This strategy is a good one for new traders. You can use it in different ways to determine trend and reversals, too. The time frames to use it should be short but you can apply it to any time frame. As we said it is an easy strategy which uses MACD. The good thing is that it follows the trend and uses more than one indicator to determine the entry point which is good for Binary Options trading.
Indicators which are used:
- 50 SMA (GREEN)
- 100 SMA (RED)
- MACD (DEFAULT SETTINGS – 12, 26, 9)
How it works:
As you can see the setup itself is simple and it is based on a 5 minute time frame so the signals come regularly. With the two moving averages you determine the trend. These two SMAs determine your position: When the 50 bar SMA is above the 100 bar SMA it defines that the trend is bullish so it goes up. When the short 50 bar SMA is below the 100 bar SMA it defines that the trend is bearish and it will go down. As you can see you only trade when this situation happens and you do not anticipate and trade before it crosses. You will see the signal when the MACD is overbought or oversold (when it will crossover and at the same time the price will go through the SMA). So when the trend is in a downfall you will have to wait for the price to correct itself above moving average and you will get a signal when MACD oscillator is on the overbought side and is making a bearish cross over. You can predict this cross over with the MACD histogram.
This is a good strategy for beginners because you can get clear trading signals. You can use this strategy for every asset you want to trade on any time frame. Please take care of a good money management at all time frames. As you can see you do not need to check multiple time frames but it will not hurt if you do your analysis.