The “MACD correction" strategy
There are many various moving average strategies for binary options. We decided to present our interpretation of applying the moving average and the MACD indicator to the trading of binary options for the highest profit. When applying the “MACD correction" strategy, we aim to make a profit on the inevitable quote correction rollback. That way, we will be able to increase our profit statistics and get a lucrative income from price movements that traders often ignore.
Technical system requirements
As you’ve guessed, the first thing we need is the possibility to apply two technical indicators to the asset quotes, but that is not all. We also need the following: a stable working platform with a good processing speed of orders, highly profitable options, accurate quotes of the underlying assets, and convenient trading conditions for managing capital. All of this can be found at the Binomo broker. Their new platform has an integrated set of indicators, including the tools we need; the speed in which orders are processed is 1.7 ms; the quotes are accurate and supplied by Thomson Reuters; and option yields reach 87%. In principle, this is probably the only option that would allow us to properly and easily apply the “MACD correction” strategy to trade binary options.
So, let’s suppose that we have convinced you and you have opened an account with the Binomo broker. Now, you’ll need to set up the chart in order to implement the strategy. For this purpose, we will set the averages for the binary options, as well as the MACD indicator, from the platform set:
Moreover, there’s no need to change the indicator settings that are set by default. So, our so-called system template is completely ready. The moving average will work in its classic mode and show the direction of the local trend present on the market of the selected asset. In turn, the MACD indicator is used to determine the start of quote correction movement on which we will make a profit, which is actually rather decent - about 120% in one trading week.
Trading on the system
To begin with, we should note that the tactic signals are quite simple and accurate and it’s difficult to confuse them with anything else. And they look as such:
Trading on an increase in asset value occurs when the following happens:
⦁ The moving average indicates a declining trend (the direction of the moving average of the indicator is downward)
⦁ Price quotes are below the line of the moving average
⦁ On the MACD indicator, dynamic moving averages are below the centerline of the histogram and are intersecting upwards, and the histogram has changed its building direction to growth with respect to its zero level
We have received the necessary combination of signals to register the option UP; therefore, we can start trading:
Trading on a decrease in asset value occurs when the following happens:
⦁ The moving average indicates a growing trend (the direction of the moving average of the indicator is upward)
⦁ Price quotes are above the line of the moving average
⦁ On the MACD indicator, dynamic moving averages are above the centerline of the histogram and are intersecting downwards, and the histogram has changed its building direction to decline with respect to its zero level
We have received the necessary combination of signals to register the option DOWN; therefore, we can start trading:
Thus, we do not miss the quote correction and generate more revenue. This tactic is conveniently used in addition to the main trading system. Although, of course, MACD binary options can be considered a full and independent system of trading on the options market. Moreover, the indicator generates no less than 80% profitable signals of the total number. And this is a high indicator among binary options trading tactics, which will inevitably lead to active growth of trading capital.
Capital management and expiration
We will use the classic capital management requirements for trading on this system. For trading, we use the minimum cost of options (with Binomo, it is 1 dollar), if we have a large amount of trading capital, we use no more than 2% of its total volume. For trading, we use options with short expiry periods - up to 5 minutes. To increase the profitability of trading, we can arrange a series of several contracts.
The Binomo company has created a good opportunity to increase the efficiency of trading on its new trading software, owing to the use of indicators to trade binary options. Our trading system is a vivid example of that. That's all, we wish you rapid account growth!