EMA and Stochastic
- VFX Blog
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 vfxAlert 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);
- Period %K = 13;
- Period %D = 3;
- Smoothing = 3;
- 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.
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.
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.