Financial markets frequently experience reversals. Price reversals always occur at some point, and over time, there will be both upside and negative reversals. Reversals may cause you to take on more danger than you intended. It isn’t always obvious when a reversal or pullback is beginning. The price may have gone quite a distance by the time it becomes clear that it is a reversal, causing the trader to sustain a substantial loss or loss of profit.
The Reversal strategy’s basic tenet is to buy in the price’s direction. Because to the frequent signals and ability to conduct trades over shorter timescales, it is perfect for binary options. Bollinger Bands, MACD, and SMA are three potent indicators that form the foundation of the technique. All of these resources are available in the Pocket Option terminal.
How to set up the chart and indicators?
Activate a candlestick chart and trade highly volatile assets like USD or cryptocurrencies to use the reversal trading method.
In relation to the indicator settings:
Use the default settings for MACD, Bollinger Bands, and SMA. For Bollinger Bands, use period 22 and deviation 2.
A 15-minute time period is suggested by experts for the reversal method. You can use it to start and then modify it.
How to apply the Reversal trading strategy?
Then, you should watch for a significant change in the price; at that point, all candles will be the same color. Watch for 4-5 of these candles to appear. You naturally have two key inquiries: will the trend persist, and when can you purchase an option?
Following price rollbacks, trading takes place in spurts. Change the time window from 15 minutes to 5 minutes to see it on the chart. False signals are a common occurrence. An indicator or price action may show a reversal, but the price instantly resumes moving in the previous prevailing direction.
How to buy contracts with the Reversal trading strategy?
Prior to waiting for the impulse movement on the 15-minute timeframe, configure your trading terminal. Go to a lower period after there are multiple candles on the chart (5 minutes).
When the candles are trending upward and are over the Bollinger Bands, CALL. The price made an upward bounce off MA (10). There is movement in the MACD chart above zero;
- PUT when the candles are trending downward and below the Bollinger Bands. The price made a downward rebound off MA (10). The MACD chart is positioned below zero.
The expiration period is set equal to three bars on the lower timeframe.
An asset’s price changing trend is referred to as a reversal. A pullback is a reversal inside the trend but does not change it. Higher swing highs and lower swing lows indicate an upswing. The higher lows are produced by pullbacks. Consequently, until the price establishes a lower low in the time frame the trader is monitoring, the uptrend will not reverse. Always begin as potential pullbacks, reversals. Before it begins, it is unclear which one it will finally turn out to be. Prior to a reversal, traders strive to exit trend-aligned positions; alternatively, they exit after they notice the reverse is happening.
The Quotex provides traders with a full suite of tools for developing fruitful trading strategies.
FAQS
Q: What is the reversal trading strategy on Quotex?
A: The reversal trading strategy is a technique that involves identifying potential trend reversals and making trades based on these reversals.
Q: How can I use the reversal trading strategy on Quotex?
A: To use the reversal trading strategy on Quotex, traders can use technical analysis tools, such as charts and indicators, to identify potential trend reversals. They can then place trades based on these reversals.
Q: What are some tips for using the reversal trading strategy on Quotex?
A: Traders should use technical analysis tools, such as trendlines and indicators, to identify potential trend reversals. They should also have a clear trading plan in place and use risk management strategies, such as stop-loss orders, to minimize potential losses.
Q: What are the advantages of using the reversal trading strategy on Quotex?
A: The reversal trading strategy can provide traders with the ability to identify potential trend reversals and make profitable trades based on these reversals. It can also be used in combination with other trading strategies to further improve trading performance.
Q: Are there any risks associated with using the reversal trading strategy on Quotex?
A: Like all trading strategies, there are risks associated with using the reversal trading strategy on Quotex. Traders should be aware of potential market volatility, market conditions, and other factors that could impact their trades. It’s also important to use risk management strategies, such as stop-loss orders, to minimize potential losses.
