Tuesday, March 11th, 2014 by Tim Lanoue
Hey everyone this is your favorite binary options writer here with a great educational article for you to apply into your binary options trading strategy. Today we are going to cover the basics and implementation of the percent price oscillator indicator. As many of you may know the binary options industry is a very desirable industry to become part of and to take advantage of, but it takes knowledge, experience and luck to thrive in the industry. Moving forward we will cover the basics, set up and implementation of this indicator and how to apply it to binary options.
The percent price oscillator indicator otherwise known as the PPO indicator is an indicator whose main function is to measure the difference between two moving averages as a percentage among a larger moving average. The PPO indicator is a great indicator to use if you are a trader who likes to trade with momentum and trends. Moving ahead we will cover the basics associated with setting up the PPO indicator.
Setting up the PPO indicator is rather simple and cannot be overlooked. Without properly setting up the PPO indicator the effectiveness of this indicator is severely hindered causing the signal process to be less accurate. Luckily, setting up this indicator is rather simple and only takes two steps to complete. The first step is to make sure that we are using a time frame suitable for this indicator so any time frame no less than 15 minutes and no more than 30 minutes is ideal for this set up. The last thing must confirm is that the asset we are observing displays a low level of volatility, meaning that the asset is less likely to change directions in a short amount of time. Common assets that we should be trading are as follows: Eur/Usd, Usd/Chf, Usd/Cad, Apple, Exxon, Gold, and Silver.
Now that we have the proper set up in place the next thing we need to cover is how to apply it effectively into a binary options trading strategy. In the picture below you can see an example of how this indicator would look and how to effectively trade it. The main signal process comes from when our blue line crosses our white line in the PPO indicator box. If there is a downward break then we see if we have bearish candles present and if we do then we go ahead and place a put trade. However, if there is upward break where our blue line crosses our white line in an upward direction and we have bullish candles present then we go ahead and place a call trade. It is a rather simple signal process and expiry times should consist of 5 to 15 minutes.
Implementing the PPO indicator into a binary options strategy by itself is quite effective but can become more effective when used in combination with other momentum and trend oriented indicators and strategies. Making sure you have the proper set up is essential and cannot be overlooked. If you have any questions or comments please feel free to leave them below. Thanks for your time and stay tuned for more articles!