vfxAlert strategies for beginners
- VFX Blog
Opening a deal with binary options signals is the easiest way for a beginner to make money on trading. But, after several unprofitable signals in a row, the question arises - according to what strategies does the service work? No one can give 100% profitable signals, knowing how they are generated, you can significantly reduce losses.
Unfortunately, most binary option signal services work as a "black box": a new asset price comes in at the entrance, and we get a recommendation to open a CALL or PUT-option at the exit. How the decision is made is unknown. As always, there are exceptions to the rules; one of them is the service vfxAlert, which publishes the main conditions of its strategies.
Details of what indicators are used can be read on the site. Here will be only basic information about the types of binary options strategy useful to readers who are just beginning to study technical and candle market analysis:
Let's start with the definition. So, a trend is a directional movement of the price of a trading asset (currency pair, stock, futures) in a certain period of time. There are three types of trend:
- Uptrend (bullish) - shows an increase in the price of an asset. On the chart, it looks like a series of price lows, each of which exceeds the previous one.
- Downtrend (bearish) - indicates a fall in prices. On the chart, it looks like a series of successively lowering price highs;
- No trend (flat, side trend, consolidation) - price fluctuations in a narrow or wide range of values. On the chart, it looks like a series of highs and lows located at the same level.
Trend trading, as well as the corresponding live trading signals, are considered the most reliable and profitable. Newbie is recommended to start trading with the trend strategy.
The main technical indicator for determining the trend, both in paid and free binary signals, is the Moving Average (MA): if it is directed upon the uptrend asset, down for downtrend and horizontally for flat. To confirm the continuation, end, and absence of a trend, several MA with different offset and number of periods are used, as in the Alligator indicator.
As you can see from the examples, and everyone can see this by looking at the chart, the price usually follows the trend in a certain range with small pullbacks and the emergence of new max/min. If you draw a line between at least two of them, we get a resistance line and a support line that limit the range of price fluctuations. Most accurately, this can only be done manually, but now the best binary signals software does it quite accurately.
When the price pushes off support/resistance lines, the strategy opens an option with expiration at the level of the opposite line (see the picture above). This way you can open several options before the trend ends and increase your profit.
Another option would be to open one option with a long expiration in the direction of the main movement. This strategy is more suitable for manual trading and does not require an auto strategy for binary options.
Important: even if trading is done through the best binary signal provider, it is recommended to look at the dynamics of changes in market volumes (even tick volumes). They often give leading signals.
Trends, even medium - and long-term ones, always end: the resources of "bulls" and" bears " are not enough to move the price up (overbought) or down (oversold). Another reason for stopping may be the publication of strong fundamental news and statistics, especially for intraday trends.
A market reversal can occur quickly for 3-5 price bars or after a period of consolidation. A reversing strategy gives fewer signals than a trending one. As practice has shown, they are more reliable since there is a high probability of opening an option at the very beginning of a new trend, and not at the end of the movement when most top binary options signals become false.
Drawback: after long trends, overbought/oversold oscillators such as RSI and Stochastic can "trample" for a long time in critical areas or near level 50 without crossing it. The strategy does not give a signal, although the reversal has begun. Always look at the chart if the reversal is clearly visible, especially after the "Doji" or "Pin-bar" candle patterns, you can try to open an option with an increased expiration.
Adaptive is an algorithm or system that automatically changes its work or structure to achieve a better result when external conditions change. For example, a person varies his behaviour and actions depending on the environment and past experience.
Statistical methods for analyzing historical data are used. If in the two previous strategies, the signal appears only when the indicator value meets the given conditions, then the adaptive algorithm works differently. It is assumed that at each historical price bar there will be a binary option trading signals for an option with a given expiration time (5, 10 minutes etc.). Then data from indicators are added, we look at the result of expiration - positive or negative. Each data combination is stored in a database (at least 2000 signals) for comparison with the current market.
Thus, the adaptive strategy is automatically adjusted, it can more accurately determine the probability of a positive outcome, which means the "strength" of the signal and the moment the option is opened.
Recommendations for use strategy
- The signals of any binary signals software may not be the only factor for opening a deal. These are just recommendations; always look for additional confirmation from technical indicators and graphical analysis patterns. If there are obvious discrepancies, it is better to skip the signal!
- In addition to the direction, we always look at two main additional binary signals:
- Power. Calculated from historical data and represents a percentage of profitable options in this combination of indicators.
- Heatmap. The expected percentage of winning. It is determined by statistics and other timeframes.
The Pro version has a filter for trading assets and Power values. Free binary signals are not possible!
- You can improve results by analyzing multiple timeframes simultaneously. More "long" M5-M15 can give a hidden signal about a trend change, which is then confirmed by a deal on M1.
- On a strong trend and confirmation from binary options signal service, you can open several deals with different expiration in order to pick up maximum movement with 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!
- 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!
Let's summarize: all three types of auto binary signals give consistent returns when used properly. It all depends on your goals and trading style. For short-term (3-5 minutes) stocks on the M1 timeframe (scalping), an adaptive strategy works better. The price is constantly unfolding and the “classic” strategies give false signals, there is no time for a thorough analysis, you need to quickly open deals. Adaptive statistics of results will allow you to quickly assess the situation and filter the "market" noise.
If you prefer a more "calm" trade, choose trendy or reverse trading binary signals on the M5-M15 timeframes with expiration from 20-25 minutes.