This strategy offers binary options traders an easy way to trade currencies. Although it’s a moving strategy, it doesn’t utilize the simple moving average, but rather exponential moving averages instead. This is because EMA’s will help you enter into smart trades sooner. Below is a simple version of the strategy. This version uses a 30-bar EMA along with daily and 30 minute time frames. Both time frames and the MA will continue to be 30-bars.
By examining multiple time frames in your analysis, false signals will be kept to a minimum. The daily time frame will establish the underlying price trend. If within the daily charts the price of your chosen asset is above the 30-bar, then the trend is bullish, below and the trend is bearish. Exercise caution because you must see where the price is in relation to the long-term trend and support and resistance.
After identifying the underlying trend and verifying that it is not too close to a turning point then you can shift to charts containing 30-minute bars. The signal comes when the price shifts back above the 30-bar EMA within the 30-minute chart. This might take several hours, so patience will be a must. It is possible that no signal develops, or you could get several. Usually expiration should be restricted to one to four hours. The closer the price is to a prospective turn, the shorter the expiry should be.
If bullish market conditions are in place when the asset price crosses over from underneath or is higher than the 30-bar EMA but then pulls back, this is the time for entry. The initial signal is difficult to capture and the final signal can in some cases end in a loss, but there should be a number of solid signals in between.
Moving averages are a wonderful way to assess trend strength. They gauge the average asset price over any period of time. They can also form the groundwork for a significant portion of your technical analysis. The MA generates a collection of data that when posted beside prices can measure the trend. When asset prices are closing higher the MA is going to move upward. When asset prices are closing lower then the MA is going to close down. Utilizing an EMA indicates that the most recent data is most important and the older data is less important. This helps make it a fresher indicator than a SMA.