Exponential Moving Average Strategy

Exponential Moving Average Strategy

This binary options strategy is a bit advanced, but not to worry because we’ll break it down step-by-step. Before getting started be sure that you have downloaded MetaTrader 4, as this is the analysis chart that you’ll be using. Once you have this, open up a currency pair chart and plot three exponential moving averages. This lays the groundwork for the strategy. Now pause and let’s spend a moment discussing moving averages.

Moving averages can provide you with a visual that shows price direction. They are considered to be a lagging indicator and are calculated by averaging out the value of a select number of periods. There are several different versions of moving averages, but of course you need not ever use all of them. When working with moving averages you’ll never have to perform any calculations. Your MetaTrader 4 software is going to take care of that task. For this binary options strategy you’ll select the Exponential Moving Average with a period of 10 then go back in and repeat using periods of 25 and 50. EMA is used for this strategy because its formula takes into account the last candles. This makes it more sensitive to the price action.

The trade signal occurs whenever the 10 moves through the 25 and 50. An upward cross of these two indicates a Call opportunity. A downward cross the two indicates a Put opportunity. If you’ve set up your chart correctly, you simply wait for all of these conditions to be met. Once they are, select your Call or Put positions accordingly. Just remember that the 10 EMA must cross over both the 25 and 50 before you consider the signal valid and enter it your trade.

If the asset price starts a solid trend after your first trade, consider opening another trade if the three EMAs are continue to be properly aligned. If the price moves against you right after the trade begins and the 10 EMA crosses back over the 25 and 50, use the Digital options plataform “Sell” feature to exit the trade and avoid a complete investment loss. When you do this you can boost profits while minimizing losses. You should also be able to avoid the sting of false signals that are produced during sluggish market conditions.

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