“Trend Intraday” Strategy for binary options is not the easiest one and requires careful attention. Usually it is used in the FOREX market, however it could adapted be for binary options trading and it gives quite good results. It provides signals for purchase of CALL or PUT options using three indicators and two different time-frames. It is mainly used for 1D and 4H time-frames (one candle accordingly 1day and 4 hours). Here we will consider a more aggressive version of strategy for 4H and 1H time-frames, so to increase the number of transactions per day. Rules for 1D-4H time-frames will be the same.
The idea of the strategy is to get a signal on the current trend using moving average indicator on a larger time-frame, to move to a smaller, and purchase the option by the signals from other indicators. The option should be bought in direction of the trend according to moving average indicator.
We can open the following indicators in the Real time chart section (click here ): Moving Average, Relative Strength Index (RSI) and MACD (Moving Average Convergence Divergence).
Moving Average (MA) is a curve that moves in the same direction as the trend line, the trader can independently represent the basis of the current highs and lows. This auxiliary tool allows you to see the smoothed market movement, to determine in which direction the market is developing at the moment, as well as in relation to the general trend.
Relative Strength Index (RSI) is a momentum indicator that calculates the value based on the accumulated price strength or weakness for the period of time specified in parameter Length. When parameter Length is smaller, the RSI becomes more sensitive to price changes.
Also, this indicator is used to determine overbought and oversold conditions in the market when the indicator value is very high or very low. These levels (the Lower Band and the Upper Band) are 70 and 30 by defaults (you can change them). When the price is in these areas, it is necessary to pay attention to the development of events.
MACD (Moving Average Convergence Divergence) is an indicator showing convergence and divergence of moving averages. It can be attributed to the type of complex average, since it improves the visual perception of moving averages. It is believed that this indicator reduces the disadvantages that moving averages might have.
Let’s look at the sequence of actions more attentively.
Go to the section Real time chart and open the chart of EUR /USD. We are choosing timeframe 4 hours and placing our indicators.
Then adjust the settings for indicators. Click on the gear icon to set the parameters. In the Inputs tab, leave the value as in the screenshot below. For Moving Average set the value 3, put the RSI 5 and leave MACD 12,26,9 as it is by the default.
After setting the indicators, we are ready for trading.
On the timeframe 4H we pay attention only to the MA (moving average). We don’t look at the other indicators this time. In the screenshot above we can see that the previous candle closed above the moving average. It means that now it is a rising trend and we will consider only the CALL option for purchase.
An example of buying a CALL option
Let’s go to the timeframe 1H and look for signals to buy an option from the remaining indicators.
We buy the option CALL, when the moving averages of the indicator MACD intersects, histogram trend changes it direction to up and the RSI should break through its overbought level. The composition of these signals is very reliable and tells us about the growth of asset prices. Expiry time for the option should be one-two hours.
An example of buying a PUT option.
On the chart USD/CHF with timeframe 4H we pay attention only to the MA (moving average). In the screenshot above we can see that the previous candle closed below the moving average. It means that now is a downward trend, and we will only consider the option of buying PUT option.
We go to the timeframe 1H and look for signals to buy a PUT option on the remaining indicators.
You can buy PUT option, when MACD indicator moving averages intersects, histogram trend changes it direction to down and the RSI should break through its oversold level. These three signals tell us about the fall of the asset price. Expiry time should be one-two hours.
As you can see, binary options trading can successfully use this FOREX strategy. Both, experienced traders and beginners can apply it.
Of course there is more easy to trade with this strategy at the platform where all the needful indicators are integrated in the trading platform. So, we are recommending you to use one of below listed. By the way, both of these platforms have demo account, so you may test this strategy absolutely without risk. You can try one of them now!Try with “IQ option” demo account Try with “Binomo” demo account