Using Cross Pairs to Double Your Profits


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Video Transcription:

Hello, traders. Welcome to the Pro Trading Course and the ninth module, Professional Binary Options Trading. In this lesson, I am going to teach you how to use cross pairs to double your profit when you’re trading BOs. Now, I am going to go right to the charts, and I am going to explain to you what I mean by using cross pairs. And let’s say that you are analyzing price action on the U.S. dollar/Canadian dollar.

In this case the base currency is the dollar, the Canadian dollar is not the base currency. So you are going to find a currency pair on which the Canadian dollar is the base currency. This way, these two currency pairs are going to be driven, or price action in these currency pairs, are going to be driven by the same pressure or by the same currency, and they are going to be inversely correlated.

Using Cross Pairs to Double your Profits in Binary Options

This means that when the U.S. dollar/Canadian dollar goes up, the Canadian dollar/Japanese yen goes down. Remember that this is a correlation that is not a 100%, but when momo comes in, the correlation is almost perfect. Because when we trade binary options we trade momo, and we only focus on momentum. Because we don’t have profit targets, we only have expirations, this is going to work most of the time. And when I say most of the time, it is going to work more than 80% of the time.

So basically, let’s start by analyzing price action on the U.S. dollar/Canadian dollar. And remember that this is a lesson on how to trade with a cross pair, not how to enter a trade. Well, basically what we have here is a zone of resistance, and price action is trading in an up move right here. Now let me zoom in on this chart, and I am going to show you what I mean. We have analyzed price action and we have determined that price is going to break to the down side.

Using Cross Pairs to Double your Profits in Binary Options1

But where are those breaks going to happen and when are we going to enter the trade? Well, that’s easy. We are going to wait for the break of the trend line, which has been tested twice now. You can see now that it started here, tested one, then rejected before we broke to the downside, while we also need to break with the previous slope.

Remember that a break, at a true break of a trend line needs to break a trend line and the previous low. So basically our entry is right here, okay? And this is our bias on the U.S. dollar/Canadian dollar. And this is a Canadian dollar in this move. So we are going to go ahead and wait for that breakout. When this breakout happens, and it happened on the 22nd at 3:30 pm, we are going to be looking at the Canadian dollar/Japanese yen.

Using Cross Pairs to Double your Profits in Binary Options2

So I am going to draw a vertical line at 3:30 on the 22nd. You can see that we have the huge bar on the U.S. dollar/Canadian dollar to the downside, and a huge bar on the Canadian dollar/Japanese yen to the upside. Now, we are not going to blindly buy a poor option here just because we’ve bought a call option on the U.S. dollar/Canadian dollar. We are going to look for a break.

And as you can see, this is an area that price assisted one, twice, three, four, five times before breaking to the upside. When these breaks happen or when this break happens, I am sorry, you are going to buy a call option on the Canadian dollar/Japanese yen. This means that the move that is driving the U.S. dollar/Canadian dollar down is going to drive the Canadian dollar/Japanese yen up, and you are going to double profit with the same move.

Using Cross Pairs to Double your Profits in Binary Options3

And as you can see, one or two, three, four candles later, this option expires in the morning around these levels. And one, two, three, four candles later, this option expires in the morning around those levels. And this is what binary option is all about. Finding momentum trades, profiting from them, and trying to profit from the same move on instruments that are heavily correlated with the one that we are trading. And you can use these with, for example, the GBP/USD and the Euro/GBP, on which the base currency on the Euro/GBP.

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