We take already written many times on our weblog nearly moving averages. This is probably the virtually popular indicator when it comes to technical analysis. Many strategies are based on it. Today, we are going to describe a method that works well with one-infinitesimal binary options.
Contents
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1
The classic interpretation of moving averages-
1.ane
The endmost price crosses the moving average -
one.2
Using ii moving averages to generate trading signals
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1.ane
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2
Strategy for i-minute binary options using SMA(8) and SMA(21)-
2.1
Opening positions for price decreases -
two.2
Opening positions for price increases
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2.1
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three
Summary notes
The classic interpretation of moving averages
Yous probably already know that there are several types of moving averages. Among them, you volition notice the most popular ones, like 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 state of affairs where the closing price is above the moving average is read every bit a buy betoken. Conversely, if the candle crosses the moving average downward, it is a sell bespeak. This strategy in its simplest form gives many fake signals. Just look at the chart beneath and you will see what I am talking about.
Using ii moving averages to generate trading signals
Another common technique is to use 2 moving averages with unlike periods. Pop pairs of averages are 9 and 13, eight and 21, 10 and xxx. In the chart beneath you volition find SMA(viii) and SMA(21). The SMA(8) follows the cost faster than the SMA(21). The signal to buy is when the fast average crosses the slow boilerplate upwards. The point to sell is when the fast average crosses the slow average down.
Both of these techniques work. All the same, it is better to use them in combination with a set stop loss and take profit. Binary options, notwithstanding, are an instrument that does non offer such possibilities. Here we are only assessing whether the market will go up or down. Our assessment is verified by the actual direction of the market.
Strategy for one-minute binary options using SMA(8) and SMA(21)
As I mentioned, binary options require a slightly different approach to trading. Nosotros volition employ the same averages, SMA(eight) and SMA(21). First of all, they will be used to make up one’s mind the existing trend. If the average is more than than wearisome, then we are dealing with an uptrend. If the fast average is below the slow average we say that the market is in a downtrend.
The trend is i thing and the moment the position is opened is another. Our strategy is about being clever. If the trend is downward, we will try to open the option for toll falls.
The place where nosotros will trade is to exist clearly expensive in the marketplace. If nosotros have an uptrend, we desire to open an option for the toll increment, merely in a place where it is extremely cheap. In this way, we have a chance to reach lx-70% efficiency of our trades. But what does this hateful in practical terms?
Opening positions for price decreases
Practical examples all-time show the thought of this method. If there is a down tendency nosotros wait for the price to exceed the fast average (SMA8) upwards. If this happens, nosotros wait for the price to clearly intermission through the SMA8.
Some traders will read it as a buy betoken, merely in such situations, the price usually returns. This is our signal to open a 1-minute option for a price drop. In the chart beneath I present one of the transactions. The red rectangle indicates where it is relatively expensive, which is skillful for opening positions for cost drops.
Opening positions for price increases
If we take an uptrend we expect until the toll breaks downwards successively SMA8 and then SMA21. Afterwards, nosotros quickly open the option for the price increment. Look at the chart below.
Summary notes
Remember that this strategy, like any other, does not work every time. In addition, it requires some practice. It is expert to practice it on your demo account.
Using this method, prepare several charts for unlike currency pairs and try to monitor the state of affairs in several markets simultaneously. Remember to set an appropriate expiry time of one minute. Remember too that the method works best when the trend is also visible without the utilize of indicators.
This method may plow out to be very effective later a few weeks of training and observations. The key to success is a transaction in line with the tendency catching the ends of the corrective motion in the existing trend. Nosotros hope that you will enjoy today’s strategy. Delight share your thoughts in the comments section beneath.
Nosotros wish you all the best!
Source: https://www.iqoptionwiki.com/1-minute-binary-options-strategy-sma-8-21/
