For trading binary options, the Double Red strategy can be a simple strategy to help assess the market movements of the financial assets. In this strategy, a trader is introduced to a fixed setup in which there are two red bars side by side. The second bar closes below the first one and its wick. In most cases when it happens, the third candle can give you a better price, as a price pull back is generally reflected on it. But once you get the double red, you need to execute the trade immediately, if you don’t want to miss the better price for your trade.
The Double Red Strategy is based on the market behavior of the assets and it helps the traders in understanding the market movements. Using this strategy, a trader can find an easy way to make money in the highly risky segment of binary trading. The idea behind the strategy is to watch the stocks of a company over a period of five minutes and observe the specific double red pattern.
The double red pattern signifies the two consecutive asset losing trade sessions of five minutes each. The essential condition for this strategy however requires that the close of the first candle must be lower than the close of the last red candle. This arrangement of the close of both the candles is the ideal pattern that one needs to observe.
Once such a pattern is observed, you should not delay to execute the trade, as the pattern can guarantee a better price over a very short period of time, usually ranging between 5 and 15 minutes. As soon as the third candle reaches a little above into the second candle, the expiry period will get opened. So, you should not delay more than 5 minutes in general.
Basically, the strategy gives you a fall in prices of stock, and if you see a price fall of a particular asset for about 10 minutes or so, you should not waste time and can predict that the stock will fall further till the expiry time.
Pros of the strategy
- It is a simple strategy and a trader can easily understand how to use it.
- The strategy can be used to multiply your profits up to 300%.
- Gives results in very less time, usually ranging between 5 and 15 minutes.
Cons of the strategy
- May not give results in several cases such as a company is launching a product
- One needs to act very fast to take advantage of the strategy
- The double red strategy can be very useful who can watch the market conditions with lots of patience and can act very swiftly once the conditions of the strategy are fulfilled.