The Zombie Hour Strategy

tradingOne of the great things about the internet is the ability for traders to search out interesting and profitable binary options trading strategies. One interesting strategy which caught our attention recently is “Zombie Hour” range trading strategy. For the uninformed, ranging is taken to mean a situation where the asset price is fluctuating or oscillating between two points during a certain period.

The term “Zombie hours” is used to describe the period when the exchanges are closed for trading for the business day and the markets are still open. During this period, there are very little activities and volatility in the market. With most of the major players such as the market makers being out of the market for the trading day, only pre-programmed algorithms are used to breathe some life into the price movements.

Due to the lack of volatility during these periods, most retail traders do not trade also. Even scalpers who normally thrive with small price movements will find it difficult to make any money. However, as we know with binaries, closing in the money is not dependent on the quantum of price movements but rather on the direction of price movements. Because of this particular characteristic of binaries, we can actually still make some rewarding trades during the “zombie hours”. What’s important to note is that this trading strategy only works during the “zombie hours’ which is interval between 22.00 GMT to midnight after the major exchanges are closed for the business day (before the Asian markets open).

Ideal Trading Conditions

The key to a successful trade during the zombie hours is to look for a range of 15 minutes candlesticks which are somewhat tightly stacked to each other. The ideal candlesticks are those with fairly long wicks extruding at the top and bottom which are used to confirm the boundaries of the range.

Making the Trade

To make the trade, you have wait until the asset’s price have reached close to the end of its oscillating run and quickly make a trade in the opposite direction. To improve the chances of a successful trade, it is best that you let prices run to its extreme and then let it settle back to its normal routine in the opposite direction. The type of trade made (call or put option) will depend on the actual direction of the price run.

Things to Be Aware Of

Although the strategy is fairly simple to understand and implement, traders should note that ranging markets are liable to breakout at anytime. Although the chances of this happening at a trader first run at this strategy is rare, the risk is still there.

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