Thursday, October 3rd, 2013 by Tim Lanoue
When it comes to trading binary options we the traders are assigned the difficult task of finding good trades to enter. Luckily for us that over the years trading indicators have helped aid the win percentage of trader’s portfolios. What many traders research countless hours on is what we call the “Holy Grail” of trading indicators, unfortunately for us no such indicator exists but if you use this custom Acceleration Band Indicator and William Percent R Trading Pattern I am sure your success rate will rise.
One of the major issues with traders that follow a specific trading pattern or no pattern at all would be over trading. Meaning that traders are receiving too many signals and not refining their trade selection to a few trades per day. The ability to control yourself and not expose yourself to ‘over trading’ is what we call risk control. Risk control plays a major role in technical analysis trading patterns so don’t make the mistake of over trading.
Acceleration Bands Indicator Explained
The concept of acceleration bands is to help show the price action of the asset over an extended period of time. Before we dig deeper it is important to know that you can find these indicators along with many others at Freestockcharts.com. Historically, acceleration bands were used as a tool for measuring the acceleration of an asset but over time it has become more of a technical analysis guideline for online traders. When dissecting the indicator we find that the indicator is composed of a simple moving average of 20 and acts as a way to predict future direction of the asset. On other hand we have the William%R indicator which is a dynamic technical tool that determines if the value of the asset if overbought or oversold. When the value of the asset crosses the dotted line we know that the value of the asset serves as a majority vote for either buy or sell orders.
Moving forward, we need to add the William Percent R which will be abbreviated as William%R in the indicator tab. The purpose of the William%R indicator is to serve as an aid to help spot change in direction in correlation with our acceleration bands. An important note to consider is that when using this trading pattern you can use 4 hours, 1 hour, 30 minute or 15 minute charts. The flexibility of time frames to choose from is a nice advantage for traders who like to be dynamic and use multiple time frames. In the picture below you can see the basic set up and execution of the acceleration band and William%R indicators.
When it comes to using this trading pattern we need to wait for two conditions to be met before we enter our trade. The first condition that must be met is that we need our asset to have two candles close before crossing an acceleration band. The last condition that must be met is that we need our William%R line to cross the dotted line with the same direction our asset crosses the acceleration band. So if the asset crosses the acceleration band in a downward movement our William%R needs to cross the dotted line in a downward motion and vice versa with the other direction. In the picture above and below both conditions are met and a trade is place that ends up as both winning trades.
Overall, this is a very easy trading pattern to implement into your portfolio that can help raise your success rate as a trader. This trading pattern may take time for the right set up to develop but just be patient and be mindful of risk control. If you have any questions or suggestions please leave a comment.