Timeless strategies are built to survive; to withstand adversity and long periods of stagnation where few opportunities exist. They don’t require specific events to occur within specific time periods in order to perform well. They don’t require you to be right all the time but keep you in the game so you can make a bet when an opportunity comes along.
The Old School Strategy is a legendary strategy, which brought millions of dollars to traders around the world. Its cornerstones for trading are the classic financial tools: Bollinger Bands and Stochastic indicators. Each tool is often used generate clear signals for purchasing of an option. When applied in combination, they outperform by doubling their force.
The Pocket Option terminal offers traders all necessary tools and indicators to set up old school strategy. In order to start trading, you just need to install indicators to your chart and adjust settings.
How to set up the chart and indicators?
The “Old school” strategy is recommended to be used on a timeframe from 3 to 5 minutes. The recommended timeframes produce false signals then, for example, the timeframes of turbo options (60 sec). At the same time, the old school strategy expects purchasing and selling contract frequently to earn a profit.
For the old school strategy you will need “Japanese Candles”. You will have the Bollinger channel to see the closing of the current price.
Bollinger Bands is used as a price channel. You should follow its extremes and disregard the median. Stochastic, in turn, acta as a confirmation of the signal from the Bollinger. In the Old School strategy it displays the exits from overbought and oversold zones.
When you use Stochastic on lower timeframes, it is necessary to set the appropriate parameters: period% K – 5, period% D – 3, deceleration – 3.
Bollinger Bands settings are as follows: period – 20, deviation – 2.
Congratulations: the chart is set up, the indicators are set, the parameters are adjusted! You can start trading binary options according to the Old School strategy.
How to trade contracts on Old School Strategy
As mentioned above, the main signal from Bollinger Bands will be a breakout of the price from channel border. The situation when the candle closes outside the indicator is considered a clear break.
Stochastic is applied to track the exit from the overbought zone (level 70) when buying a contract for a downtrend, and oversold (level 30) in the case of buying an option to uptrend.
The recommendations for the old school strategy are:
- CALL option when the candlestick closed below the lower border of the Bollinger Bands channel, and the next candlestick came back. At the same time, the fast Stochastic line crosses level 30 from the bottom up.
- PUT option when the candlestick closed above the upper border of the Bollinger Bands channel , and the next candlestick came back. At the same time, the fast Stochastic line crosses level 70 from top to bottom.
In both cases, the transaction takes place on the next candle after the one that returned inside the channel.
The expiration period should be from 9 to 12 minutes or 3-4 candles if you are trading on a 3-minute timeframe.
As you can see, the old school strategy fully lives up to its name. The principle of using these indicators is “as old as the world”. However, thanks to their cooperation, we filter out more than 70 % of false signals.
Fill the chart with a sufficient number of possible support and resistance levels and you return to discretionary trading because price is liable to reverse anywhere. In trading, you can choose either strategies built on timeless principles or ones designed to profit from specific scenarios. Timeless old-school strategies diversify, trade with the long-term trend, manage risk and require discipline.
