Double Red Strategy

This strategy is risky. It is popular with experienced traders, but beginners should avoid it.

The Double Red Strategy is based on scalping and short term binary options. Both these techniques expose the trader to a high degree of risk. It is best only used when the markets are fairly flat or ranging.

Overview about Double Red Strategy

Scalping and short term options both use small quick moves in the markets to make lots of small profits. The combination of these techniques makes the strategy too risky for beginners.

High/Low or Rise/Fall options with very short trade times are used — usually less that 15 minutes. Because of the quick trade times and the lack of risk management this strategy is often thought to be pure gambling.

How Double Red Strategy Works

This is a short term strategy that looks at price action combined with support or resistance levels in the 5 minute chart. The trader looks for the price to test a resistance or support level.

In a test of resistance, two bearish candles will form. When the third candle closes lower than the first two, this is the signal to buy Puts.

The reverse scenario applies when a level of support is being tested and two red candles form, hence the name Double Red Strategy.

To set yourself up for this strategy, go to the long term charts, Daily or Weekly, and identify support or resistance levels. Once you have done this, go to the 5 minute chart and see if the levels you identified on the long term charts are reflected there. If not, you will have to try and identify short term resistance or support levels. After that it’s a waiting game. As soon as the double candles form, be ready to place your trade.

Double Red Strategy: The Good Points

The Double Red strategy is based on the 5 minute chart, so it gives the trader the chance to profit from the smaller movement in the market and very short term trades. It also a very simple strategy with an expiry of 5 to 15 minutes. However, you should always be ready to close your trade manually if the market moves against you.

Double Red Strategy: the Not-so-good Points

The Double Red strategy is extremely dangerous when news events are coming up and are only really at their safest during quiet periods on the markets. At the first sign of volatility or uncertainty, Double Red should be a no-go zone. The other area of danger in an already dangerous strategy is the mis-identification of the candles that signal the set up. You have to be absolutely sure that you identify the candles correctly if you don’t want to lose your money.

Summary

The Double Red strategy is very high risk and very unpredictable. New traders should not consider using it. It is dangerous because it does not look at any other indicators and because the market is prone to unexpected moves the risk is very high and unpredictable. This strategy should only be used when the markets are quiet or very obviously ranging and it should never be used around a news event.