Wednesday, October 15th, 2014 by Tim Lanoue
If you guys are fishing for a new binary options trading strategy well then I have quite the catch for you here. Today we are going to discuss a great technical indicator that should be a part of any trader’s strategy arsenal. The main indicators that we will be using with this strategy is the Fisher Transform indicator and a simple moving average indicator. Moving forward we will cover the fundamentals and complexities of these indicators and how to properly set up a high success trading strategy.
For those of you who don’t know the Fisher Transform indicator is solely a technical indicator used to predict price reversals. Furthering your knowledge, this technical indicator is known as an oscillator which means that the way this indicator works is that the value of the indicator fluctuates along face values which can be used to measure market conditions of the targeted asset. This indicator is a great indicator to use in combination with the Relative Strength Index indicator but most of all with the moving average indicator. The moving average indicator is a simple technical indicator that uses a predetermined time period to show the assets past price history which allows traders to easily predict future price reversals.
Setting up this indicator is relatively simple and really only requires the use of a charting solution in order to get started. One of my favorite charting solutions to use is www.freestockcharts.com because it is free and is wired directly into the marketplace so you see the best price values of assets. Now when it comes to picking out a good asset to trade we should use a low volatility currency pair like the Eur/Usd, Usd/Cad or Usd/Chf. High-volume stocks that can be traded with this strategy as well would be Apple, Nike, Amazon and Exxon. Selecting one of these assets now we need to change the time frame to 15 minutes on the chart and now to customize the other two indicators. Originally the Fisher Transform indicator is set to a period of 10 so we need to edit the indicator and change the period setting to 20. The simple moving average indicator needs to be set at a period of 50 which can be done by right clicking and selecting Edit Indicator.
Now that we have the proper set up we can wait for our signals to be generated. The signal process is quite simple and any novice trader can effectively trade with this strategy. As you can see in the picture below when our Fisher Transform line crosses our moving average line we place a trade in the direction of the cross. So if the Fisher line crosses our moving average line in a downward direction we would place a PUT trade and vice versa. Now either you can wait for a confirmation candle to appear right above the cross and if the candle is heading in the same direction of the cross then you can place that trade, however this confirmation is not needed. Without the confirmation we still won 4 out of the 5 trades so as you can see this is a solid strategy that doesn’t require confirmations. Average expiry times that one should use when using this strategy would be anywhere from 15 to 30 minutes.
Using this strategy during market hours will ensure your best chances of success but this strategy can also be used during intra-trading hours. One of the best advantages about this strategy is that it is simple enough to be used by new traders but also effective enough to be used by experienced traders. As always guys if you have any questions, comments or suggestions please feel free to leave them below and I will get back to you!
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