Identifying a winning trade vs losing trade using binary options and trend directionIdentifying a Winning Trade vs Losing TradeIdentifying a winning trade vs losing trade is something that takes time.  Traders need to learn to read price action and understand what is normal versus what is not.  This morning we had two binary options signals that showed exactly what this means.

Identifying a Winning Trade vs Losing Trade

There are two charts below — a USDJPY 60-minute chart and a USDJPY 15-minute chart.  Notice on the 60-minute chart, the red dot comes in right at the ATR (plus sign) and when you analyze price in the trend, a higher low has not been made.  In other words, price is in a downtrend and your expectation is that the low at 115.566 will be tested.  The trade is already in the money.  Does it help that there was volume divergence?  Yes.  Does it help that the RSI was overbought?  Yes.  But the main component that any trader can immediately use for identifying a winning trade, without any indicators, is the trend is still intact.

Identifying a Winning Trade vs Losing Trade

Now compare that with the 15-minute chart.  Price was making higher lows and higher highs.  However, when the blue dot comes in at the ATR — the uptrend move is in trouble because it has failed not once but twice to test the previous high at 116.785.  Without any indicators on the chart, this would be clearly evident.  By definition, an uptrend is higher highs and higher lows.  There are two lower highs on the chart at entry.  DANGER trend is in trouble.  Price has flipped the ATR and may go back and test the new ATR (red plus sign now) — but with an hour and forty-five minutes till expiration, the trade will probably end up losing money.

This is a very simple way for identifying a Winning trade versus a losing trade or filtering the binary options signals.  I also recommend watching the video on using bar by bar analysis when trading binary options.  This is just one of the things I harp on during the 2-Day Training Seminar — the price chart is trying to give you clues but are you listening?