In a previous article, I described a strategy of binary options trading on the Pivot points. Heatmap options — one simple intuitive table on which you can successfully open the options for purchase or sale. However, the Pivot point I would still have left as a secondary tool.
Heat map in options
Heat map — is the same display of the deviation of the current price from its maximum or minimum values. This option can be seen with the help of technical indicators, but they are difficult to analyze for those who are just starting to try their hand at binary options. In the same table, everything is clear.
As the Pivot point, the heat map in the options exists for different time frames and is updated online. You can find it on third-party resources. I was most satisfied with the 30-minute chart, but this option is individual. Data in a table is updated every 5 minutes. How to analyze the heat map:
- saturated red rectangle means that for the past 30 minutes the currency pair went down below the previous low;
- saturated green rectangle suggests that the current rate for the past 30 minutes has risen above previous high.
Other colors can be omitted, because they show weakness (inaccurate) signal.
As you can see, there are no saturated red rectangles there, but a lot of saturated green ones. Take, for example, the pair Euro/Swiss franc, its value has risen above previous highs, so may soon turn down. Open Put option with the expiry time of 15-20 minutes.
Additionally connect Pivot points to the strategy also configured for 30-minute timeframe. For example, if you see that on the heat map options, EUR/CHF need to open in fall, then open the table in the Pivot: the current price of the pair must be higher than the value of pairs in the column “Pivot Point”. That is, the current prices are too high and a reversal is expected, that confirms the data on a heat map.
- Important: logically, if there is saturated green rectangle in EUR/CHF pair, then the pair CHF /EUR should have a saturated red. We see only a pale shade of red. This means that the signal is weaker than the maximum possible. Ideally, you should wait for the symmetrically opposite color pairs that will mean a signal of maximum strength. The example is below.
The effectiveness of the strategy depends on how strong the signal will be confirmed by auxiliary indicators. For Forex, this strategy is practically not applicable because of losses on the spread