Moving Average & MACD
- VFX Blog
Moving Average & MACD: proven indicators on the binary options market, they are working very good in a case to proper use. Moving averages and MACD oscillator at any settings are delayed, like all other technical indicators. Therefore, their use of small timeframes and turbo options with a duration of no more than 3-5 minutes gives a large number of false signals. An exception to the rules is adaptive strategies, as in the vfxAlert app, where they proved themselves to be an additional tool for confirming automatic signals. The strategy is a classic combination of the trend indicator (moving averages) and the oscillator (MACD).
Characteristics of the strategy
• Type: scalping and turbo options;
• Chart period: 30 second - M5;
• Currency pairs: any except cryptocurrencies;
• Trading time: All trading day except a period of strong fundamental news.
How to trade
Adjust indicators in your trading system:
Exponential Moving Average (EMA):
• Period = 14
Weighted Moving Average (EMA):
• Period = 7
• Fast MA period = 12
• Slow MA period = 26
• Signal MA period = 9
• CALL: both moving averages are directed upwards. The "fast" WMA crosses the "slow" EMA from the bottom up. The MACD histogram is above zero;
• PUT: the opposite conditions - the moving averages go down, the WMA from top to bottom crosses the EMA. MACD is below zero.
The intersection of the MACD histogram of the zero levels can be regarded as a leading signal, but the final decision to open the position to be taken by at he vfxAlert signal of an Adaptive algorithm and WMA/EMA.
2-3 minutes for turbo options, in other cases not less than 3-5 candles of working timeframe.
How to open the position:
The position opens on the first candle after the crossing of the moving averages, and it must necessarily close above the WMA. MAs have a longer delay than MACD, so if the MACD condition is met at the next candle, this signal can also be considered to open the position
Some bits of advice:
• Use a fixed option volume or change it depending on the strength of the vfxAlert signal, as in the attached video. But do not apply Martingale with doubling the losing deal - in seconds and minutes of time it often leads to loss of deposit. The strategy gives a lot of signals and it is better to enter only the most reliable ones;
• It is necessary to wait for the intersection of moving averages, even if the MACD histogram has crossed the zero level otherwise it is only a single price pulse and not the trend at which the option can be opened;
• In the presence of a long trend, the strategy can be used on large timeframes, such as M5 and M15, you only need to select the appropriate signals of the adaptive strategy vfxAlert. Indicator settings cannot be changed.
• Trading on the news is one of the most difficult options and most scalping strategies give false signals at these moments, but if there was a strong signal before the exit, both on vfxAlert and on indicators it can be considered as a leading one;