This binary options strategy provides trade signals by way of the Relative Strength Index (RSI) indicator as well as analysis of a pair of time-frames. The goal with this strategy is to recognize the prevailing trend and then trade along with it while it continues to remain in place. Inexperienced traders might have trouble with this strategy at first while tracking down the entry points. To protect yourself from problems, follow the instructions for each step exactly and never skip or repeat a step unless directed to.
Setting Up Your Chart
Your technical chart needs to be set up beforehand. Begin by selecting the 15-minute and 5-minute charts. The first chart will be used for detecting the prevailing trend, while the second chart will be used to find the entry point. In the 15-minute chart, choose exponential moving averages (EMAs) of 50, 21, and 5. Your next move will be to draw support and resistance lines. These lines can originate from your individual estimations, or be drawn according to the present levels as furnished by industry professionals.
To ensure that the RSI is able to point out the best entry points, adjust the settings to 4-bars in order to view the trend inside the 15-minute chart, but bear in mind that the 5-minute chart is the place where you will discover the actual entry indication. The Stochastic will be utilized to supply further validation for entry and exit points. The employment of the Stochastic is elective, however the additional verification can easily make a difference in the general rate of success when using this strategy.
- Step 1: Begin by taking a look at the 15-minute chart. In the event that value of your selected underlying asset is in the vicinity of either support or resistance, see this as a negating element for any signals that you observe shifting in the same direction. Make use of moving averages to establish the current trend in this chart prior to moving forward.
- Step 2: examine the short-term averages to ascertain whether they are higher than the long-term 50-bar level. If that’s the case, the projected trend direction is ascending. If the averages are under the 50-bar, the projected trend is descending.
- Step 3: Hold out for the signal to trade. This appears as soon as the RSI moves directly into overbought or oversold locations. When this takes place, go on to the 5-minute chart and begin to watch for the entry signal.
- Step 4: Once back inside the 5-minute chart, start to look for the entry point. The indication should always be consistent with the exact same trend observed inside the 15-minute chart. In the event the price is in close proximity to areas of support or resistance, wait to find out if the price goes beyond these levels prior to trading. If you are planning to confirm using the Stochastic, this is the time to take action.
Take into account that this strategy was created exclusively to be used with the 5 and 15 minute charts. If applied using lengthier time-frames it’s going to be less reliable. Trade signals frequently appear suddenly and for that reason call for speedy actions. Furthermore, any market reports which happen to be circulated during the time you intend to trade can easily make a big difference. It is advisable to avoid using this binary options strategy in conjunction with any underlying asset which is linked to the discharge of new report information.
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