Thursday, June 5th, 2014 by Tim Lanoue
Finding a highly profitable quick term trading strategy can be difficult and sometimes hard to apply, fortunately for you guys today I am going to provide you with one that not only has a great success rate but also is pretty simple to use. What you are going to need for this 5 minute strategy is access to a charting solution, access to your trading broker and a little bit of patience. Checkout the top 5 free charting solutions for binary options.
This 5 minute strategy only requires the use of one trading indicator and it is the Derivative Oscillator indicator. This indicator is a trend generating and trend finding indicator that applies itself directly into the price action of our targeted assets. The Derivative Oscillator is a unique technical analysis indicator solely because it uses the assets momentum to formulate and generate there signal output.
Before we can apply this indicator into our trading strategy we need to make sure that the time frame that we are watching our asset is set on 5 minutes, since this is a 5 minute strategy. Any time frame watched outside this will affect the accuracy of the signals generated. In addition, this indicator works best for high volume stocks and low volatility currency pairs. Some of the more popular high volume stocks that would work great for this strategy would be Apple, Nike, Exxon and Amazon. Low volatility currency pairs that we would want to trade with when using this strategy would be Eur/Usd, Usd/Chf, Nzd/Usd, and Usd/Cad.
Now that we have all the basics set up we can look into applying this indicator into a trading strategy. In the picture below you can see an example of how this indicator would look when applied to our trading strategy. If you look closely you can see how the derivative oscillator bars go in the same direction as the price action candles, or it will predict it and you can see how it changes and how the price also then follows suit. We have three trading opportunities in this example and all three of them end up as winners. In order for a trading signal to be generated we need to wait for one step to happen and one confirmation. The one step would be that there is a change in direction in our derivative oscillator indicator. Meaning that if there is a negative candle below the 0.00 value the next candle must be a positive candle, and vice versa. The confirmation is if the candle forming above or directly next to our derivative oscillator is heading in the same direction as that candle, if it is then we are good to place a trade in that direction for an expiry time of 5 minutes.
This is a rather simple indicator and so far I have been experiencing around a 73% in-the-money success rate with it, I keep planning to researching and developing new strategies for you guys so just stay tuned in! Best of luck, and if you have any questions or comments please feel free to leave them below!