Double Red Strategy
The double red strategy is a binary options trading strategy that aims to catch a short-term bearish movement on an asset. A double red indicator is composed of two successive red candles where the second red candle closes lower than the bottom shadow of the first candle.
These two bearish candles must appear after price hits resistance following an uptrend.
Conditions For The Double Red Strategy
- analyse using the 5-minute chart
- take trades with an expiry ranging from 5-15 minutes
- the two red candles should be preceded by an uptrend
How To Trade The Double Red Strategy
Start by identifying the resistance levels on the weekly and daily charts. On the five minute charts you will be playing off of your long term resistance lines, if none are close by then you may have to look for potential short term resistance levels.
Then, when price hits your resistance level wait for two red candles. If the second black candle closes lower than the previous two candles you have a signal to trade a put or lower option with an expiry of up to 15 minutes.
Precautions With The Double Red Strategy
- do not use it during news releases which makes it a good strategy to trade using synthetic indices from Deriv which are not affected by news releases
- not applicable in very volatile markets
- do not use it if there hasn't been a clear uptrend before the two red candles.
See more binary options strategies here.