The strategy Three in a row is based on the three most popular indicators: MA, Stochastic and RSI. If these indicators are used correctly, they provide a high percentage of correct signals and may be filters for each other.
Surely, every trader is faced with a situation when the popular indicator that seemingly is used by all the traders begins to give false signals. In such cases, it’s better to use additional indicators to filter out those false signals.
Three in a row binary options strategy uses three tools
• Moving Average: Hundreds of strategies are built at the MA with different periods since, firstly, it shows the moment when the market chose the direction and traders unanimously decided to buy or sell an asset. Secondly, it is easy to track on the chart.
• The Relative Strength Index (RSI): RSI shows us the overbought/oversold zones. In this trading strategy, the key level is 50. If the RSI is above this mark, the trend is up; if below, the trend is downward.
• Stochastic: The useful tool of technical analysis. Its direction also coincides with the direction of the price, and the important thing for us is the moving of stochastic in the channel 20-80. The break of this channel shows overbought or oversold zones of the market.
The settings of the indicators for Three in a row binary options trading strategy
• MA (5),
• MA (10),
• Stochastic (14, 3, 3),
• RSI (14).
The strategy is suitable for all timeframes. Naturally, the longer timeframes will give us more correct signals; consequently, we will gain more profitable deals. The expiry time of the options should be 2-3 candles ahead. For example, if we analyze the 15-minute timeframe, it’s better to buy options with an expiry of 30-45 minutes. Conversely, if you chose a 30-minute timeframe, the expiry time should be one hour.
The signals for Three in a row strategy
Conditions to buy CALL option:
• MA5 crosses MA 10 upwards,
• RSI moves within the channel 30-70 and is above 50,
• Stochastic moves between 20-80,
• Stochastic moves upward.
Conditions to buy PUT option:
• MA5crosses MA10 downward,
• RSI moves between 70-30 but is below 50,
• Stochastic moves in the channel 80-20,
• Stochastic moves downwards.
If you look at the strategy in more detail, you may wonder why one binary options strategy uses two oscillators: Stochastics and RSI.These oscillators have their specific advantages and disadvantages. For example, the stochastic reaches the borders of overbought/oversold zones earlier than RSI with the same number of periods. However, because of this lag, RSI gives fewer false signals. Thus, they fine filter each other.