern, and take a look at what it’s supposed to herald – after all, that’s what the system is based on.
There are two tweezer pattern variants: the tweezer top and the tweezer bottom. They both predict a trend-reversal: the tweezer top signals the end of a previously dominant bullish trend, and its reversal into a bearish one. The tweezer bottom on the other hand means that a bearish trend is about to experience a bullish reversal.
The tweezer top is made up of two candlesticks. The Day 1 candlestick is a bullish one, featuring a short wick under its body. The Day 2 candlestick is a bearish one, with a longer body than the Day 1 candle, but with its opening at the same level as the closing price of the Day 1 candle. The significance of the pattern should be obvious from this description: while the Day 1 candle is a continuation of the previous trend, the day two one sees sellers flood the market, destroying all the Day 1 gains and then some, thusly creating ripe conditions for a consistent trend-reversal.
The tweezer bottom is made up of two candles as well, and it is the upside-down mirror image of the tweezer top. Its Day 1 candlestick is a bearish one, with a wick above it. The Day 2 candlestick on the other hand is a bullish one, it’s longer than the Day 1 candle and its opening is on the same level as the closing price of the Day 1 candle. With that in mind, it’s easy to see how the Day 1 candle represents the continuation of the previous trend, at the end of which buyers flood the market, erasing all its losses and then some.
NB: Interested In Mining Bitcoin And Other Cryptocurrencies for Profit? Now, You Can Mine Better, Faster and Smarter for More Profits With The Ready to Use, "High Performance", and Approved IQ Mining BTC Cloud Service For Miners. With This Mining Service, You Will Get Up to 128% Yearly ROI from Mining Bitcoins Alone Without Having to Buy Any Expensive Mining Hardwares and Softwares! Not Only That, You Will Get Your First Payout In First Few Hours After Buying a Plan With IQ Mining. You’re Also Given a Dedicated Account Manager After You Buy A Plan Who Will Help You With the Best Pool Allocations and Account Setup Plans To Get the Most Out of Your Purchase. Click the Banner Below To Register Now:
Note: If your language is not English, you should use the language dropdown menu at the top of their page to select your language.
Now that you know and understand how the tweezer patterns develop, it’s easy to see how they can be used for the trading of the Call/Put contract, and – with a bit of tweaking – the Touch/No Touch contract as well.
To keep things brief, we’ll only consider the tweezer top for trading purposes. Once you understand this, you’ll easily be able to transpose the process to the tweezer bottom through analogy.
First of all: with the tweezer top, only the Put component of the Put/Call contract can be traded (the reasons are obvious once you take a look at the attached illustration). Likewise, with the tweezer bottom, only the Call component can be traded.
Placing the Put trade is as simple as 1-2-3. Once the tweezer top pattern is spotted, place the Put trade right at the opening of the next candlestick. As you probably know, when it comes to expiry, one has to consider the time-frame used for the analysis. If you’re using an hourly chart for analysis, set the expiry on the Put trade to 4 hours.
Now then, for the Touch/No Touch trade, we’ll have to trace a horizontal line touching the top of the tweezer top candlestick pattern. Everything above this line falls into the No Touch zone, while everything below it belongs in the Touch zone. To make sure your trade will end up in profit, set the strike price for the No Touch trade some 30 pips above the said horizontal line. For the Touch trade, we’ll go 40 pips below the said line.
The expiry on the No Touch trade should be set to 2 hours (provided you’re using a 1-hour chart for analysis) and 6-8 hours for the Touch trade.
While the theory is indeed simple enough for this system, in practice, actually spotting the tweezer top (or bottom) can be quite challenging. Fortunately, one can use additional tools to confirm the likely presence of a trend-reversal: the support and resistance levels are extremely handy in this respect, as are indicators such as the Oversold/Overbought stochastic oscillator. Using a combination of these three tools, one can refine his tweezer system to a point where it pretty much guarantees a long-term EV+.
Help Us Fight Scams. Please Donate to Support Our Work. No Amount is too Little or too Big. Thank You..
February 8, 2019 By Ghazanfar
The phrase ‘Necessity is the mother of invention’ seems true for Iran. This is because Iran has unveiled its own...
February 8, 2019 By Ghazanfar
In spite of long bear market, Bitcoin transactions per day are increasing. Today the level of these transactions has touched...
February 4, 2019 By Ghazanfar
Although bear market in crypto world is extending, yet many fiat currencies are facing the threat of destabilization. This is...
February 4, 2019 By Ghazanfar
In spite of mix signals from the cryptocurrency world about the future of cryptocurrencies, many countries are planning to test...
February 3, 2019 By Ghazanfar
The idea of Bitcoin adoption as an international currency is not at all new. Over the years, many financial experts...
February 2, 2019 By Ghazanfar
Bitcoin’s entry into the longest ever bear market in history is one of the most burning issues of today. The...
Valforex.com cannot be held liable for any damages incurred due to the usage of any information displayed on this website. The information and trading guides found on the website constitute the authors’ opinion only. Both Forex and Binary options involve high-risk and are not suitable for all investors. Either Forex or Binary options may not be legal in your jurisdiction. It’s visitors’ responsibility to make sure these entities are legal in their jurisdiction before engaging in trading activity… Read More