Today, Binowiki would like to send you an effective way to trade Binomo with Retest of Breakout Levels that have been used by myself for the past few months. The results obtained from this strategy are very positive. Today, I would like to share with you my favorite winning formula.
- 1 How to trade Binomo effectively with Retest and Levels (Support and Resistance)
- 2 What is a Retest?
- 3 Special candlestick patterns appear when the price retests
- 4 Trading formula with a retest of the breakout of levels
- 5 How to manage capital with Retest strategy
- 6 Review a few entry points at Binomo
- 7 Summary
How to trade Binomo effectively with Retest and Levels (Support and Resistance)
The basis of the trading strategy is based on a habit of price on its way. Remember, what happened in the past will repeat in the future.
The price behavior I want to mention here is the reversing reaction of the price after it makes a breakout of the Support or Resistance level. We simply called it a “Retest”. Let’s go into details.
What is a Retest?
Resistance and Support are the levels where the price will typically turn around when it touches them. However, when accumulated enough, the price with a strong momentum will break the level (a.k.a Breakout) and create a new Trend. Depending on the level that the price breaks, we have Uptrend or Downtrend.
After breaking out of the resistance and creates a Trend, the old Resistance level becomes a new Support and vice versa. As a habit, the price will reverse to test the level it has just broken and then bounced back to follow the new trend.
Special candlestick patterns appear when the price retests
When the price retests after a breakout, the probability that it will be bounced back is very high, especially with the appearance of special candlestick patterns like Doji or Pin Bar. These two candlesticks are a very reliable signal when they appear in the special price zone. This is when you need to focus on the observation so you can open the order.
If you do not know these 2 candle patterns, you can review the following articles.
Trading formula with a retest of the breakout of levels
To sum up, our strategy will be to enter a trade when the price does a Retest and creates a Doji or Pin Bar candlestick.
Condition: 5-minute Japanese candlestick chart. Identify the Resistance and Support zones. Enter trades with the expiration time is 10 minutes or more.
• Enter an Up trade when the price breaks the Resistance level to form an Uptrend, then it retests the new Support level with a Pin Bar or Doji candlestick.
• Enter a Down trade when the price breaks the Support level to form a Downtrend, then it retests the new Resistance level with a Pin Bar or Doji candlestick.
How to manage capital with Retest strategy
A complete formula is indispensable for suitable capital management. With this strategy, I use the Classic capital management method. It means I use the same amount that is about 10% of the account for each order. Trade at most 4 orders per day. No stuffing, increase money. Only trade when all those signal appears.
With the ratio of 3 wins 1 lose (75% win). The profit is $34 (42% capital). This is a safe and profitable trading strategy.
The price retests a lot but you can rarely see the appearance of a Doji or Pin Bar candlestick after a breakout of levels. That’s why when two signals appear together, the trade almost certainly wins.
Review a few entry points at Binomo
Order 1: Price went sideways for a while and then it broke the Resistance to go up and retested this level (yellow line) with a long Doji candlestick. Open an Up trade with the 15-minute expiration time.
Order 2: The price went down and broke the Support zone then returned to retest it with a Doji candlestick. Open a Down trade that would end after 20 minutes.
It must be said that this effective Binomo strategy is the combination of both experience and well study of price behavior for a long time. Let’s test it right now on your Demo account. In the following article, I will review how to use Retest strategy on the Real account. Stay tuned. Goodbye and see you again.