Full Review of the Mother Candle Strategy for Binary Options
George Clinton and Bootsy Collins had the Mother-Ship Connection, we have the Mother Candle Strategy. This is a well known and classic trading technique with a brand new name. Find out what it is and how you can use it to land some binary options profits.
Bootsy Collins says the mother candle has landed baby, yeah. Seriously though, this is a new strategy I discovered on the Blue Point Trading System website. It is a candlestick strategy for forex traders and one that can be used by others, including us binary options traders. What is it? A twist on the inside bar, otherwise known to candle chartist as a an attack pattern. The strategy relies on simple candlestick analysis and tries to catch price breaks preceded by long candle candle movements. The strategy is intended to be used in multiple time frames but is recommended for short term, intra-day trading. Before I get into the strategy let me tell you a little about Blue Point Trading. This is a forex training website that allows traders to earn from their trading during the learning process provided they meet the minimum requirements. Whether or not Blue Point is legit is the basis for another article though, today we are here talking about a strategy they promote on their website.
What Is The Mother Candle Trading Strategy
This is a forex strategy based entirely on price action. It uses candlestick analysis to predict and signal entries in trending assets. The strategy is intended for 10 and 60 minute charts but can be applied to any time frame although shorter than 10 minutes is not recommended. This is due to high levels of “noise” in the market and an increased chance of false signals. The system is based on a candle/price pattern that is well known under a different name, the inside bar. The pattern occurs when prices are trending and make a long candle (relative to recent price action) and then make another smaller candle whose body is completely inside that of the other. The first candle is the “mother”, the second is the “child”. This pattern is also known by candle chartists by a few other names depending on the size, shape and location of the smaller candle including attack pattern and harami. The signal is given on the first close outside of the mother candle’s body and trades should be taken in the direction of the close. In order to weed out false signals and potentially bad trades Blue Point recommends that you use a 20 bar moving average and support/resistance.
Why This Strategy Might Suck
This strategy might suck because it is a fairly advanced signal that can take years to master. Any signal taken strictly off of a candlestick pattern has a high chance of failure if other factors are not taken into consideration. Trend, support, resistance and market sentiment can all have an impact on this strategy. The authors themselves tell you to use a moving average and support/resistance to help filter out bad trades. The bad thing is that they don’t spend much time talking about how to do that. The strategy is sound, it’s just one that will take some additional analysis to use successfully.
Why This Strategy Doesn’t Suck
This strategy doesn’t suck because it is an already accepted and useful trading strategy, it just has a different name. This pattern is called an inside bar by the old-school HLC price chartists and a Harami by candlestick enthusiasts. It is a signal that often precedes a reversal in prices and can happen at the top or bottom of a primary movement and/or at the top or bottom of a secondary correction of near, short or long term importance. What that means is that it could occur at any potential reversal point, that is why it is so powerful. Anytime you can identify a possible harami a reversal could be around the next corner.
My Last Words On The Mother Candle Trading Strategy
This is a good strategy but it definitely comes with a caveat. First, it’s nothing new. Traders have been trading on this technique for decades and even centuries in some cases. The signal itself is a very basic candle stick/price action signal. Implementing it is a practice that could take years if not longer to perfect. You will definitely need to use trend lines, support/resistance or Fibonacci, and also a moving average, maybe two. You can use this signal but I recommend adding it as an analysis tool for your current strategy, not as a signal to build a strategy on.