Trading Binary Options with Klinger Volume Oscillator

By | April 6, 2014

Sunday, April 6th, 2014 by Tim Lanoue

The KVO indicator also known as the Klinger Volume Oscillator is a moving average based type of oscillating trading indicator.  This indicator was created by Stephen Klinger with the main function to help traders predict future long-term trends of our assets price action.  One of the unique characteristics about this indicator is that although it focuses on helping traders identify long term trends it also helps traders predict short-term reversals that may occur throughout the assets live feed.

How it Works

The KVO works by measuring the incoming volume in comparison with the out coming volume.  The KVO indicator is composed of a merging simple moving average line that is set at a period of 34 and 55.  One of the nice features about this indicator is that on most charting solution websites and software it is already present so you would not have to configure with the settings of the indicator.  The Klinger Volume Oscillator also applies divergence to help traders spot when volume and price are not confirming and moving in the direction that they should be heading.  If the oscillator is heading upwards then it is telling us that the volume of our targeted is rising and vice versa for the opposite direction.

Trading with the KVO Indicator

When trading binary options and using a volume indicator we need to make sure that we are trading assets that have volume.  If we were to use a currency pair or any other asset that does not possess any volume then we would see no volume in our indicator box, which is why I only trade high volume stocks when using this indicator.  A few stocks that I recommend to trade when using this indicator would be Apple, PLUG, NKE, and Facebook.  In the picture below you can see an example of how this indicator would look and how the trading signals are generated.  As you can see I added a simple moving average line set at a period of 3, this moving average line is used to help aid in our signaling process.  When looking to place a call trade we must wait for two things to occur, the first would be that we need our KVO line to pass our blue simple moving average line in an upward direction followed by the appearance of bullish candles on top of the break.  However, if we are looking for a put trade scenario then we need our KVO line to pass through our blue moving average line in a downward direction with bearish candles directly above the break.  If these two steps occur for either situations then we are good to place a trade.

Time Frame and Expiry Times

When using this trading pattern I only like to use the 30 minute time frame because I feel that the moving averages of the preset KVO indicator generate the best signals.  So once our signal is generated and we are ready to place a trade we need to make sure to use an expiry time consisting of 15 – 30 minutes.  If you have any comments or questions please feel free to post them below.

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