This is one of best strategies for new traders. You can actually use it in different ways to determine trend and also reversals and of course signals for trading. Best time frames to use it are short but you can apply it to any time frame. The strategy itself deserves that their author is also written, in this case this is James Ayetemimowa. As we said, it is simple strategy that uses MACD. Good thing is that it follows the trend and uses more then one indicator to determine entry point which is great for binary options trading.
INDICATORS TO USE ONA CHART:
– 50 SMA (GREEN)
– 100 SMA (RED)
– MACD (DEFAULT SETTINGS – 12, 26, 9)
– 5 MIN or anything else you like
HOW IT WORKS:
As you can see the setup itself is simple and it is based on a 5 minute time frame so the signals come regulary. With the two moving averages you determine the trend, type of trade. These two SMAs determine your position, when the 50 bar SMA is above the 100 bar SMA means that the trend is bullish so it goes up. When the short 50 bar SMA is below the 100 bar SMA means that trend bearish and it will go down. As you can see, you only trade when this happens, you do not anticipate and trade before it crosses. You will see the signal will be made when the MACD is overbough or it will be oversold, that is when it will crossover and at the same time the price will go past the SMA. This means that when trend is downfall you will have to wait for price to correct itself above moving average. So when this event happens you will get signal when MACD oscillator is on the overbough side and of course makes bearish cross over. You can predict this cross over with MACD histogram. Check also the picture and you will see what i mean.
This is a very well thought strategy even for beginners as we said but that does not mean it is not good for expirienced traders aswell. You can use this strategy for every asset you wish to trade on any time frame basicly. But please have in mind money management at all times. As you see it also does not need to check multiple time frames but it will not hurt if you do your analysis since you can only benefit from that. Even though it is simple strategy it can be very well trusted since it give you the right trend and momentum from which you can see signals to use for binary options trading.