Wednesday, February 5th, 2014 by Tim Lanoue
Trading online with binary options can be one of the most beneficial life decisions that one can make. However, many people new to the industry have little knowledge or have conducted enough research necessary to profit through binary options. Luckily for you the purpose of today’s article is to provide a high accuracy binary options strategy that can be used by traders of any experience level. Moving forward we will cover the basics of the indicators needed and how to implement them into this balanced system trading strategy.
The first indicator that we need for this binary options strategy would be two exponential moving averages set at a period of 5 and 10. Exponential moving averages are indicators that display the average price of an asset set over a predetermined period of time. Oftentimes these indicators are used with trend trading and play a primitive role in the signal process of this strategy.
The second indicator we use would be the relative strength index, also known as the RSI indicator. The RSI indicator is commonly categorized as an oscillator type of indicator because the indicator oscillates between the values of 0.00 and 100.00. However, the more important values to pay attention too would be the 30.00 level and 70.00 level, these levels will tell us the condition that the asset is currently exhibiting. If the RSI value is near the level 70.00 it tells us that the asset is currently being overbought and will more than likely drop. However, if the RSI value is near the level 30.00 it tell us that our targeted asset is oversold and a price rise may occur.
The last indicator that we use in the signal process would be the stochastic indicator. This is also known as an oscillator type of indicator because it reflects between values of 0.00 to 100.00. The stochastic indicator is quite similar to the RSI indicator not only because it is an oscillator classified indicator but it also determines whether or not an asset is overbought or oversold. If the value reflected on the stochastic chart is near 80.00 then the asset is thought of as overbought however if the value is near the level 20.00 then it is known as oversold.
Although this strategy may seem complex due to the variety of indicators needed it is relatively simple due to the simplicity of these indicators and the signal process. In the picture below you can see how we use these indicators to spot a call trading signal. In order to place a call trade we need to wait for three occurrences to take place. The first step that needs to happen is for our ema 5 line to cross our ema 10 line in an upward direction. The second thing we need to make sure is that our RSI indicator is valued above 50.00 and the last would be that our stochastic indicator is heading upward but not over the 80.00 level range. If all three of these conditions are met then we can place a call trade, however if not all three are met then no trade should be placed.
Similar conditions must be met in order for a put trade to be placed when using this strategy. The first step that must occur is that our ema 5 must cross our ema 10 line in a downward direction. The second condition that must be met is that our RSI value must be below 50.00 so it acts as a confirmation that the asset’s price will go downward. The last condition to be met is that our stochastic line must be heading downwards but not within the 20.00 level.
Although this strategy may seem like it has a lot of indicators involved the setup and implementation of this strategy is pretty simple. The signals generated by this strategy when all three conditions are met are strong and when used properly can yield win percentages consisting of 75% or higher. For more information on indications and instructions visit the Indicators & Charts Page!
EXTRA: Checkout this Binary Options Strategy review on YouTube!