Strategy of stable profit, described below, allows you to find the exact point to enter the market and earn during the day about 20 points (for Forex). As with all binary options strategies, it has its own nuances, on which we focus below.
The strategy of steady profits
- moving average (20 period) is one of the most popular basic indicators (sometimes also called “moving”);
- momentum (period 5) — simple technical indicator that measures the amount of change in the price of the underlying asset for a fixed period. The sell signal is the indicator of maximum and its reversal.
Be forewarned that in the classical case, the center line of the indicator will be the level “100”. For our convenience, we replaced it with “0” level, and relative to it will build an indicator.
A few words about the Momentum indicator. It is used to determine deviation of the price from normal value, finding the point of weakness and strength of the trend. According to professional traders, too high value of the period indicator will give false signals. In MetaTrader 4 trading platform the default indicator value = 14, but considered that the limit value may be a parameter of “21”. We prefer to recommend you only the least risky strategy. Though there are not many entry points in this approach, it is important to learn to find them, and only then to increase the risks. That’s why our strategy of stable profits takes into account the value of the indicator “5”.
Trading strategy is recommended for virtually all underlying assets, but the best option ise considered to be short-term contracts with expiry time of 10-15 minutes. For the analysis a handy chart with timeframe of 30 minutes. The period of “20” of the moving average indicator gives sufficient sensitivity, but false alarms are virtually absent. Moreover, the Momentum strategy acts as a filter.
Conditions for opening a buy position (the simultaneous coincidence of the following events):
- the price trend is below the moving average;
- price trend crosses the moving average bottom-up;
- Momentum is above the level “0”.
The essence of the strategy is that the trader needs to wait for the real fixation of the price after crossing the moving average. Momentum will tell us whether it was a simple breakdown or the price actually passed the level.
Conditions for opening sell positions (the simultaneous coincidence of the following events):
- the price trend is above the moving average;
- the price trend moving average crosses top down;
- Momentum is below the level “0”.
Options trading with this strategy is simple, because the task of the trader is to make right decision and get your share of the income. Strategy of stable profits also applicable in Forex. The position is recommended to close when it obtained a profit of 10-20 points, the stop loss is set at the maximum of the candle that crossed the moving average.
And finally, we will give some useful tips:
- there is no single strategy that can be profitable for all assets. So test it on a demo account on 5-6 different assets;
- choose a convenient timeframe for yourself. Some traders opt for 1 minute, although 30 minutes, we consider the optimal value;
- expiration is optimal in the short term, but you can also try long-term strategy (several hours), if there is an understanding that the trend has a clear strength.
I hope this strategy of steady profit will help you to master the technical indicators and will be your additional tactics.