Binary option trading involves not only short-term deals, but also medium and even long-term. For those of you who prefer the medium-term trading strategy, expiry times can vary from one day to a week or more.
Long term trades gives you an advantage against the broker and higher chance to profit in the long run.
To trade this strategy, a technical analyst will need charts on timeframes of one day or more. It is important to remember that in order a trader to use such a strategy, the trend should be detected on the chart. The medium-term strategy for binary options Three Moving averages uses simple moving average indicator. It also uses support and resistance levels.
How to set up Three Moving Averages strategy?
Since one of the main conditions for using this binary options trading strategy is the availability of medium-term trend, traders must always ensure that either upward or downward movement exists on the market.
When using the medium-term Three Moving averages trading strategy the volume should not exceed 4 percent of the deposit. As mentioned above, an indicator used in this system is a simple moving average.
The timeframe may be one day or more. Moving averages must have different periods. The shortest one is 4 and colored blue. Curve with a period of 8 colored in red. Finally, the longest period of 40 and the curve is colored in green.
Making this strategy easer, traders can apply a trend line on the chart, or at least visually mark the extremes in order to understand, in what direction the current movement is going. The most important thing that you need to determine is the direction of the current trend.
You can use the longest moving average with a period of 40 (shown in green at the example). If the price is under the moving average, the market is experiencing a downward movement. In cases when the price is above the moving average, there is an upward movement.
Buying Call and Put options with Moving Average crossing
In order to determine the possibility of binary options buying, it is necessary to look at all moving average curves. When they are deployed in the same direction, we recommend you to prepare for trading. It is not necessary to check the position of the moving averages on the chart every five minutes.
Check it once a day to see the situation and make appropriate conclusions.
If the longer blue moving average crosses the shorter red from top to bottom and the green moving average is also facing down, you can buy a Put binary option.
It is also recommended to do the same but in the opposite direction when the blue moving average crosses the red one from the bottom up. In this case it is recommended to buy a Call option, as an upward movement begins.
At the same time, green moving average with a period of 40 should be directed upwards.
This trading strategy is perfect for those who do not like to take risks and strongly prefer a measured trade. A huge advantage of using such trading strategy is that the trader has a much better chance to make a profit. Although the final yield is lower than, for example, any of the intraday strategies.