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Lately I see more and more complicated strategies, with a lot of indicators and confusing rules for entering the market. MACD has many uses and offers more than one signal but for this strategy we will use the MACD Histogram and its movement above and below the Zero level. More on that later. More on PSAR Indicator. The signal to trade comes when the Parabolic SAR and the MACD agree marked by Yellow and Red arrows on the chart and indicate the same direction.
However, it is mandatory that both conditions are met at the time of the entry. The author suggests also exit points but we cannot use that in Binary Options trading so it is of no importance to us.
However, I would recommend an expiry at least 3 times longer than the time frame used for entry. When the market is full of noise, the swings are not so easy to see and the MACD will go often above and below zero and the Parabolic SAR dots will quickly switch from one side of price to the other. Of course this will generate a lot of Out of the Money trades so the strategy will be less reliable in such times, Also, if you trade Puts in an uptrend and Calls in a down trend, your account will most likely get burned even if you follow the strategy rules.
The signals generated by this strategy are very easy to see and I must admit, they are pretty accurate if the trader is not a complete noob and can read the market context a little. Being able to identify correctly the state of the market goes a long way and has a lot of benefits… just like common sense.
The signals of the strategy have to be filtered because if you will trade all of them you will be less successful than if you only take the ones in opening hours of london stock exchange with the prevailing trend. Overall, it still needs some work but thanks to the author of this strategy and if you want to check out the original source, you can do it here.
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3 Ways to Understand Binary Options - wikiHow
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