Sunday, October 5th, 2014 by Tim Lanoue
There are so many styles of trading offered by binary option brokers that much of the time as traders we forget about the most practical style of trading, the classic style option. This was the first style of trading offered by binary option brokers and to this day many brokers still offer this style of trading so that must mean it is a profitable style of trading.
This trading strategy requires the use of three exponential moving averages set at a period of 5, 13 and 50. For those of you who are not familiar with moving averages, they are technical indicators that plot the average price level for a particular asset over a set period of days. So for example, one of our moving averages is set at a period of 5 so it is plotting the average price of our selected asset of the last 5 days. The way these moving averages cross one another oftentimes signify trading set ups and signals.
In the picture below you can see an example of how this trading strategy is set up and executed. In order for a CALL trade to set up we need our 13 exponential moving average line to cross our 5 exponential moving average line in an upward direction. The next thing we need to make sure of is that the 5 and 13 moving average lines are above the 50 exponential moving average line, if it is then we are good to place a CALL trade. In the second picture below you can see an example of how a PUT trade is set up and executed. It basically is the opposite of the CALL trade set up; we wait for our 13 EMA line to cross our 5 EMA line in a downward direction. Next we make sure that the 50 EMA line is above both the 5 and 13 EMA line and if it is then we are good to place the trade.
All trading expiry times should consist of 5-15 minutes, it is difficult to say exactly when because Classic Options often expiry at the end of a quarter, half or whole hour. As long as you stay within the 5 to 15 minute expiry time frame you should see a successful investment payout. Also, when trading with this strategy we want to make sure that the time frame that we are watching our asset is set to 15 minutes. Lastly, I found this strategy to have the best success rates with low volatility currency pairs. A few popular low volatility currency pairs that you could use this strategy with would be the Eur/Usd, Usd/Chf and Usd/Cad.
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Binary options is the most profitable and easiest style of online trading provided to online traders and will only continue to grow in popularity. Having a reliable trading strategy like the one given above is key for your success. Make sure you always have a game plan and stick around for more articles to come! If you have any questions, comments or suggestions please feel free to leave them below and I will get back to you as soon as possible!