4-Hour AUD/USD Trade – Earned $200
Yet another trade was taken on the AUDUSD currency asset on the morning of February 10, 2014. This trade was performed with a technical trading strategy involving three indicators:
- 13 EMA
- 200 EMA
- MACD histogram
This strategy is presently encoded into a binary options robot which is presently being tested and optimized for use on the SpotOption turnkey brokers.
Trade Information
- Asset: AUD/USD
- Binary Options Trade Choice: FALL (Rise/Fall contract)
- Expiry Time: 4 hours
- Entry price: 0.8933
- Investment: $103.32
- Payout: $200
The consideration for this trade was a technical trade strategy involving the indicators stated above. The trade analysis was performed using the MetaTrader4 platform and the signals generated copied into the binary options trading account.
The trade analysis showed an expectation that the AUD/USD would retreat from the spot price by the time the trade candle expired in 4 hours. The chart used for trade analysis was the 4hour chart, which indicates that the candle length would be 4 hours, and this is what was chosen as the expiry time. The FALL contract stated that the AUD/USD would be strictly below the spot price of 0.8933 at the chosen expiry time of 11am GMT). The trade was setup with an intended payout of $200, and the trade was charged at $103.32, which was even less than the cost of the trade had a CALL option been traded.
Trade Outcome
The trade ended successfully, as the asset ended at a price of 0.8921. Settlement of the payout of $200 was performed into my trade account: not a bad way to start off the new week. The snapshot is provided below:
How often do traders get a return of 93.57% on a trade? Not that often, but this is something that this strategy can achieve.
The Trade Explained
The key to the trade entry was the bounce of the candlestick off the red moving average line. The signal was confirmed using the Parabolic SAR indicator, and the trade was executed. The key is to catch the trade at the bounce. If you are able to do this, then the trade has a very high chance of success. The further away the entry point is from the red moving average, the less likely the trade is to succeed.
Having opted to trade the FALL contract due to the trade signal generated on the MT4 platform, the trade entry was made at the commencement of the trade candle at 7 am GMT. Look carefully at the chart below:
We see that the price action went below the red moving average, and the candle before our entry candle was a Doji candle, which actually pulled back up to the red moving average. The point marked as the entry point is where the trade was executed.
Lessons from the Trade
So what lessons can we learn from the trade?
- As has been indicated in previous articles, the entries and exits of binary options trades must be well timed and executed. This is because even a single pip can make all the difference between losing $103, and getting a payout of $200.
- The expiry times should be derived from the time frame used for trade analysis. In this example, the 4 hour chart was used for trade analysis and the decision was then made to use 4 hours as the expiration time.
- Interactive charts that come along with indicators and tools for chart studies are a necessity as they take the guesswork out of trading.
- The use of binary options robots is now becoming popular. It is possible to craft a trade strategy on the MT4 platform and create a binary options robot which is capable of transmitting signals from the MT4 platform to the trading platform of your binary options platform.
Conclusion
Even though this trade was performed using the Binary.com platform, there is also the opportunity to use a platform like that of Cedar Finance to execute the trade. All that is needed is to select the appropriate trade contract (in this case, PUT from Call/Put). Then scroll down to the expiry time, and select the time which corresponds to the expiration time you have chosen for your trade, then set your investment amount and execute the trade.
As explained earlier, the strategy used in taking this trade has been coded into a binary options robot. When it is commercially available, you will be duly informed. But for the moment, we will use this strategy to trade several different assets over the course of the week to demonstrate its potency.
