Options trading strategy for MA and RSI

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Free Trading Education!
    Free Demo Account!
    Perfect for Beginners!

  • Binomo
    Binomo

    2 place in the ranking!

Options trading strategy for MA and RSI

The Binomo trading platform offers an assortment of the 5 most popular indicators. The choice is not very big, but it is sufficient enough to enable traders to trade on a variety of strategies. It also includes the most popular tools. This article will provide a review of a trading strategy that works with two indicators – the Moving Average and the RSI (Relative Strength Index), which will give us a confirmation signal.

A brief overview of trading instruments

The Moving Average is the main indicator, and it is widely used for technical market analysis. It is a line that, in general, repeats the movements of price formations on the chart, and at the same time it smooths out insignificant price fluctuations. As a result, the trader sees a picture showing the main trends on the market. Determining the direction of the current trend is simple and easy to see when you look at the chart. Therefore, the main value of moving averages is the capability of recognizing moments of convergence and divergence of lines with different periods, which makes it possible to predict the beginning and end of trends with high accuracy.

The RSI was developed 40 years ago, and it is a tool designed to determine the beginning and end of trends, as well as their strength. It works on the principle of oscillators. It is based on SMMA, which differs from other types of MA in its mathematical formula for calculating the smoothing constant. The scope of the indicator is very broad – it is used both by traders on short-term markets and on stock and currency exchanges.

Configuring the trading terminal

We add two indicators. First, the Moving Average with a period of 8 (all other parameters are by default). And secondly, the Relative Strength Index. We will use the RSI as a filter which will show the potential strength of the emerging trend. Therefore, we set a long period of 30. We also remove the overbought and oversold zones from the window, setting their levels to 0 and 100.

Above is an example of the correct settings of the parameters for the RSI indicator.

Signal for options “Up”

We should open a trade on an increase when the rate of price growth begins to outpace the MA. This is manifested on the chart by the candles breaking through the line from below and exiting above it. The option is acquired immediately after the closing point (not the shadow) of the growing candle is above the moving average.

The Relative Strength Index will help us distinguish a false breakdown from a growing trend. Due to its large period, it shows only real price trends that have sufficient potential. Entering the market is allowed only if the RSI line shows growth. And it should last at least 2 candles, and the more the better.

Signal for options “Down”

The basic principle of trading on the strategy is described above, so we will not repeat it. The rules for buying an option “Down” are similar: a downward candlestick must break through the moving with a period of 8, while the RSI must show a downward trend for a minimum of the last 2 candles. An example is shown in the picture below.

Trading rules for the strategy

The duration for transactions varies from 2 to 5 candles on the chart. When selecting expiration terms, you should take into account the time frame of the chart and the general volatility of the market. When trading on strongly pronounced trends, the duration of options should be reduced, and if the trend is weak, increased.

An example of real trading on the MA and RSI

For clarity, we will check the effectiveness of this strategy in the “field conditions,” so to speak, of real trading. So, open the Binomo platform and set up the chart. We set the time frame to 15 seconds and the expiration at 1 minute. The CRYPTO IDX asset is optimally suited for short-term trading. We also add the necessary set of indicators with the required parameters.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Free Trading Education!
    Free Demo Account!
    Perfect for Beginners!

  • Binomo
    Binomo

    2 place in the ranking!

The signal is evident on the chart, so we buy the “Down” option for 60 seconds. The volume of our investment was $10, which is about 3% of our account, so we are not breaking the rules of money management.

The term expires and we get our profit. The volatility of the market is quite low, in fact it is practically flat, slightly resembling an uptrend. This is clearly seen from the Relative Strength Index – the line showed very slow growth. However, in order to successfully close the operation with a profit, one point is actually enough.

“General Risk Warning: Binary options trading carry a high level of risk and can result in the loss of all your funds.”

211# RSI with MA signal Binary System

RSI, RSX, LWMA Binary Options High/Low Trading

Submit by Marcel 07/2020

RSI with MA signal Binary System is a trend-momentum system for trading with binary otions high/low and scalping.

Time Frame 1 min or higher.

Currency pairs: any.

Expiry time 1 candle.

Metatrader 4 Indicators:

MA 2 Signal V2 ( fast ma 2, slow MA 3),

LWMA (fast period 1, slow period 2, repaint indicator),

RSI OB, OS with arrow, 8period 2 with (levels 25 and 75),

3C turbo JRSX period 1 with level 40 and 60,

Buy Sell volume period 2,

RSX Histo period (2) levels -0.5 + 0.5

RSI Lido period 2 (with levels 75 and 25),

RSI dot period 2 (with levels 85 and 15).

Trading rules RSI with MA signal Binary System

Three buy arrows in the same direction.

MA line crosses upward.

3C turbo JRSX green bar

Three sell arrows in the same direction.

MA line crosses downward.

3C turbo JRSX red bar

Exit position for trading without binary options high/low with fast profit target.

Initial stop loss 5 pips above/below the entry bar.

In the pictures RSI with MA signal Binary System in action.

RSI with MA signal with Bollinger Bands

Bollinger Bands deviation period 20 deviation 2.0

Example of reversal trading without binary options with Bollinger Bands

When the price touches or closes below the lower band of Bollinger Band, wait for three arrow ups to appear.

When the price touches or closes below the lower band of Bollinger Band, wait for three arrow ups to appear.

Share your opinion, can help everyone to understand the Binary strategy.

Example of reversal trading without binary options with Bollinger Bands

When the price touches or closes below the lower band of Bollinger Band, wait for three arrow ups to appear.

When the price touches or closes below the lower band of Bollinger Band, wait for three arrow ups to appear.

ISLAM (Monday, 18 February 2020 19:02)

Wendell (Saturday, 08 July 2020 00:33)

Yellow arrow does not appear on system, what is the indicator?

dan (Friday, 07 July 2020 16:45)

what’s yellow arrow ?, my template doesn’t see any yellow arrow

RSI: How to Set Up And Use in Trading

The relative strength index or the RSI is a momentum oscillator used to measure the velocity and magnitude of directional price movements. The indicator provides the investors with sell or buy signals when the asset is overbought or oversold respectively.

Use of the RSI indicator with standard settings

The RSI changes from 0 to 100% and can be presented by a single fluctuating line. The closer this line gets to the zero mark the higher are the chances that the asset is oversold. The price, in this case, can be expected to go up. When the RSI gets close to 100%, the asset is likely to be overbought. According to the indicator, the asset price will, therefore, fall soon.

About the author
The indicator was developed and introduced into practice by an American engineer J. Welles Wilder, real estate developer and famous technical analyst.

In 1978 it appeared in author’s bestselling New Concepts in Technical Trading Systems and June issue of Commodities magazine (now Futures magazine). It has become one of the most popular oscillator indices and is now considered to be a core indicator in the technical analysis software.

How to use RSI indicator in trading?

As noted above, the RSI oscillates between 0 and 100%. Traditionally the RSI is considered overbought when above 70% and oversold when below 30%. If the indicator provides a lot of false alarms it is possible to increase the overbought threshold to 80 and decrease the oversold threshold to 20.

How to use RSI indicator

J. Welles Wilder recommended a smoothing period of 14, which of course can be changed for the purposes of short- and long-term strategy adaptability. Shorter or longer periods are used for alternately shorter or longer outlooks.

The RSI is a universal indicator and can be used for the purpose of trading any assets from indexes to currency pairs and derivatives.

Note that during strong trends the RSI can remain in the oversold/overbought zones for quite a long time!

RSI Settings and Configurations

In order to use the relative strength index in IQ Option trading platform, click on the “Indicators” button in the lower left corner of the screen. Choose “RSI” from the list of possible indicators.

Go to the indicators tab and pick the RSI

Then simply click the “Apply” button if you prefer standard settings. The RSI graph will appear in the bottom part of your screen.

Expert traders may find useful taking one more additional step and going to the “Set up & Apply” tab.

Choose the RSI settings: the period of your liking, as well as overbought and oversold levels for more sensitivity/accuracy. Remember that the wider the corridor the fewer signals you get, but at the same time they will be more accurate. The opposite is the case if the threshold levels are closer to each other: the crossover signals will appear more often, but the number of false alarms will also increase. Remember that by increasing the “Period” parameter you are making the indicator less sensitive.

Configure the indicator settings according to your liking

Standard approach – 70/30

The smoothing period of 14, oversold level 30% and overbought level 70% are used in the standard approach. This is the most frequently used preset for this indicator. Traders expect the RSI to bounce from 30 and 70 threshold lines. With standard parameters it will happen quite often, but it won’t always mean the actual change in the trend direction is coming.

Conservative approach – 80/20

The smoothing period of 21, oversold level 20% and overbought level 80% are advised by the conservative approach advocates. Risk-averse investors set up the indicator in a way that will make the RSI less sensitive and therefore minimise the number of incorrect signals. More extreme high and low levels — 90 and 10 — occur less frequently but indicate stronger momentum.

Divergence

Divergence is another way to use the above-mentioned indicator. If the movement of the underlying prices is not confirmed by the RSI it can signal a trend shift.

Divergence as an indicator of the price reversal

Divergence can be a good indicator of a coming price reversal. In the example above the price of the asset goes down, while the RSI demonstrates the opposite movement. This situation is followed by the trend shift.

Conclusion

The RSI is a powerful tool that can tell traders when to buy and when to sell. Sometimes it can also predict the trend other indicators are too slow to acknowledge. However, it is rarely used on its own and is recommended to be combined with other indicators. The RSI can be combined with other indicators for increased accuracy and efficiency.

NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.
In accordance with European Securities and Markets Authority’s (ESMA) requirements, binary and digital options trading is only available to clients categorized as professional clients.

GENERAL RISK WARNING

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.
87% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Free Trading Education!
    Free Demo Account!
    Perfect for Beginners!

  • Binomo
    Binomo

    2 place in the ranking!

Like this post? Please share to your friends:
Binary Options Online Trading
Leave a Reply

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: