Full Review of the Nick B’s Price Action Strategy for Binary Options
Forex4Noobs is a website dedicated to providing relevant actionable information to new and beginning forex traders. Many of the strategies are easily adapted to binary options trading. Nick B’s Price Action Strategy is a simple, easy to use forex strategy that utilizes candlestick charts, support and resistance. I took a look at his strategy and found it attractive but lacking in details and substance.
Forex4Noobs is a site I recently discovered that focuses on teaching the basics of forex trading to newbies. This site is well set up and delivers high quality content on what forex is, how it works and how to trade. Nick B. is one of their contributors and he has produced a strategy based on price action that is simple to use and great for beginning traders, forex and binary options alike. The version I read is the updated version and includes extra information on how to read support/resistance and some other pertinent information. The funny thing about this strategy is that even though it is packed full of information useful to new traders there is very little information on just how the strategy works.
What Is Nick B’s Price Action Strategy
Nick B’s Price Action Strategy is a forex strategy based on price action analysis. The strategy is applicable to binary options as it seeks to predict movements from support or resistance lines. Nick claims to “keep it simple” because “simple is better”. I think he succeeded in that regard. The strategy is pretty simple. In order to keep it simple Nick does not use any indicators but prefers to keep his charts clear so that he can view the current price action. He uses support and resistance lines to mark entry points and takes signals based on Japanese Candlesticks. In the article Nick uses one hour charts but he later says that the strategy works in any time frame, with any currency pair, during any trading session provided the pair is free floating and liquid.
Here’s a Short Video on Price Action:
How It Works
Taking signals is super easy, just like he says. Simply wait for price action to reach a line of support or resistance. Once there, wait for a signal of reversal and then take the trade. For binary options traders this means buying a high or call position if prices is reversing from support or a put/low position if it is reversing from resistance. Nick says the trades are usually good for 30-50 pips so I think that one hour to end of day expiration is best for binary trades.
Why This Strategy Does Not Suck
This strategy does not suck because it is simple and easy for “noobs” to learn. It also comes with a few features that I think are inherent in any good strategy. First, it can be used in any time frame. This means that it can be used for long or short term trades and it can be used to confirm trades in multiple time frames. Second, it can be used with any currency pair and any traded asset. Third, it relies on more than one indicators even though it is a simple strategy. More than one indicator in more than one time frame equals good signals in my book.
Why This Strategy Sucks
This strategy sucks because it is way too simple. Telling a newbie to draw some support and resistance lines then wait for a candlestick reversal signal is a sure way to create frustration and losses for said newbie. There is no talk of where to draw your support and resistance lines or how to determine which ones are more important. There is also no talk of underlying trend or conditions or even what kind of “price action” you are looking for. Further, the strategy is only targeting reversals and makes no mention of break outs. It is also based on only one type of candle reversal. The supporting information provided only displays doji reversals and more specifically the hammer/shooting star type. If a newbie were to rely on this strategy he might have to wait a long time for a signal to appear.
My Last Words On Nick B’s Price Action Strategy
This is a really good piece introducing new traders to price action strategy but it is far from a working strategy on its own. The concepts and uses described are good and I recommend all traders master them but Nick B. has not provided us with an actionable strategy that I fell will provide the intended results. In the end we are trying to create winning trades, not frustration and that is what I think you will get trying to trade this way. However, if you take the principles of the strategy and apply them to a multiple time frame approach to technical analysis and trend determination you will likely find them to be useful.