Moving Average Convergence Divergence is an indicator which is used in this strategy. Together with two simple moving averages and a stochastic
oscillator it makes up a strategy for Binary Options trading on the M5 timeframe.
Setting up the Strategy:
Set the MACD levels to 12, 26 and 9. For the Stochastic you just drag and drop one from the Navigator window. You can either use 5,3,3 or 9,3,3 for the stochastic and 80/20 for overbought and oversold. If you choose 5,3,3 you will get more signals but the number of false signals might increase. You can play with that and see for yourself.
The Rules are simple:
Call option is confirmed when
- the 50 SMA is above the 100 SMA and
- the MACD signals bars up above the zero line (green bars).
The exact entry is then when the stochastic oscillator's blue line crosses the red line from below and oversold position (20
The opposite is true for taking put options.