Binary options moving averages as the best strategy for newbies
- VFX Blog
- Estratehiya
Excessive «complexity» is a common occurrence in binary options: up/down arrows instead of regular Fractals, indicators in the form of colour diagrams with incomprehensible signals and other «improvements» do not help to make a profit. Professional traders know that all the best technical tools have been invented, and you just need to learn how to use them correctly. One of these universal tools used in both manual and automated trading, including the vfxAlert signals, is simple moving averages.
Strategy characteristics
Type: | Trend |
Timeframe: | Any in the range M1-D1. The longer the period, the more reliable the signal. |
Trading asset: | Any currency pair. The main requirement is a fixed (2-3 points) spread and no hidden fees. The most stable results show EUR/USD, GBP/USD, NZD/USD, AUD/USD. |
Trading time: | All Forex trading sessions |
Percentage premium option | Not less than 70-75%. |
After installing the moving averages, the terminal’s working screen takes the following form (the colour gamut can be changed):
Binary options moving averages as the best strategy for newbies To open a CALL-option, all three slivers must be directed upwards and arranged sequentially from bottom to top: “long – medium – short”, or SMA (8) −SMA (5) –SMA (3). This is a must to confirm an uptrend. The option opens after closing the first breakout candle above the blue line SMA (3). PUT-option opens on opposite conditions: moving averages turn from top to bottom according to the “fast – medium – slow” scheme (SMA (3) –SMA (5) –SMA (8)) − we enter the market on the second bar after the breakdown.
As you can see, the common scheme of the “envelope” or “corridor” of moving averages is used. The classic example - Bill Williams' Alligator - works in a similar way: the averages unfold in the direction of the trend according to their speed (the longer the period, the “slower” the MA). The intertwining of lines in a narrow range indicates the end of the trend and the beginning of consolidation.
Notes: Despite the fact that the three movings in the set filter the signals to each other well and provide fairly reliable entry points (as you can see in our video!), the strategy still does not comply with the basic principle of technical analysis.
Tools of the same group, in our case, trend instruments, even with different parameters, cannot be a decisive factor in opening a new position. It is recommended to receive additional confirmation from oscillators, for example, RSI, CCI, Stochastic, or vfxAlert signal service, which correctly take into account the appearance of overbought/oversold situations and the dynamics of volatility. You can significantly improve the result of scalping if you perform analysis on multiple timeframes simultaneously
For example, periods M5-M15 can give a hidden signal of a trend change, which is then confirmed by a deal on M1. The optimal expiration time of an option for this strategy is 5-7 minutes, but other values can be chosen depending on the dynamics of an asset. The main thing is that even on M1-M5 there are stable trends with stable volatility, then you can increase the time of the option and not lose the reliability of the signals. When trading intraday, we recommend performing a comprehensive analysis of the market −, as a rule, there are many typical situations on different assets and timeframes, to which moving averages react the same. Periods of strong fundamental news are strongly recommended for binary traders to skip since without a clear understanding of the direction it is simply dangerous to open options.
Without knowing where the market will understand in the first minutes, it is difficult to open the necessary option. Moreover, usually at such moments, brokers dramatically increase the slippage or do not allow it to enter the market at all. But the price impulses in the period between the closing of the Asian and the opening of the European trading session, known as the «morning flat breakdown» can and should be worked out at the intersections of the Moving Average.