Using Japanese candlesticks – A Binary Options Trading Strategy

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This strategy is meant for a newbie to binary options trading who wants to quickly begin to make money online with binary options. Using Japanese candlesticks is a great way to trade binary options as traders find this strategy easy to grasp and implement.

Virtually all charts utilize Japanese candles nowadays. It has significant predictive value and traders in the Western world and across the globe have been using it for a long time.

The candlestick formations that I am about to list here are some of the more popular ones. Traders can use the following binary options strategy to increase their earnings. Some formations are made up of two or three candles and this can make it a bit more complex, but none the less, it can be very helpful to understand these basic Japanese candlesticks.

The following is an example of a bearish candle as astute traders would have identified with ease. Nothing like a graphic to illustrate something!


Types of Japanese candlesticks

 

Pin Bar

Master this and you’ll take a giant step forward in your ability to successfully make money from home. The pin bar above tells a story that starts with the Bulls being strong pushing prices higher, but then it ended with the Bears taking over and pushing prices lower than the initial level and closing it lower with a diminutive lower wick. The Bears are now in charge and the prices are expected to go even lower.

A Bullish Pin is the total opposite of this. However, in reality, it is difficult to find a perfect Pin bar.

 

Doji Candle
The Doji Candle is simply this: the opening price and closing price are almost the same. Typically, an appearance of a Doji signifies that market participants are rather indecisive. This is a great opportunity for options trading of course and it is important to remember that regardless of the price movements, a Doji means that the price will go back to its opening level.

Marubozu candle
A Marubozu candlestick is fairly easy to identify but a rarity. There are no wicks here and only long bodies that either represent strong buying or selling pressure. Marubozu candles are great for traders to make money as they serve as confirmations that a breakout is real whether it is bearish or bullish.

Key takeaway points from options trading via Japanese candlestick signals:

  1. No one strategy will produce perfect results
  2. Equity prices are driven by the actions of individuals and these individuals are in turn driven by their emotions.
  3. Japanese candlesticks come in handy to get a general sense of the market sentiment. This can be very beneficial for binary option traders. However, investors must remember that this is not the Holy Grail and they are not 100% accurate.

The best approach with these strategies is to use multiple tools to get a good idea about the trajectory of a security. I know of binary options traders who use as many as 10 tools. Stay tuned for more binary trading strategies!

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