This trading system is well suited to new traders thanks to its simplicity and the steady number of profitable setups it provides.
No additional indicators need to be downloaded, and no complex calculations are required. All you need is an understanding of support and resistance levels and the ability to draw them on a chart.
How the Strategy Works
A careful study of price behaviour across popular trading assets leads to a consistent observation: most of the time, price moves within a relatively narrow range without significant fluctuations — rising and falling inside a defined channel and rarely breaking its boundaries.
A clearly defined, sustained trend is the exception rather than the rule. This strategy works best during periods of relative market calm, when no major economic releases are expected.
Support and resistance levels can be identified manually. Price appears to "bounce" off invisible lines several times, reversing direction at each touch. By connecting the points closest to the local highs and lows of a given chart segment, we draw the upper and lower boundaries of the range.
Trading Guidelines:
- Timeframe: 15 minutes to 1 hour.
- Buy a Put option when price has touched the resistance level three times. Wait for the third signal candle to close and the next candle to open. It is important that this is a touch of the level, not a breakout.
- Buy a Call option under the opposite conditions: wait for the third touch of the support level and the formation of a new candle.
- Expiration time: 3 candles. On a 15-minute chart, this equals 45 minutes, and so on.
If the candle following the signal confirms a breakout — meaning price has left the channel and is moving strongly up or down — the move is likely to continue. In this case, buy the corresponding option with a longer expiration, such as 4 candles.
The ideal conditions for this intraday channel strategy are the morning, evening, or night sessions, when market volatility is low. The key requirement is that price remains within the range defined by the support and resistance levels. During consolidation, the probability of a breakout is low, and most options will close in profit — provided the trading guidelines above are followed consistently.
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