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Stochastic Oscillator, RSI and MA binary options strategy

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binary options trading strategy
3.7/5 of 19 ratings

Three indicators strategy

This strategy is based on the three most popular indicators - Stochastic, RSI and MA. These indicators, if used properly, do not only provide a high percentage of correct signals, but may be used as different market filters for each other.

You can trade binary options on a high level platform integrated with trading indicators including RSI and MA.

Surely, every trader faces a situation where one or another popular indicator that seemingly without exception use all traders, begins to provide inaccurate signals. In such cases, the use of additional indicators helps to filter out false signals.

RSI Indicator Signals

RSI indicates trend strength. However, according to RSI, we will not look at overbought or oversold price levels, as it is often done, but at prices direction because indicator’s figures coincide with the testimony of the price trend.

The key note in this binary options trading strategy is the 50 mark. If the RSI is above this mark - the trend is bullish, if below - bearish.

Terms of Call option buying occur if RSI value is higher than 50 but lower than 70. In the opposite side, if RSI is situated between 30 and 50 we recommend to buy Puts.

Stochastic Indicator Signals

Stochastic is an oscillator type of indicator. It is also a very well-known tool for technical analysis. The direction of Stochastic oscillator also coincides with the direction of the price movement.

Another important indication for us is to find the stochastic in the channel between 20 and 80. This let us know about the existence overbought or oversold asset.

Stochastic_Indicator_Signals

We recommend to buy Call option if Stochastic oscillator is situated between 20 and 80 values and it is going up.

Put option buying is good when Stochastic is going down and its value is between 20 and 80 figures.

MA Indicator Signals

Hundreds of strategies are built exactly at the intersection of MA with different periods, since, firstly, it shows the moment when the market has chosen an unambiguous direction and traders unanimously decided to buy or sell an asset.

Secondly, it is very easy to be traced on the chart. If MA (period of 5) crosses MA (period of 10) upwards - it is Call option buying signal, if MA 5 crosses MA 10 downward – Put signal.

MA_Indicator_Signals

We recommend to buy options with an expiration after 3-4 candles forward. For example, if we examine the 15-minute timeframe, it is better to choose expiry after 30-45 minutes.