Monday, April 7th, 2014 by Tim Lanoue
Not only are we going to cover the basics of the Klinger Volume Oscillator Histogram indicator but we are also going to discuss how to properly apply this indicator into a highly accurate binary options trading strategy. The KVOH indicator is a powerful financial instrument that is very similar to the Klinger Volume Oscillator indicator however it displays a histogram instead of a oscillating line. This is especially beneficial when trying to predict whether or not the price of the asset we are watching is likely to continue in its general direction or if it will change.
How it Works
The KVOH indicator has the main function of helping traders predict future long-term trends however it is also designed to identify and spot potential short-term reversals by analyzing the market flow on our targeted asset. Unlike the KVO indicator, the KVOH indicator display is created by a convergence very similar to the MACD indicator. In the picture below you can see an example of how this indicator would look when applied to a charting solution.
Application and Trading
When applying this indicator into a trading strategy we need no other indicators and it only requires the use of two steps before a signal can be placed. As you can see in the picture below we have four trading examples that all turned out to be in-the-money. The first step that we need to happen in order to place a call trade would be a continuation with our KVOH Histogram candle bars, so if we have two upward candles then our first step is completed. The last step is that we need a bullish candle over both of the KVOH candle bars, if they both match and are going in the same direction as the candle bars then we are good to place a trade. On the other hand, when we are looking to place a put trade we need two downward KVOH candle bars to form along with a bearish candle over each of the candle bars, if everything checks out then we are good to place a put trade.
Time Frame & Expiry Time
When trading with this indicator I prefer to use a 30 minute time frame to watch our assets, however 15 minute time frames along with one hour time frames work well also. When trading with a 15 or 30 minute time frame we want to make sure to use an expiry time consisting of 10 – 45 minutes. However, if we are using an hour long time frame then we want to use an expiry time consisting of 30 minutes to 2 hours, any time frame outside this range will affect your chances of winning the trade. When trading with this strategy I only prefer to use stocks as well, the histogram works well with volume oriented assets and generates more accurate trading signals. If you have comments or questions please feel free to post them below!