Strategies of binary options trading differ from the strategies for the Forex market. Below we will present a strategy, which is based on the application of 4 indicator at the same time. At first glance, the simultaneous use of classic and unique indicators may seem impractical, however I think this is one of the best combinations that after a deep understanding can bring an optimum revenue.
Strategy of 4 indicators
Unlike my favorite Metatrader4 platform, which I like for the ease of programming of indicators (which is widely used in Forex), for binary options trading I use Grosl platform. It is quite clear and has an optimal functionality.
The basic conditions of the strategy:
- Strategy of 4 indicators can be applied to any currency pair.
- Expiration time: 5 minutes — 2 hours. For beginners it is recommended to select the longest time period, as short-term trading requires the ability to quickly identify false signals.
- The timeframe for tracking signals: 5 minutes — 24 hours. More about the signals of Grosl trading platform you can find here.
- The indicators that are used and their parameters:
- stochastic oscillator (window size 14, %K = 2% D = 5). One of the most popular indicators, showing the relation of current price quotations for a fixed price range in the past, defined in the indicator settings;
- ATR (period 14). Average true range shows the level of market volatility and investor sentiment. If the indicator moves at the boundaries of the minimum area, it says lowering the mood of the traders. Wide indicator values represent active trading, large fluctuations in prices, high market volatility;
- MA Cross (the first pair 10 and 21, the second 150 and 200). The indicator is a pair of moving averages that reflect the average value of price over a certain period;
- Aroon (leave default settings). Indicator that shows trend direction and its force. On its basis, it is possible to predict pivot points.
Strategy of 4 indicators is rather complicated due to the fact that a trader must use correct interpretation of the entry signals into the market. I offer 3 main signals, which by their power are a good options for opening of positions:
- a good signal is the entrance of the indicator MA Cross 150-200. The Aroon indicator must have an upward direction (yellow line indicates the trend, the blue — its power). ATR should be at its maximum values, or to rise, the stochastic should also filter out the signal in our favor (to be guided in the direction of the trend);
- a breakout of moving averages MA Cross 1500-200. Remaining conditions identical to the previous case;
- opening a position with the trend. It is important that all the sliding (10, 21, 150, 200), were on the same side, Aroon was directed in the same direction as the trend, the ATR was on the maximum or had upward value. The stochastic should also be directed in the direction of the trend.
Thus, strategy of 4 indicators was based on the fact that ATR needs to show growth, most of the indicators should have the same direction of the trend. We do not consider early withdrawal from market, since the recommended interval on strong signals is calculated in minutes.