This binary options strategy provides an easy solution for trading currencies more accurately. While it is a method that involves moving averages, it does not make use of the simple moving average (SMA), but instead uses the exponential moving average (EMA). The reason behind this is that the EMA can help you get into attractive trade setups faster. The following is a straightforward version which makes use of a 30-bar EMA in conjunction with one day and 30 minute periods. The entry signal and trade direction is clear, so novice traders should be able to use this method without any problems.
By evaluating two different time frames during analysis, the risk of false signals will be minimized. The one day period will be used to identify the main price trend, with the 30 minute period providing the signal to trade. If the asset price within the one day chart exceeds the 30-bar, market conditions are bullish. If the current price is under the 30, market conditions are bearish. Exercise caution, however, as you have to identify the spot where the price is with regards to the long-range overall trend, as well as in relation to support or resistance.
Once you have recognized the main trend and confirmed that it’s not close to a reversal level, move to the 30-minute chart and await the signal. The signal to trade will appear as soon as the price moves above the 30-bar inside this chart. The major drawback for some would be that it could take hours to receive the signal. It’s possible that the signal never arrives, but also possible that several could show up. In most cases, the expiry time should be between 1-4 hours. The nearer the price is to a point of prospective reversal, the less the expiry time ought to be.
Should bullish conditions be dominating when the price crosses the 30 from below or the price is above the 30 and then pulls back, enter the market using the standard Put/Call binary options trade. The first signal is tough to take at times, and the very last signal can occasionally result in a loss. However, once the first entry point is identified, there should be quite a few reliable signals to take between that point and the time the trend draws to a close.
Moving averages are an excellent indicator to use when trying to determine the overall strength of a trend. They measure the typical asset price, and can do so for any time-frame you choose. The MA produces a variety of data that when presented next to the asset price can assess the trend. Whenever prices are ascending, the MA will be ascending as well. Whenever prices are descending, the MA will be descending as well. The EMA places more importance on recent data and less on older data. For this reason, it often provides more timely data than the SMA. As with all binary options strategies, feel free to use more than one indicator for additional signal validation.
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Between 74-89 % of retail investor accounts lose money when trading CFDs