Nosotros have already written many times on our web log about moving averages. This is probably the most popular indicator when it comes to technical analysis. Many strategies are based on it. Today, nosotros are going to draw a method that works well with one-infinitesimal binary options.
Contents
-
1
The classic estimation of moving averages-
i.1
The closing price crosses the moving average -
ane.2
Using 2 moving averages to generate trading signals
-
i.1
-
2
Strategy for one-minute binary options using SMA(8) and SMA(21)-
2.1
Opening positions for price decreases -
2.two
Opening positions for price increases
-
2.1
-
3
Summary notes
The classic interpretation of moving averages
You probably already know that in that location are several types of moving averages. Among them, you lot will find the almost popular ones, similar the simple moving average (SMA), weighted moving average (WMA), exponential moving average (EMA). Their classical interpretations are the same.
The closing price crosses the moving average
A situation where the closing price is higher up the moving average is read as a buy bespeak. Conversely, if the candle crosses the moving average downwards, it is a sell signal. This strategy in its simplest course gives many false signals. Only await at the chart below and you volition run across what I am talking about.
Using 2 moving averages to generate trading signals
Another common technique is to use 2 moving averages with different periods. Popular pairs of averages are 9 and 13, 8 and 21, 10 and thirty. In the chart below you volition detect 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 upwards. The indicate to sell is when the fast average crosses the wearisome average down.
Both of these techniques work. However, it is meliorate to use them in combination with a set end loss and accept turn a profit. Binary options, however, are an instrument that does not offer such possibilities. Hither we are simply assessing whether the market volition go up or down. Our assessment is verified by the actual management of the market.
Strategy for 1-minute binary options using SMA(8) and SMA(21)
Every bit I mentioned, binary options crave a slightly unlike approach to trading. We will use the same averages, SMA(8) and SMA(21). Outset of all, they will exist used to determine the existing trend. If the average is more than slow, and then we are dealing with an uptrend. If the fast boilerplate is below the slow average we say that the market is in a downtrend.
The trend is 1 thing and the moment the position is opened is another. Our strategy is nearly being clever. If the trend is downwardly, we volition effort to open the pick for toll falls.
The identify where we volition trade is to be clearly expensive in the marketplace. If we accept an uptrend, we desire to open an option for the toll increase, but in a place where it is extremely cheap. In this fashion, we have a chance to reach lx-70% efficiency of our trades. But what does this mean in practical terms?
Opening positions for price decreases
Practical examples all-time bear witness the idea of this method. If there is a downwards trend we wait for the toll to exceed the fast average (SMA8) up. If this happens, we wait for the price to clearly break through the SMA8.
Some traders will read it every bit a purchase signal, but in such situations, the price usually returns. This is our signal to open a one-infinitesimal option for a price drop. In the chart below I present one of the transactions. The carmine rectangle indicates where it is relatively expensive, which is proficient for opening positions for price drops.
Opening positions for cost increases
If we take an uptrend nosotros wait until the price breaks downwardly successively SMA8 and and then SMA21. Afterwards, we rapidly open up the option for the cost increase. Look at the chart beneath.
Summary notes
Call back that this strategy, like whatever other, does not work every time. In improver, it requires some practice. It is good to practice it on your demo account.
Using this method, prepare several charts for unlike currency pairs and try to monitor the situation in several markets simultaneously. Remember to prepare an appropriate expiry fourth dimension of one infinitesimal. Remember also that the method works best when the trend is also visible without the use of indicators.
This method may turn out to exist very constructive subsequently a few weeks of training and observations. The fundamental to success is a transaction in line with the tendency catching the ends of the corrective move in the existing trend. We hope that you volition enjoy today’s strategy. Please share your thoughts in the comments section below.
Nosotros wish you all the all-time!
Source: https://www.iqoptionwiki.com/1-minute-binary-options-strategy-sma-8-21/
