ema crossing binary option strategy

We have already written many times on our blog about moving averages. This is probably the well-nigh pop indicator when information technology comes to technical analysis. Many strategies are based on it. Today, we are going to describe a method that works well with one-minute binary options.

Contents

i The classic estimation of moving averages
- 1.ane The endmost price crosses the moving average
- 1.2 Using ii moving averages to generate trading signals
2 Strategy for i-minute binary options using SMA(8) and SMA(21)
- 2.1 Opening positions for cost decreases
- 2.2 Opening positions for price increases
three Summary notes

The classic estimation of moving averages

You probably already know that in that location are several types of moving averages. Amidst them, you will detect the well-nigh popular ones, like the simple moving boilerplate (SMA), weighted moving boilerplate (WMA), exponential moving average (EMA). Their classical interpretations are the aforementioned.

The closing toll crosses the moving average

A situation where the closing price is to a higher place the moving average is read every bit a buy signal. Conversely, if the candle crosses the moving average downwards, it is a sell betoken. This strategy in its simplest form gives many imitation signals. Just await at the chart below and yous will see what I am talking about.

Typical interpretation of SMA — The typical interpretation of SMA

Using 2 moving averages to generate trading signals

Another common technique is to employ 2 moving averages with unlike periods. Pop pairs of averages are 9 and 13, 8 and 21, x and thirty. In the chart below you volition find SMA(8) and SMA(21). The SMA(8) follows the price faster than the SMA(21). The signal to buy is when the fast average crosses the ho-hum average up. The signal to sell is when the fast average crosses the tiresome boilerplate downwardly.

Signals from short and long-term moving averages

Both of these techniques work. Even so, it is better to utilize them in combination with a set stop loss and take profit. Binary options, however, are an musical instrument that does not offer such possibilities. Hither we are but assessing whether the marketplace volition go up or down. Our cess is verified past the actual direction of the market.

Strategy for one-minute binary options using SMA(eight) and SMA(21)

Equally I mentioned, binary options crave a slightly unlike approach to trading. We volition apply the same averages, SMA(8) and SMA(21). Showtime of all, they will be used to determine the existing trend. If the average is more than tedious, then nosotros are dealing with an uptrend. If the fast average is below the slow average we say that the market place is in a downtrend.

Downtrend and uptrend determined with 2 moving averages — Downtrend and uptrend determined with ii moving averages

The trend is ane thing and the moment the position is opened is another. Our strategy is nearly being clever. If the trend is downward, we will try to open up the option for price falls. The place where we volition trade is to be conspicuously expensive in the market. If nosotros take an uptrend, we desire to open an pick for the price increase, but in a identify where information technology is extremely inexpensive. In this fashion, we take a chance to reach 60-seventy% efficiency of our trades. But what does this mean in practical terms?

Opening positions for price decreases

Practical examples best prove the idea of this method. If there is a downward trend we wait for the price to exceed the fast average (SMA8) upwards. If this happens, nosotros wait for the price to clearly break through the SMA8. Some traders will read it as a buy point, but in such situations, the price unremarkably returns. This is our signal to open a i-infinitesimal option for a toll driblet. In the chart below I present ane of the transactions. The red rectangle indicates where information technology is relatively expensive, which is good for opening positions for price drops.

Sell in downtrend when it is expensive enough — Sell in a downtrend when it is expensive enough

Opening positions for cost increases

If we accept an uptrend we wait until the toll breaks downwards successively SMA8 and then SMA21. Subsequently, nosotros quickly open the pick for the price increase. Look at the chart beneath.

Buy in uptrend when it is cheap enough — Buy in an uptrend when it is inexpensive enough

Summary notes

Recall that this strategy, similar any other, does non work every time. In addition, information technology requires some practice. Information technology is good to exercise it on your demo account.

Using this method, prepare several charts for different currency pairs and attempt to monitor the situation in several markets simultaneously. Remember to set an advisable expiry time of one minute. Remember too that the method works best when the tendency is also visible without the use of indicators. This method may turn out to be very constructive later a few weeks of preparation and observations. The key to success is a transaction in line with the trend communicable the ends of the corrective motion in the existing trend. Nosotros promise that you will savour today'southward strategy. Please share your thoughts in the comments department below.

We wish you all the best!