There are a couple of things that can hasten your way to success. You need, among others, a trading plan, strong emotional control and a good strategy. Moreover, there are plenty of indicators that are designed to help you in search of the best entry points.
The indicators will reveal trading volume changes, trend reversals or whether the trend is going to continue in the same direction. This information is very helpful. However, the calculations of the indicators are based on the past price. This most often causes a delay in providing signals. Some traders may not want to waste precious seconds. So the question is, “Are there any other techniques in which you do not need to depend on the indicators?”
The answer is yes, there are. And today I will tell you about a trading method that only requires that you observe the candlesticks attentively.
A trading method based on the colours of the candles
First, log into your Binomo account and choose the financial instrument. I will use the EURUSD currency pair as an example. Set the period of the candles for 5 minutes. You will open the transactions that last 5 minutes. So remember to check the time carefully when you decide on the expiration time for your option. Your option should cover a full 5-minute candle.
The method based on the colours of the candles works only when true candles are taken into account. True candles are the ones that have a full body. Special candles are, for instance, pin bars or Doji candles. You should avoid them in this method of trading.
As soon as you recognise the true candle you can open a position together with the opening of the following candle.
Money management strategy
With the colour based method, it could be a good idea to implement the Martingale money management strategy. The Martingale system is quite challenging as according to its rules you ought to increase an investment amount every time you open a new position after your last trade turned out to be a loss. The Martingale sequence ends when you end up with profitable trade.
Let’s take a look at the table below to see how the Martingale system looks like with 6 consecutive transactions.
Using the colour candle strategy with the Martingale system on Binomo
At the beginning of the session, there were no true candles visible. The market was ranging. After the first true candle has appeared, I entered the market. The true candle was green (1), so I opened a buy position for 5 minutes, which was the duration of one candle at the same time. Unfortunately, my transaction has lost. That is why I entered another buy position, which has lost too. But the third time my long trade has won. With the initial trade amount of $1, a payout rate of 84% and a series of 3 trades I was able to make $3.56.
Then a special candle (pin bar) appeared so I was waiting for a true candle to open the next transaction. Soon another bullish candle (2) has developed so I opened a long 5-minute position. I won at the fourth entry which is $9.68 according to our Martingale table.
Next, there was a bearish candle (3) which led me to open a successful sell trade with just one transaction (+$0.84).
As a result of the appearance of the green candle (4), I entered a buy transaction. It was not profitable at the first entry, but at the second (+$1.52).
Another green candle (5) has brought me a profit at the very next candle (+$0.84).
Another example shows my entries in another session. The beginning was similar to the first one that is the market was ranging and the volatility was low. The true candle should show us a clear directional price movement. After the first true bearish candle (1) I entered the trade and won at once (+$1).
The next candle possible to use in the colour bases trading was also red (2). This time I had to open 4 consecutive transactions to win (+$9.68).
The next red candle (3) prompted me to enter a sell trade. It was not lucky entry, though. Nor was the next one. Only third trade was successful (+$3.56).
Another red candle (4) appeared so I opened another sell position. I won at the second entry (+$1.52).
Final words about the colour based method of trading
A trading method that relies only on the colours of the candles is not too difficult to apply. The main advantage is that you do not need any additional indicators. You just have to watch the candles that develop on the chart.
Remember to enter the trade only when the true candle appears. Trading with special candles is not the best idea here. It may simply lead to unnecessary loss of money.
What you need to focus on are the full-bodied candles that appear on the price chart. Hold the position open as long as the period of one candle.
Apply the Martingale system together with the colour based trading strategy. It may seem risky as it requires you to increase the amount you invest in the consecutive trade, but it allows you to recover incurred losses. As you saw in my exemplary trades, you do not always win. Sometimes you will have to enter 3 or 4 times to make a profit. You would not cover for it if you put the same amount of money each time. But with the Martingale system, you ensure that the winning transaction will cover for what you lost. Of course, keep in mind that it is also possible to get involved in losing streak lasting 6 or even more transactions. You need to be prepared for that and not to trade with money you cannot afford to lose.
You may be interested in reading the article about using other money management strategies on the Binomo platform.
I encourage you to practice applying the colour based strategy on the Binomo demo account first. This is a wonderful place where you can train what you have learned. Share your thoughts on this technique with us in the comments section which you will find further down the site.
Wish you success!
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