Wednesday, December 3rd, 2014 by Tim Lanoue
Hey everyone I hope you had a great Turkey Day and are ready to get back to business with trading! I am rather excited today to present you with a high success rate trading strategy that I have been working on lately and I hope you are ready increase your vast knowledge about trading binary options. For those of who you prefer or enjoy trading the Eur/Usd currency pair much like myself then you will want to keep reading because you definitely will want to add this trading strategy to your arsenal. A charting solution, three technical indicators and a kick ass attitude is all you need in order to use this trading strategy. Below I will highlight the main functions of the three technical indicators that we will be using along with discussing the set up and implementation of this binary options strategy.
The TRIX indicator, also known as the triple exponential average indicator, is a oscillator driven indicator whose main function is to determine whether the asset we are watching are showing symptoms of being overbought or oversold. This is exceptionally helpful with our trading strategy here because the main focal point and concept behind this strategy is to trade strong reversals. The TRIX indicator acts as our guide really, if we can determine whether the targeted asset is overbought or oversold you can bet it will change directions soon down the line which is where our reversal trading strategy concept falls perfectly into play.
Simple Moving Average Indicator
Many of you already know that the simple moving average indicator is my favorite technical indicator to use when trading binary options. The main function of the simple moving average indicator is to display past average prices of our targeted asset over a predetermined period of time. For example, if we wanted to see the average price of our asset over the past 14 days we would set the period of our indicator to a period of 14.
Time Series Forecast Indicator
The Time Series Forecast (TSF) indicator, also known as the Moving Linear Regression indicator, is an extremely effective technical indicator that is used to show trends over a predetermined period of time. The TSF indicator is quite similar to the simple moving average indicator due mostly to the fact that you can change the period that the indicator displays and see how it reflects the charting solution.
Set up and Strategy Implementation
Setting up the Reversal Eur/Usd Binary Options Strategy strategy is relatively simple and only requires a few steps. The first step would be set up our charting solution, I prefer to use www.freestockcharts.com due mainly because it has all the indicators that I need and the values reflected in the solution have a better real time value than downloadable charting solutions. The next step would be to adjust our time frame to 15 minutes and select the Eur/Usd currency pair as our asset of choice. The last step would be to add our indicator to the charting solution, this can be done by clicking on Add Indicator. Once our indicators are added to the charting solution then we can begin implementing our trading strategy.
As you can see in the picture above we have a total of 5 investments placed and all but one ended up in-the-money, meaning that we had an 80% success rate. The signal line in this trading strategy would be the TRIX indicator line, not the simple moving average line like in most of my other trading strategies. In order for a signal to be generated we need to wait for a merge or cross to occur between our TRIX indicator and our simple moving average indicator. Whether the cross was conducted in an upward or downward direction will determine the type of investment trade we place. So if our TRIX indicator line crosses our simple moving average indicator in an upward direction and we have a confirmation candle directly above the break then we are good to place a CALL trade. The same can be said for a cross in a downward direction, once the cross has been established and we have a confirmation candle above the cross then we are good to place a PUT trade. Expiry times when using this trading strategy should stay between 5 – 30 minutes, no less and no longer.
This is an extremely effective binary options strategy when used correctly and on average you should have no problem seeing a success rate between 70-75%. Trading reversals is one of the most effective trading strategies in binary options and only continues to grow in popularity in the binary options community. 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 as soon as possible!