Stochastic and Cycle Strategy

Stochastic and Cycle Strategy

This binary options strategy makes use of a pair of customized indicators. The first is a cyclical Stochastic, which happens to be displayed on a chart as being distinct from a typical one, but don’t get confused because it is still a Stochastic. The second is referred to as I-High/Low/Middle. This indicator is comprised of 3 lines that enfold the price. These indicators only function on the MT4 platform, so grab a free download from a Forex broker if you haven’t already.

The purpose of the I-High/Low/Middle indicator is to separate binary options trades. In accordance with the strategy, the price trend is up when the asset price is higher than the center green line and down if asset price is beneath the center green line. Needless to say, you’ll only select a Call trade if the asset price is trending upward and a Put trade if the asset price is trending downward. Once you’ve recognized the trend using I-High/Low/Middle indicator, hold out for a matching dot to show up on the Stochastic cycle and then enter into your trade. A blue dot will indicate Call, while a pink dot will indicate Put.

Since this is a trend following binary options strategy, it’s not going to do well within a ranging period. The asset price will push higher and lower the middle line and incorrect signals will abound. Furthermore, the green line is not always the most ideal trend indicator, so some caution must be exercised. Also, you will need to consider not trading on every dot, but instead consider trading with those that appear in areas which are overbought or oversold.

This binary options strategy can be used by inexperienced traders. While there are more accurate strategies in existance, this one is a good selection for the trader who is trying to become familiar with strategy use. There are only two basic rules to follow and these keep you trading with the trend. This strategy will also teach discipline and help prepare you to move on to more elaborate strategies.

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