Many strategies are based on the formations that these candlesticks indicate. Every historical close, open, high, and low will have an effect on future trades, and this is the primary skill that traders need in technical analysis. The Double Red strategy is a binary options strategy that uses such skills of a binary options trader.

Now that may sound easy at first, but remember that we need to look at the candles in detail to make the success rate of this strategy high. Otherwise this strategy could be very risky especially for new traders. The Double Red binary options trading strategy aims to perform on a short-term bearish price action movement of an underlying asset.

The trade period for this strategy is usually executed in a matter of minutes. This type of strategy is also known as option scalping. Because of the very short-term nature of the trade it carries great amounts risk without proper analysis. But when performed carefully by properly observing the right configuration of candles, it can be very rewarding.

Option scalping may sound sketchy to some new binary options traders. However, we should not take the negative connotation of the term scalping. Scalping in trading can be classified in two terms according to their legitimacy. Legitimate scalping is a method of arbitrage of small price gaps created by the bid-ask spread.

The second sense of scalping is a fraudulent form of market manipulation, kind of like your ticket scalper at the stadium.

The binary options strategy is based on the first. But in a way, the two definitions may pose some similarities when it comes to trading. Alternatively, the Double Red strategy can be used to trade the Rises or Highs of a binary options trade, making them Double Greens. The Double Red strategy is performed with a very short expiry that should not exceed 15 minutes.

For experienced binary options traders, it is easy to spot and execute as it is easy to understand. However, it is important to reiterate the high risks involved with using such a short term strategy, especially for new users. A double red indicator is composed of two successive red candles where the second red candle closes lower that the bottom shadow of the first candle. This is deemed as the succeeding trade having a price lower that what the previous trade had as its lowest, denoting a downward trend in the immediate future.

The following is a list of how to properly identify double reds. The configuration above is NOT a Double Red indicator. The shadow of the first candle runs below the close of the second candle. A double red indicator should have the shadow of the first candle above the close of the second candle. Although a put option in this instance may close in the money, this is not the usual case and traders could lose in the long run when placing options based on this candle configuration.

This is a double red indicator:. As we can see, the close of the second candle is lower than the bottom shadow of the first candle. This is the proper configuration of a double red candle. If you see this, you can place a put option at for some amount at any expiry of about 5—15 minutes.

Here are other double red configurations:. This is also a double red indicator because the close of the second candle is lower than the bottom shadow of the first candle. But, this time the indicator results in a losing trade. The trick is to stick it out and put in trades for double reds consistently.

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Before jumping into this page, an important disclosure.

The Double Red Strategy is a popular strategy for binary options traders. This strategy is based on options scalping techniques and is not suited to beginners. Options scalping is very risky, the short term binary options used to capture those moves are also very risky. The Double Red Strategy is best used when the market is calm or range bound. The double red strategy is a binary options trading strategy that aims to catch a short-term bearish movement on an asset; usually in a matter of minutes.

This type of strategy is also know as option scalping. Because of the very short-term nature of the trade it carries enough risk to be considered pure gambling.

The double red strategy is a short term reversal system based on price action and resistance. The trade is set up on the 5 min charts and is signaled when two bearish candles form following a test of resistance. The signals generated with this system are good for minutes and no longer.

How it works is like this. You are following asset XYZ and wish to make a day trade. First identify support and resistance levels on the weekly and daily charts, then narrow your focus to five minute charts.

On the five minute charts you will be playing off of your long term resistance lines, if none are close by then you may have to look for potential short term resistance levels.

Then, when price hits your resistance level wait for two black candles. If the second black candle closes lower than the previous two candles you have a signal to buy puts. I usually like to run away from the ultra-short term expiry trades in the binary options market because of the extreme uncertainty of those trades. However this is one strategy that can be used successfully to trade these ultra-short expiry binary options.

Personally, I like this strategy because it is quick and pretty straightforward — to make a decision you simply have to identify two consecutive candles in red. The simplicity of the Double Red is what catches the eye.

You are watching your resistance lines and there are two sequential bearish candles on your chart. The close of the first candle in the pattern is lower than that of the previous bull candle. The second candle opens above the low of the first candle and closes below it, and there goes your double red. Once you get the formation, head over to your binary options platform and execute a short expiry trade.

The chart used in identifying the pattern is a 5-minute chart, so your expiry should be opened when the third candle has retraced slightly upwards into the body of Candle 2. If you try trading the Double Red during a news release, you should prepare for a day of redness and sadness. The unpredictability of the news will take the trade out and you will lose your money. If you cannot identify candlesticks properly, then this trade is also not for you.

Another reason why it sucks is expiry, you have to be very careful of how much time you give the trade. If your expiry is too short or too long, prepare to see double red on your account.

Also, you have to be very quick making a trade. If you are the nervous type who cannot execute trades quickly and smartly before prices change, the trade will show you a double red card.

The Double Red Strategy is a risky and unpredictable trade not suited to beginners. The nature of short term trading like this is too unpredictable. Experienced traders will also have a hard time with this because it does not take into consideration trend, resistance or any other indicators. Unstable price actions are the norm as the price will lurch around in an unpredictable manner.

Under such conditions you cannot make a decision and execute a trade at the same time. You are better served trading this strategy when there is no major news event taking place.

In addition, try to do your analysis and take the trade when the trading time zones overlap. This is what guarantees the required volatility that is just enough to keep you profitable, but not too unpredictable as to destabilize the trade.

Finally, practice the Double Red on the demo platform of a Binary Options broker. That is the only way you will master the trade. Popular Reviews 24Option IQ Option Nadex HighLow Ayrex eToro BDSwiss Binary. com IG OptionRobot Bitcoin Code Tesler App Binary Robot Crypto Robot GreenFields Capital The Bitcoin Trader BinBot Pro The Crypto Genius.

Full Review of the Double Red Strategy for Binary Options The Double Red Strategy is a popular strategy for binary options traders. Double Red Introduction The double red strategy is a binary options trading strategy that aims to catch a short-term bearish movement on an asset; usually in a matter of minutes. What Is The Double Red Strategy The double red strategy is a short term reversal system based on price action and resistance.

Why the Double Red Does Not Suck: My Opinion I usually like to run away from the ultra-short term expiry trades in the binary options market because of the extreme uncertainty of those trades. Why The Double Red Strategy Sucks If you try trading the Double Red during a news release, you should prepare for a day of redness and sadness. Conclusion The Double Red Strategy is a risky and unpredictable trade not suited to beginners.

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After this, focus on the resistance activities by identifying them from the five minute chart. Double red strategy is pretty simple to understand and easy to spot. The second one close below the first. That is the only way you will master the trade. Apart from the comprehensive insights, there is double red strategy binary options the Thinkorswim learning centre, which gives clients access to tutorials on how to make the best out of trading. This broker serves clients from over countries and has over 32,, registered users on their platform.

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