This strategy is simple enough for novice traders despite the fact that it consists of more than one condition for market entry. This strategy makes use of Moving Averages periods of 5 and 10, an RSI of 14, and a Stochastic of 14, 3, and 3. Clearly, you must have some knowledge of RSI, Stochastic, and Moving Averages prior to trying to use this binary options strategy.
The first step will be be to plot the indicators inside your chosen chart. When this is completed, you’ll then consider the entry requirements:
Call position require the 5 EMA to cross the 10 EMA, moving upward. Additionally, the RSI has to be higher than 50. The Stochastic should be moving up, but should not be in the overbought area. All three of these conditions must be met before entry is signaled. Don’t expect all three conditions to be met simultaneously. You’ll likely have to be patient.
For Put entries, simply reverse the aforementioned conditions. This means the EMA 5 must cross the EMA 10, but this time moving downward. The RSI shifts to needing to be below 50. Stochastic needs to be moving downward, but not yet in the oversold area. Here again, all three conditions must be met before entering into your digital options trade.
There really are no serious drawbacks to this digital options strategy so long as all conditions are met. When they are expect the price of the asset to promptly move in the direction indicated, but keep in mind that things don’t constantly go as planned. Sometimes the market will turn. Additionally, reduced volatility and ranging conditions may produce improper signals.
On the positive side, triple indicators can shield you from falling for false movements by offering precise signals. The RSI is frequently perceived as being a strong trend verification tool, and by waiting until after the 50 level is surpassed you should then be trading alongside the trend. Even though that level is not an 100% affirmation of a trend, you’ll have the extra EMA and Stochastic verification to provide additional confidence prior to entering into your digital options trades.
As with all strategies, be sure to run a few paper tests prior to using it within the digital option platform. You should be happy with the outcomes and success percentage before using this strategy in an investment situation. When all three conditions are met and you execute your trade in a timely manner, more often than not your trade should finish in the money. If not, go back and check to ensure that you are executing the steps correctly.