Hello traders friends!
As you know, the foreign exchange market is full of various patterns and patterns. Some of them come and go, and some work stably for a long time, such as Japanese candlestick patterns . Today we will also look at one effective candlestick chart pattern – the Interleave pattern. And let’s figure out how to apply this strategy in binary options.
An alternation pattern consists of alternating bullish and bearish candlesticks. The essence of the alternation is that at some point it necessarily stops, and our task is to enter at this moment in the direction of the market.
The table consists of 3 lines: Call options, Put options and all together. The Rate column displays the percentage of successful bids for the test period.
Our task is to determine the beginning of the alternation, that is, the alternating color of the candlestick body. Having determined the beginning of the sequence, we begin to count the candles. After the fifth candlestick closes, we buy an option in its direction.
Buying a Put option:
- We are waiting for the appearance of a sequence of 5 or 7 alternating candles, where the sequence begins with a black candle;
- When the last candlestick in the sequence (black) is closed, open the Put option.
Buying a Call Option:
- We are waiting for the appearance of a sequence of 5 or 7 alternating candles, starting with a white candle;
- Upon closing the last candle in the sequence (white), open the Call option.
The option expiration time is 1 candle of the current TF. That is, if you trade on a 1-minute chart, then the expiration will be equal to a minute. But, I still recommend choosing an hourly chart, where there is much less price noise. Since for the correct determination of the color of a candle its size should not be too small, it is better to exclude from trading the time of little activity in the market – you should not trade in the early morning and at night.
For trades closed in OTM, we will apply a short series of additional Martingale contracts. For the correct calculation of the Martingale bet size in binary options, you can use a special calculator on our website.
The calculator takes 3 parameters: the size of the initial investment, the percentage of return on the option and the maximum unprofitable series, in our case, 3 rates. For example, with an option yield of 80%, the sequence of bets will look like this: $ 100, $ 225, $ 506.
Thus, each of the tribes covers the loss of all previous bets. If, after two knees, the profit is still not received, the next contract is bought with the minimum (initial) size. Martingale is a useful tool, but it shouldn’t be overused.
Examples of deals
First example on the hourly EURUSD chart. Having counted 5 candles, we determine the direction of entry – to a fall (Put option). Let’s put, for example, $ 100. The first bet was unsuccessful and the color alternation continued. We do not pay attention to this fact and open the next contract in the same direction, but with an increased size – $ 225. This contract was closed successfully, and we received a total profit equal to a unit rate of $ 100.
The second example is on the M5 chart, GBPUSD. Here the situation turned out to be somewhat worse – two deals in a row were closed in OTM, in connection with which they had to use the second knee in Martin, buying a contract worth $ 506 (for example). Having closed in ITM, the contract beats off the cost of the previous two losing trades, plus it gives a profit corresponding to the original rate.
Finally, a few recommendations for applying the strategy in the real market. First, enter a trade only when the size of the candlestick’s body allows you to speak with confidence about its color. We exclude too small candles and doji from the analysis. At the very least, we do not trade during the Asian and Pacific sessions. Secondly, do not abuse Martingale by opening more than 2 knees. Even if you get a loss, you will recover it in the next successful streak. But the abuse of risky tactics can result in a complete drain. Observing these two rules – the strategy will definitely not let you down.