When it comes to trading strategies for broker options, I have to say, they vary quite a bit. Some let you cash out in just seconds, while others keep you engaged for a few hours. If you're aiming for those quick wins, trading broker options on shorter timeframes can really pay off, especially with the Envelope strategy. And guess what? It's based on the Envelopes indicator.
Just a quick tip, the Envelopes indicator is essentially a simplified version of Bollinger Bands—it combines three Moving Averages (MAs). Two of them are set above and below the price, creating a channel around it. This channel indicates the usual trading range, while the two outer MAs hint at overbought or oversold levels. The middle Moving Average helps you keep track of the trend.
But I've got to remind you: trading turbo options can be risky, so making wise decisions is crucial. Learn to read the market's ups and downs—it'll save you in the long run!
Overall, the strategy you go for will depend on your trading style and account size. I suggest targeting a solid 70% profitability on those contracts.
What do I need to trade the Envelope strategy?
The Envelopes indicator is pretty easy to use. You can use it alone or pair it with oscillators. It works smoothly with any trading instrument and timeframe, but really, sticking with the standard settings simplifies things.
Now, here's the deal: this Envelope indicator is super reactive to price changes. It doesn't lag and consistently provides reliable signals. For an extra edge, consider pairing it with another tool, like an SMA, to filter out those annoying false signals.
I recommend sticking to the shorter timeframes (3 minutes) with expirations set for at least 15 minutes.
This is what I typically use:
- Envelopes set to 20; 0.1.
- Moving Average with a period of 6;
- Japanese candlestick chart on the M3 timeframe;
- High-volatility currency pairs.
PocketOption broker has everything I need for trading. Set up your chart and jump into direct trading. Just click it, and the settings menu will pop up, allowing you to customize the indicator's period, deviation, the source (you can choose which price to use for calculations—open, close, high, low, you name it), and the type. The upper and lower levels are set so the price stays around the edges about 90% of the time, meaning you can adjust the deviation based on price volatility. More volatility? Just increase the deviation.
How do I trade options with the Envelope strategy?
When it comes down to it, the key signal for buying a contract using the Envelope strategy is when the price channel's boundaries get broken and the price bounces back.
I also rely on that 6-period Moving Average because it's very sensitive to market changes. If the trend line it creates gets broken, it's usually a sign to go for a buy.
So, as a rule of thumb, I'll go for a CALL contract when the chart breaks below the lower Envelope boundary and the reversal candle pushes past the SMA in a bottom-up move.
On the flip side, I'll grab a PUT option when the chart breaks through the upper boundary of the Envelope, and the opposing candlestick breaches the SMA from top to bottom.
And remember, aim for an expiration time of at least 15 minutes.
The Envelopes indicator can be a solid alternative to classic Moving Averages, giving me a handy technical analysis tool all on its own. Plus, it pairs well with other indicators too. Make sure to give it a try to see how it fits into your trading strategy.
