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Martingale

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Trading using the Martingale principle is constantly found in binary options for newbie’s courses, even though in terms of the number of lost deposits it takes first place with a huge margin from competitors. New strategies and advisers are constantly appearing, “smart martingale” methods and other strange things. The binary options market also did not stand aside, and in this article, we will try to understand whether there is a profitable martingale trading strategy or is it just a marketing technique for receiving money from traders.

Briefly about the strategy. The term comes from the world of gambling and provides for an increase in the volume of the current bet compared to the previous one to compensate for past losses. So after losing $ 10, we have to bet the next one at $ 20 and so on. It should be noted that this technique is prohibited in most casinos and gambling houses. Let’s finish our tour of history and move on to binary options.

Features of martingale on binary options

Considering the options for using Martingale on binary options, you should always remember that the size of the profit in this market is fixed and does not change during the entire term of the option. There is a binary trading platform that allows you to close transactions before the expiration date with a smaller profit, but this is rather an exception to the rule.

Excluding turbo options, the profit margin is less than 100% and this does not allow closing previous loss-making transactions by simply doubling the volume of the next, as is done in the Forex market. Here are examples of options:

Let the series begin with the EUR / USD option, closed with a loss of $10 and a planned profit of $8.5 (85% of the option amount). To compensate for losses and make a profit, the next transaction must have an income of $18.5 = $10 (loss on previous option) + $8.5 US (profit 85%). After the calculation, we get the volume of the second transaction equal to 22 dollars, check the profit: $22 * 0.85 (85%) = $18.7.

As you can see, to compensate for losses and profit, strategy for binary options need to use a coefficient of 2.2, which is higher than on Forex, where doubling the volume is enough. This fact places high demands on the size of the deposit, and with an average option yield of less than 75-85%, the use of martingale becomes even more expensive and risky.

How much money does need?

Let’s not write a lot of text, but just calculate a deposit for trading on martingale based on an example from the previous section. So the entry conditions are as follows:

First option amount: $ 10

Estimated profit: 85%

Number of losing trades in a row: 5.

As a result, we get a table:

№ OptionsProfit, %Profit, $Option amount, $Option payout, $Profit / Loss, $
185%8,5100,00-10,00
2220,00-22,00
3480,00-48,00
41050,00-105,00
52300,00-230,00
6500925,00425,00
Deposit amount required, $915Profit, $10

The calculation data is not very encouraging: even with a minimum initial bet of $ 10, five lost trades in a row require more than $ 900 from a trade deposit. If readers think that long losing series of binaries option trading signal, we hasten to “reassure” them: such situations happen regularly, especially when using advisers and in small periods that beginners love so much. In the future, costs will grow even faster, and everyone must decide for themselves whether such trading risks are necessary with low profits or not.

Binary option strategy and martingale

Martingale trading does not use any special and unique strategies that “author’s courses ” like to talk about. Profit is obtained only in the trending sectors of the market, and if the strategy is good at determining the points of its beginning and end, it can be used for double deals. The main discussion concerns the volume of subsequent transactions to compensate for losses – in some methods, it is fixed, in others, it “floats” depending on the current size of losses and the total volume of open positions. But the meaning of these mathematical calculations does not change: the trading strategy must give at least 7 out of 10 profitable points to open an option.

As an example strategy with the profitability of 70%, let’s take groups of moving averages.

Important: options do not open before closing or opening trading sessions, in the afternoon of Friday, at time of publication fundamental news and statistics.

The strategy uses two groups of simple (SMA) moving averages: “fast” and “slow”. This makes it possible to filter out false binary options signals and trade even during flat periods, although in this case without Martingale.

Strategy characteristics:

Trading asset: all trend assets except cross currency pairs;

Timeframe: from M30 and above. In periods of decreasing volatility, the recommended hour (H1);

Medium periods: “Fast” red – 15, 12, 10, 8, 5, 3. “Slow” blue – 60, 50, 40, 35, 30

Trading signals

CALL option:

  • “Slow” SMA turn up in the following order: 30… 35… 40… 45… 50… 60, which confirms an uptrend;
  • “Fast” is also up with the order 3… 5… 8… 10… 12… 15. On them we look for the beginning and endpoints of price rollbacks and corrections;
  • Open an option with the expiration of 3-5 candles after closing the bar, on which both conditions are met;

PUT option:

Groups of averages decrease in the opposite order to the CALL condition;

The entry point is an interval of 3-4 candles, so you can open after crossing the group of “slow” several “fast”.

The strategy is simple and can use Martingale to cover losses, and each trader must make his selection of an increased ratio depending on the market situation and the size of the deposit. There can be no universal solutions, despite assurances authors of paid strategies and advisers.

Recommendations for use:

Despite everything, this type of trading remains popular. Let’s give some recommendations that will help binary options trader to properly use Martingale with any strategy:

  1. Martingale is not synonymous with short-term trades or scalping. An expiration time and timeframe can be anything from one minute to four hours and day. As with any other technical analysis strategy, the older the timeframe, the more reliable the signals are.
  2. Conclusion of their previous paragraph – forget about turbo options! They are primarily paid attention to binary options strategy sellers and binary brokers, but it is here that the largest number of false signals and non-market quotes.
  3. We start with the minimum allowable option amount. Even if you have thousands of dollars on deposit, you should not be tempted to increase the starting transaction. Always be aware of potential losses.
  4. We regularly take profit. Martingale always leads only to losses, so use periods of a strong trend to the maximum.
  5. Choose the right expiration date. The term of the option should be at least 3-5 bars of the working timeframe. This allows you to wait for moments of short-term corrections and rollbacks before resuming the trend.
  6. We monitor market changes. No trading technique gives a 100% guarantee, if after 2-3 losing options in a row you realize that you made a mistake in the direction of the trend, you need to stop. Add volume, open the opposite trade and do not increase losses.

Let’s summarize. Are there any advantages of martingale trading compared to other options strategies? You can answer not and need to think about how to make money on binary options increasing the following transactions. This type of trading is the riskiest even in the Forex market, and for options, it increases many times over. There are two main reasons, and they cannot be addressed:

  • The percentage of profit is less than 100% and in most cases, there is no possibility of early closing of transactions, even with a smaller profit.
  • On small timeframes, long losing series of  binary options signals are not uncommon due to the incorrect choice of the expiration time. In the Forex market, transactions can be opened indefinitely until the Take Profit/Stop Loss order is up and down or the position is manually closed. The option may end a few minutes before the market starts moving in the direction we need, and what can be the losses read in the section on the size of the deposit

Strategy «Shot»

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We present the next strategy on standard indicators of technical analysis. It brings a stable profit on short-term and medium-term binary options and is accessible even to newbie’s.

Strategy characteristics

Type:Trend.
Timeframe:Any in the range M1-M5. In our case, M1 is used, but with increasing period of analysis, the accuracy of the signal an increasing.
Trading asset:Any currency pair. The main requirement is a fixed (2-3 points) spread and no hidden fees.
Trading time:All Forex trading sessions.
Percentage premium option:Not less than 70-75%.

Used indicators

The strategy uses three technical indicators.

  • Parabolic SAR. Determine the direction of the short and medium-term trend. Indicator points are below the price and directed up – an uptrend. Higher prices and directed downward – a downtrend.
  • Stochastic − the oscillator will assess the current balance between buyers and sellers: the predictor above level 80 − the end of the uptrend (overbought), below 20 − the end of the downward (oversold).
  • Awesome Oscillator (AO). The oscillator should finally confirm the signals of the previous indicators. Additional signals can be obtained using intermediate levels − in this case, the Williams Magic Oscillator will also work as an indicator of overbought/oversold conditions.

After installing the tools, the terminal’s working window looks like this:

  • CALL option. Parabolic SAR below the price, AO green and up. Stochastic is above zero levels or in the overbought area.
  • PUT option. Parabolic SAR is higher than the price, AO is red and down. Stochastic RSI also goes down to oversold.

Open a trade on the next candle after binary signals. Time of expiration of options has to be not less than 5-7 minutes even if as a working timeframe it is chosen of minute.

Recommendations for use:

  • Even on the minute timeframe, Stochastic rarely goes into the extreme zones and you can miss a lot of good deals. If price and Stochastic start moving in one direction − you can open an option!
  • During the publication of important fundamental news and statistics, we do not open options 30 minutes before the news and 30 minutes after the publication; cautious traders can close current deals. To control the events, we use the economic calendar included in the all popular binary trading platform!
  • Even though you can trade throughout the day, the most profitable results were obtained in the second half of the US session (from 16:00 UTC) and the end of the Asian session (until 06:00 UTC);
  • Expiration term. Look to steer a middle course: too short (1-2 minutes) and too long (10-15 minutes) option life is considered dangerous. In the first case, the price risks «not having time» to go in the right direction – we get a loss. In the second, the market will have time to turn around, which again gives a negative result.

Intraday strategy «Shot» represents rather reliable system of a conservative scalping for trade in the stable market. Parameters of trade tools can be changed according to the current volatility. Once again, we remind you that most profitable binary options signals will only be on trend areas, during the flat periods we remain out of the market!

Simple scalping strategy «Neptune»

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With a small deposit, it is unprofitable to open transactions lasting several hours or days in order to get a couple of tens of dollars in profits. We will do this much faster: we will need a «Neptune» scalping strategy and binary options signals. 

Strategy characteristics 

Type:Trend
Timeframe:Any in the range M1-M15. In our case, M1 is used, but with increasing period of analysis, the accuracy of the signal increases.
Trading asset:Any currency pair. The main requirement is a fixed (2-3 points) spread and no hidden fees.
Trading time:All Forex trading sessions.
Percentage premium option:Not less than 70-75%.

Used indicators

The strategy uses three standard indicators. 

  • Bollinger Bands (BB). The indicator reports the direction and volatility of the current trend, and the horizontal movement of the lines will show flat − in this case it is better to stay out of the market, especially if the price moves in a narrow channel. When the range dramatically expands (see screen), you can use longer 10-15 minute binary signals and increase the transaction volume by 10-15%.
  • Exponential Moving Average (EMA). The intersection of the Bollinger Bands midline or breakdown (rollback) from its borders will be a signal to open or close a deal. Open the option on the next candle!
  • Awesome Oscillator (AO). The oscillator should finally confirm the signals of the previous indicators. Additional signals can be obtained using intermediate levels − in this case, the Williams Magic Oscillator will also work as an indicator of overbought/oversold conditions.

Binary options signals:

  • CALL option. Price and Moving Average bounces off the lower border of the Bollinger Bands or cross its middle line from bottom to top. The Awesome Oscillator histogram is green, above or as close to zero as possible.
  • PUT option.Opposite conditions: the price and the moving average cross the middle line of the Bollinger Bands from the top down, or fighting off its upper limit. Awesome Oscillator histogram of red colour, below or near the zero level

Time of expiration of options has to be not less than 3-54 minutes even if as a working timeframe it is chosen minute or 30-second.

Recommendations about use  

Novice traders should trade only binary signals at the zero crossings of the Awesome Oscillator. As you gain experience, you can use the histogram reversals up for CALL and down for PUT options;

  • the longer the sideways movement of the Bollinger Bands continues, the higher the likelihood of a strong trend after its completion. In such cases, you can open trades at the first signs of a Moving Average reversal and strong binary option trading signals from vfxAlert;
  • During the publication of important fundamental news and statistics, we do not open options 30 minutes before the news and 30 minutes after the publication; cautious traders can close current deals. To control the events, we use the economic calendar included in the all popular binary trading platform!
  • time of expiration can be increased up to 5-7 minutes if the steady trend is observed. Also during such periods, it is possible to open several options with different validity period to take away a maximum of the movement at minimal risk. If the broker gives the chance to close the option until expiration, then surely we fix the transaction (even if it in profit!) at the emergence of an opposite signal!

Doji and Engulfing patterns

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Technical analysis indicators provide a stable profit on binary options. Beginners tend to put them on the schedule as much as possible forgetting the principle of “a lot of information is not always good.” You can trade without them at all using candlestick analysis.

The methodology was developed in Japan and for 2.6 centuries has not changed significantly to date. Includes more than 200 patterns, but the strategy uses only two of them, which can be immediately applied in trading even to binary options for newbies.

The picture shows the structure of a candle. The strategy does not use “shadows”, opening point of option is determined by the size of the “body”.

The first pattern showing trend reversal will be “Bullish / Bearish engulfing” – the body of the current candle completely closes the body of the previous one. We open the option at the opening of the third candle.

The second candle is inverse colour. An exception is for very small first bodies similar to «Doji».

The next «Doji» pattern. The strongest reversal signal and highlighted in a separate section of candle analysis. The basic rule – the less often there is a candle «Doji» the more important it is. In the classic «Doji», the closing price is equal to the closing price +/- several ticks. The option opens on the third candle after the appearance of “Doji”.

In any case, such candles (even if false) require a binary options trader special attention; otherwise, you can get a big loss from a sharp trend change!

Candles cannot be the only decision making a factor. Patterns indicate only the probability that the market will reverse or continue the current trend. Additional confirmation will be vfxAlert binary option trading signals working on technical indicators.

Open a trade on the next candle after binary signals. Time of expiration of options has to be not less than 5-7 minutes even if as a working timeframe it is chosen of minute.

Recommendations for use:

  • If the second candles break through strong support/resistance levels, this strengthens the signal;
  • During the publication of important fundamental news and statistics, we do not open options 30 minutes before the news and 30 minutes after the publication; cautious traders can close current deals. To control the events, we use the economic calendar included in the all popular binary trading platform!
  • You can choose a cautious strategy of gradually increasing the position as the signal is confirmed.
  • If you cannot open a transaction at the beginning or at the strong point of the figure, do not look for an entry point where it does not actually exist. Candlestick analysis should always be supported by technical instruments, especially support/resistance levels. See the price movement on multiple timeframes, the presence of divergences and sharp changes in volumes.
  • Expiration term. Look to steer a middle course: too short (1-2 minutes) and too long (10-15 minutes) option life is considered dangerous. In the first case, the price risks «not having time» to go in the right direction – we get a loss. In the second, the market will have time to turn around, which again gives a negative result.
  • Newbie’s often trade on a template, forgetting that the market situation is never repeated 100%. Candlestick combinations that bring profit a year ago can now lead to losses. We need a constant control of the correct development of patterns!

Let’s summarize. Candlestick analysis will be relevant for at least another 10-20 years, despite the growth in the use of AI and HFT in trading. Most stock transactions are still made by people, which mean that its principles will continue to work and make a profit 

Scooter – option strategy

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The «Scooter» strategy is a profitable and simple trading technique for binary options. This is good for beginners – reliable binary options signals bring constant profit on short-term intraday trends.

Strategy characteristics

Type:Trend.
Timeframe:Any in the range M1-M5. In our case, M1 is used, but with increasing period of analysis, the accuracy of the signal an increasing.
Trading asset:Any currency pair. The main requirement is a fixed (2-3 points) spread and no hidden fees.
Trading time:All Forex trading sessions.
Percentage premium option:Not less than 70-75%.

Used indicators

The strategy uses two technical indicators:

  • Three exponential (EMA) averages with periods of 10, 20 and 30. Determine the direction of the short and medium-term trend.  On a flute with high volatility, you can use the price channel, inside which you can trade (at least 10-15 points wide). A breakdown will become a binary signal of a new trend. This method is recommended only for experienced traders!

EMA(20) and EMA (30) are considered as «long» moving averages by which the direction of a trend is determined, EMA(5) will be «fast» moving average and the first signal for the opening of the option. Long averages on the chart are shown in one color.

  • Two MACD (12,26,9) and (50,75,9). This indicator works both as a trend and as an oscillator instrument, so it will be the final signal to open an option.

After installing the tools, the terminal’s working window looks like this:

Trade of binary options signals:

  • CALL option. The fast-moving average crosses from down up both slow-moving averages with confirmation by two MACD indicators (one or more bars have to be above the zero lines).
  • PUT option. The fast-moving average crosses from top to down both slow-moving averages with obligatory confirmation on the histogram of MACD (one or more bars have to be below the central line).

Open a trade on the next candle after binary signals. Time of expiration of options has to be not less than 5-7 minutes even if as a working timeframe it is chosen of minute.

Recommendations for use:

  • In this strategy, «slow» moving averages, except confirmation of signals, work as the trend filter. If the price punches two moving, and fast EMA (10) − only one, the transaction does not open even if on RSI there is a confirmation. Thus, we have additional protection against market «noise» and false turns.
  • We monitor the binary trading platform for the release of important fundamental news and statistics. We do not open the option immediately after the publication, and, if possible, close the current transaction 15-20 minutes before publication;
  • Expiration term. Look to steer a middle course: too short (1-2 minutes) and too long (10-15 minutes) option life is considered dangerous. In the first case, the price risks «not having time» to go in the right direction – we get a loss. In the second, the market will have time to turn around, which again gives a negative result.
  • If the broker makes it possible to close the option before on expiration, we do it (even if it in profit!) at the emergence of an opposite signal – repeated reverse crossing of slow-moving averages at fast or the RSI chart changes direction relative.

After strong trends, RSI, like any other overbought/oversold oscillator, can “trample” for a long time in critical zones or around level 50, without crossing it. At the same time, EMA can give strong signals to open options. To take such signals to work or, not everyone should decide for himself, but still, it is better for beginners to wait for a fully formed entry point, according to which the «Scooter» strategy gives about 70-75% of successful

Woodcutter strategy

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Binary options for newbie’s strategies often go the way of complication: up/down arrows instead of regular Fractals, indicators in the form of color diagrams with incomprehensible signals and other «improvements» do not help to make a profit. Meanwhile, professional players and trading signal services, such as vfxAlert, use simple and time-tested combinations of standard tools, such as in the «Woodcutter» strategy.

Strategy characteristics

Type:Trend.
Timeframe:Any in the range M1-M5. In our case, M1 is used, but with an increasing period of analysis, the accuracy of the signal an increasing.
Trading asset:Any currency pair. The main requirement is a fixed (2-3 points) spread and no hidden fees.
Trading time:All Forex trading sessions.
Percentage premium option:Not less than 70-75%.

Used indicators

The strategy uses two sets of moving averages: two simple (SMA) and one exponential (EMA) moving averages.

  • Classic trend indicator, which will determine the general direction of the scalping trend. The strategy is not intended for trading during flat periods. We trade only if the range is between at least 15-25 points!
  • Standard MACD (12,26,9).

This indicator works both as a trend and as an oscillator instrument, so it will be the final signal to open an option.

After installing the tools, the terminal’s working window looks like this:

Binary options signals

SMA(85) and EMA (75) are considered as «long» moving averages by which the direction of a trend is determined, SMA(5) will be «fast» moving average and the first signal for the opening of the option.

  • CALL option. The fast-moving average crosses from down up both slow-moving averages with confirmation by the MACD indicator (one or more bars have to be above the zero lines).
  • PUT option. The fast-moving average crosses from top to down both slow-moving averages with obligatory confirmation on the histogram of MACD (one or more bars have to be below the central line).

If all moving averages are close to each other, then this indicates a trend change. We remain outside the market and wait for the next signal.

Open a trade on the next candle after binary signals. Time of expiration of options has to be not less than 5-7 minutes even if as a working timeframe it is chosen of minute.

Recommendations about use

  • the longer the sideways movement on the market, the higher the probability of a strong trend after its completion. In such cases, you can open trades at the first sign of a Moving Average reversal (as shown in the picture) and a strong binary option trading signals from vfxAlert;
  • if the broker gives the chance to close the option until expiration, then surely we fix the transaction (even if it in profit!) at emergence of an opposite signal − repeated return crossing of slow-moving averages a fast-moving or if the histogram of MACD changes the direction of rather zero levels.
  • time of expiration can be increased up to 5-7 minutes if the steady trend is observed. Also during such periods, it is possible to open several options with different validity period to take away a maximum of the movement at minimal risk.

Intraday strategy «Woodcutter» represents rather reliable system of a conservative scalping for trade in the stable market. Parameters of trade tools can be changed according to the current volatility. Once again, we remind you that most profitable binary options signals will only be on trend areas, during the flat periods we remain out of the market!

The strategy is quite well automated, but as with any scalping system on a minute timeframe, it is better to trade manually. This will help to effectively adjust the strategy to MACD reversal signals, rebound from moving averages and get a stable profit every day.

Moving Average Tunnel + MACD

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Trading binary options are not as simple as it seems at first glance. In order not to succumb to the excitement, you can use free binary signals, for example, from vfxAlert, or use has proven techniques and tools as the MA Tunnel + MACD strategy does.

Strategy characteristics

Type: Trend

Timeframe: Any in the range M1-D1. In our case, M1 is used, but with an increasing period of analysis, the accuracy of the signal increases.

Trading asset: Any currency pair. The main requirement is a fixed (2-3 points) spread and no hidden fees.

Trading time: All Forex trading sessions.Percentage premium option: Not less than 70-75%.

Strategy Indicators:

  1. Simple (SMA), exponential (EMA) and weighted (WMA) moving average with a period of 10 The main indicator for determining the trend and direction of the next option. We draw the attention of traders that this strategy is exclusively trend and does not provide range binary signals. But if the lateral movement goes within 25-35 points you can try to trade!
  2. MACD (12,26,9) with default parameters. Simultaneously oscillator and trend indicator. Used for final confirmation of moving average signals.

In the figure, a trading terminal with installed indicators and trading signals for CALL / PUT options:

The strategy uses a «tunnel» of three moving averages. Weighted moving average shows a global trend, exponential and simple to show the point of opening option. Open only when all the averages cross and signal of «fast» MACD.Options open on the next candle after the breakout with an expiration time of 3-5 minutes. The reliability of the signal increases if most or all of the candle body is above all Moving Average.As you can see, even beginners should not have problems with trading, but there are several factors that need to be considered before opening an option:

  • The release of strong fundamental news “knocks down” the logic of most technical indicators and graphic patterns. Moreover, in contrast to the stock and currency markets, one cannot put a pending option, it is necessary to react immediately at the time of exit, which is difficult to perform technically and psychologically difficult. It is recommended during such periods to stay out of the market. There are many signals on small timeframes intraday. It is better to wait for the next one on the established trend. 
  • Mutual delay of the Moving Average and MACD signals is observed, but this is normal. It is completely impossible to remove the delay, but its dynamics on each technical tool is different. This makes it possible to improve the quality of binary options signals and enter the market in the best possible way. You can verify this from our video on the strategy «MA Tunnel + MACD».
  • Expiration time. Both very short (1-2 minutes) and very long (10-15) terms of options are considered incorrect. In the first case, the trend does not have time to go in the direction of free binary signals, in the second the movement may end and a reversal will begin. In both cases, we get a loss. Remember that in our case the strategy is used for scalping, it is better to stay on the expiration time in the range of 4-6 minutes. But if the trend is strong, you can increase the expiration to 8-10 minutes.
  • We look at the higher timeframes M5-M30 where the first signs of a weakening of the trend or its reversal may appear, which will then be followed by a reaction to M1. Separate attention to the moving average, there may be typical situations when you can retreat from the rules of the strategy and open an option!
  • Important note: after sharp impulses or strong trends, the MACD, like other oscillators, can «trample» for a long time above or below the zero levels without crossing it. At the same time, moving averages can produce good signals. To open options in such cases or not, everyone decides for himself,

Moving Averages as the Best Strategy

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Excessive «complexity» is a common occurrence in binary options: up/down arrows instead of regular Fractals, indicators in the form of colour diagrams with incomprehensible signals and other «improvements» do not help to make a profit. Professional traders know that all the best technical tools have been invented, and you just need to learn how to use them correctly.

Strategy characteristics

Type: TrendTimeframe: Any in the range M1-D1. The longer the period, the more reliable the signal.Trading asset:  Any currency pair. The main requirement is a fixed (2-3 points) spread and no hidden fees. The most stable results show EUR/USD, GBP/USD, NZD/USD, AUD/USD.Trading time:  All Forex trading sessions.Percentage premium option:  Not less than 70-75%.After installing the moving averages, the terminal’s working screen takes the following form (the colour gamut can be changed):

Binary options moving averages as the best strategy for newbies To open a CALL-option, all three slivers must be directed upwards and arranged sequentially from bottom to top: “long – medium – short”, or SMA (8) −SMA (5) –SMA (3). This is a must to confirm an uptrend. The option opens after closing the first breakout candle above the blue line SMA (3). PUT-option opens on opposite conditions: moving averages turn from top to bottom according to the “fast – medium – slow” scheme (SMA (3) –SMA (5) –SMA (8)) − we enter the market on the second bar after the breakdown.

As you can see, the common scheme of the “envelope” or “corridor” of moving averages is used. The classic example – Bill Williams’ Alligator – works in a similar way: the averages unfold in the direction of the trend according to their speed (the longer the period, the “slower” the MA). The intertwining of lines in a narrow range indicates the end of the trend and the beginning of consolidation.Notes: Despite the fact that the three movings in the set filter the signals to each other well and provide fairly reliable entry points (as you can see in our video!), the strategy still does not comply with the basic principle of technical analysis.

Tools of the same group, in our case, trend instruments, even with different parameters, cannot be a decisive factor in opening a new position. It is recommended to receive additional confirmation from oscillators, for example, RSI, CCI, Stochastic, which correctly take into account the appearance of overbought/oversold situations and the dynamics of volatility. You can significantly improve the result of scalping if you perform analysis on multiple timeframes simultaneously. For example, periods M5-M15 can give a hidden signal of a trend change, which is then confirmed by a deal on M1.

The optimal expiration time of an option for this strategy is 5-7 minutes, but other values can be chosen depending on the dynamics of an asset. The main thing is that even on M1-M5 there are stable trends with stable volatility, then you can increase the time of the option and not lose the reliability of the signals. When trading intraday, we recommend performing a comprehensive analysis of the market −, as a rule, there are many typical situations on different assets and timeframes, to which moving averages react the same.

Periods of strong fundamental news are strongly recommended for binary traders to skip since without a clear understanding of the direction it is simply dangerous to open options. Without knowing where the market will understand in the first minutes, it is difficult to open the necessary option. Moreover, usually at such moments, brokers dramatically increase the slippage or do not allow it to enter the market at all.

But the price impulses in the period between the closing of the Asian and the opening of the European trading session, known as the «morning flat breakdown» can and should be worked out at the intersections of the Moving Average.

«Trinity» – New strategy for binary options

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Binary traders, especially beginners, are in constant search for new techniques. But the search result in huge collections of strategies is not always profitable, especially if it is assumed to be scalping on M1-M5 timeframes. Meanwhile, professional players use simple and time-tested combinations of standard tools, such as in the «Trinity» strategy.

Strategy characteristics 

Type:Trend
Timeframe:Any in the range M1-D1. In our case, M1 is used, but with an increasing period of analysis, the accuracy of the signal increases.
Trading asset:Any currency pair. The main requirement is a fixed (2-3 points) spread and no hidden fees.
Trading time:All Forex trading sessions.
Percentage premium option:Not less than 70-75%.

Used indicators:

  • Simple (SMA) moving average with a period of 10.
  • Classic trend indicator, which will determine the general direction of the scalping trend. The strategy is not intended for trading during flat periods. We trade only if the range is between at least 15-25 points!
  • RSI with a period of 14 and an additional level of 50.
  • Trend indicators must necessarily be confirmed by at least one oscillator indicating an overbought condition when buyers can no longer move the price up or oversold, where there is almost no one in the market to sell at lower prices.
  • Standard MACD (12,26,9).
  • This indicator works both as a trend and as an oscillator instrument, so it will be the final signal to open an option.After installing the tools, the terminal’s working window looks like this:

Trading signals

Let’s start with the CALL option for the expected growth of the currency pair. To open a transaction, the following conditions are necessary:

  • RSI line 50 level crossing upwards;
  • MACD also crosses its zero lines from the bottom top or its histogram turns up after a new local minimum (signal of medium strength);
  • price moves above the moving average.

The option opens on the second candle above SMA (10) with an expiration time of 5-7 minutes. The signal strength increases if the breakout candle (or most of it) is above the Moving Average.
Opposite conditions are required for a PUT option: the price moves below SMA, RSI breaks down from 50 downwards, MACD also moves upwards.As you can see, everything is quite simple, and you can quickly start trading, but you should consider several factors affecting the final result:

  • We exclude the periods of the release of strong fundamental news when technical indicators give only false signals. Binary options are not intended for news trading at all since it is impossible to open a pending order, and it is very difficult to predict where (and most importantly, when!) will follow the first impulse of a market. Choose periods of intraday with a minimum news background and average volatility. Signals occur quite often and can be earned with minimal risk.
  • As can be seen from the graph, the signals from RSI and MACD are mutually late, but there is nothing unusual in this. The delay in varying degrees is present in all technical tools, but their combined use in the strategy makes it possible to minimize this problem and enter the market at the optimal point. For more details on how the delay is compensated, see our video on the “Trinity” strategy.
  • Expiration term. Look to steer a middle course: too short (1-2 minutes) and too long (10-15 minutes) option life is considered dangerous. In the first case, the price risks «not having time» to go in the right direction – we get a loss. In the second, the market will have time to turn around, which again gives a negative result. Do not forget that the strategy is scalping, so try not to go beyond the range of 5-7 minutes.

One more thing. After strong trends, RSI, like any other overbought/oversold oscillator, can “trample” for a long time in critical zones or around level 50, without crossing it. At the same time, MACD and SMA can give strong signals to open options. To take such signals to work or not, everyone should decide for himself, but still, it is better for beginners to wait for a fully formed entry point, according to which the «Trinity» strategy gives about 70-75% of successful transactions.

EMA and Stochastic

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This method of trading on binary options shows stable profitability on almost all instruments of the Forex market and includes signals of the adaptive strategy and technical indicators that have been tested by several generations of traders. The strategy is simple and accessible even for beginners, the indicators used are present in all popular trading platforms. The Stochastic oscillator will give the first signal to change the trend, and the moving averages as a more lagging instrument will confirm the opening of the option.

Characteristics of the strategy

  • Type: scalping;
  • Currency pairs: any with medium or high intraday volatility;
  • Charts period: 30 second – M1;
  • Trading period: all trading sessions.

How to trade

Adjust indicators in your trading system:

Exponential Moving Average (EMA):

  • Period = 14 (1 EMA);
  • Period = 9 (2 EMA);

Stochastic:

  • Period %K = 13;
  • Period %D = 3;
  • Smoothing = 3;

Signal conditions:

  • CALL: Stochastic is above level 20 and its graph is directed upwards and the current candle closes above the moving averages.
  • PUT: Opposite conditions: Stochastic below level 80, the candle is closed below the middle.

How to open the position:

The optimal entry point will be the first candle that closes above or below the moving averages and properly moves Stochastic, which must be paid special attention – it must necessarily exit overbought (80) or oversold zones (20). On the M1 chart period, you can open the position on the second candle if the first is missed, but better to wait for the next signal.

Expiration time:

Not less than 3-5 candles working timeframe 

Some bits of advice:

  • This strategy stably makes a profit on most currency pairs, but it’s better to choose currencies according to the current trading session: the EUR/USD and GBP/USD are practically not moving into the Asian session, so short-term options will only lead to losses. And NZD/USD and AUD/USD are active in the Asian session;
  • Beginners have to open options only after crossing the moving average graph! You always want to catch the whole trend with a few deals in a row, but it’s better to wait for the signal at the intersection. Never open the position if vfxAlert shows strong opposite signal.
  • Special attention to the release of strong fundamental news and statistics! Usually do not recommend trading in these periods, as the market is unstable and technical analysis is no longer working. But in reality, if the news trade goes on a one-minute timeframe, it is quite possible to open an option in the direction of the news with confirmation from the adaptive strategy vfxAlert.

Stochastic:

About thirty years ago, market analysts were dominated by the belief that exchange prices depended on so many factors that it was impossible to predict them. However, the systematization of the experience of exchange trades and the development of computer technology clearly showed the possibility of predicting the behaviour of prices in the market. The tempting prospect of “earning” big money has prompted many mathematicians to develop various methods for forecasting prices. These techniques were later called “indicators.”

The number of known indicators has long numbered thousands. Despite the fact that some of them are known only to a narrow circle of specialists, many indicators are well known to most traders, including beginners. One of the most popular indicators (including forex) widely used in trading systems is the stochastic oscillator, which George Lane started developing since the early 1950s. This oscillator, popularized by George Lane, is very similar to the RSI line. The Relative Strength Index (RSI) by Wells Wilder and the stochastic are the two most popular and well-known improvements of the base oscillator,% R Larry Williams, – in fact the same stochastic, just not so smooth, and the scale is upside down.

So, the stochastic is one of the most popular indicators. It can be found on all available services offering various graphics, in all trading software packages there is no exception. And yet, many traders, especially beginners, use it incorrectly.