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Forex Trend Trading Strategy Explained With Examples October 26, Some methods are based on candlestick patterns and some on indicators. The one I will present today joins the RSI, the EMA and the engulfing pattern. You must be logged in to your IQ Option account. Today's strategy gives the best results in the markets with high volatility. Take it into account when choosing the asset.

Set the chart timeframe for 1-minute. We will use two indicators in this strategy, the Relative Strength Index and the Exponential Moving Average. The RSI will be used to identify the medium-term trend. The EMA serves as a long-term trend filter. We will use the EMA with the RSI on the 1-minute chart. Click on the Chart Analysis icon and find the RSI indicator. Leave the default settings. Then find the EMA and add it to your chart.

Change its period to You can see on the above chart that my RSI has got just one horizontal line at the level of How I did that? I set the Overbought level at Then I went to colour settings and made the Oversold level transparent changing its opacity. This way I have an RSI indicator window with only one horizontal line I am interested in. On the IQ Option platform , you have the possibility to save the configurations. This is very convenient when you use a strategy often.

Next time you will just have to find a ready template instead of adding all needed indicators. Simply write the name you want this particular template to be called and click Save. You can save your indicators set as a template. The strategy is used on the chart with a 1-minute candlestick period set. You should, however, keep the position open for 5 minutes. The assumption is that the price will fall or rise within 5 minutes from the signal received.

So set the expiration time to 5 minutes for your binary option. Remember to keep your expiration at 5 minutes. This is where our Trading Strategy Guides team comes to the rescue. We will provide you with the best binary options strategy.

Understanding how to trade options can help increase your performance as a trader. At the same time, binary options also allow us to make more money in the process. We are also controlling the risk. Binary options are easy to understand.

This is coming from someone who has little or no experience in the area. If your favorite approach to trading forex is to jump in on a fast price movement and ride the intraday trend for as long as the momentum lasts, you can learn how to make money trading binary options very quickly.

When we first discovered binaries, the light bulb in our heads turned on. No need to worry about how many pips we could grasp in the process. Binary options trading is a form of derivatives trading that has a fixed profit or loss. Trading binary options is simple. All you need to do is ask yourself a simple yes or no question. Will the price of the underlying asset be worth more than the strike price at the expiration date?

Essentially, we can trade binary options for any type of instrument. Second, before submitting our trades, each of these instruments has a current value at any given point in time. How to trade binary options depends on our trading skills. It is used to predict where the current value will be some time in the future. In other words, we must use our skills to predict the market direction.

This will determine our success in trading binary options. The market can only go up or down. If we believe the current value will go up in the near future, then we buy a Call option. On the other hand, if we believe the current value will go down in the near future, we buy a Put option. Read more about call options vs put options. Third, we need to determine what the most critical aspect of trading binary options is.

Being wrong means you incur a loss. We have made a nice infographic that highlights the four steps on how to master binary options trading. If you manage to figure this out, then knowing how to make money trading binary options will be a piece of cake for you. Our team at Trading Strategy Guides is ready to share with our beloved trading community our second binary options strategy.

The mathematical model behind this binary options trading strategy has a proven market edge. The only tool you need to trade binary options successfully is the RSI indicator. The RSI default settings need a little bit of adjustment if you want to master the 1 minute time frame.

We use a 3-period RSI to trade binary options profitably. Naturally, a lower RSI period means that the indicator will tend to be noisier than normal. But it is more responsive to the immediate price action. Along with the RSI settings adjustments, we also played around with the overbought and oversold readings.

We found out that by using an 80 RSI reading for overbought and 20 RSI reading for oversold conditions, we get more accurate day trading signals. By changing the RSI overbought and oversold line, we have eliminated the noise. The 1-minute binary options or the seconds time frame is the best chart for trading binary options. In other words, the best binary options expiration time is the 60 seconds time frame. We recommend highlighting the starting point on your charts.

And the ending point of your candle low that you have identified. Simply draw two vertical lines on your chart through the starting point and ending point of your 50 candle low.

When you count the 50 candle low, you should always start from the current candle. Then go from the right side of your chart to the left side of your chart. If you manage to count 50 candle low, obviously the starting candle point will be your 50 candle low.

Since this is a reversal trading strategy we need the RSI indicator to show a bullish reversal signal. An RSI reading below 20 shows that the market is in oversold territory and it can potentially reverse.

It is the simple average over a certain number of periods. This technical indicator aids you in trading with the trend. Being lagging indicators, they do not predict future trends but instead give confirmation of trend continuation.

Upward trending moving averages indicates an uptrend and vice versa. Avid industry news reader? Take the Finance Magnates quiz. Many traders look at the , and day Moving Averages of asset prices but we can also use Fibonacci numbers such as 13, 21, 34 and so on to capture herd behaviour in the market. Exponential moving averages can also be used, placing more weight on the most recent periods. Whatever the variant of moving averages, find the best one that generates reliable signals for the trading instrument.

Moving averages are easy to interpret; if the price is above the moving average bullish momentum is dominating, if it is trading below the moving average then bearish momentum is dominant. To follow the system, we need to examine the conditions for entry, stop loss and take profit of trades. Entry: There are two types of crossovers with respect to moving averages that form the foundation of this strategy. Also, the RSI is used to confirm the moving average signals.

The equilibrium level for the RSI is 50, where if the index is above 50 this suggests bullish momentum. When it is below 50, this indicates bearish momentum. So when the moving averages generate a signal, you can use the RSI to check if momentum is strong enough to justify taking your trade. Stop Loss: The moving averages can be used to exit a trade when it turns out to be unsuccessful to limit your risk. You would place stops just above or below the moving averages since these are important resistance or support levels.

For example, if the price action closes above the moving averages, then we would place the stop loss just below the moving averages as they will now provide support. Take Profit: This is where the RSI comes in. This index indicates overbought and oversold regions and suggests a reversal is more likely when the index is within these regions.

Therefore, you should hold your position until the RSI enters the overbought region for buy positions or the oversold region for sell positions. The chart below illustrates how to use this strategy.

The first white arrow indicates that the price action closed above both of the moving averages giving a bullish signal. EUR-USD closed above both moving averages at 1. Also, the RSI was higher than 50 at this point confirming bullish momentum. Long positions or call options would then be entered into at this price and once that candle closed on the hour.

Then we should look at the period moving average orange line to provide support and exit the trade if the price closes below this moving average. The long position is held until the RSI indicates overbought conditions in the market, that is when the RSI is larger than This also signals that the uptrend may soon reverse. Overbought conditions are indicated by the RSI and with the white arrow on the chart.

This occurs on the hourly close at 1. Notice that a few hours after this, EUR-USD started to move lower and broke back below the moving averages. Another buy signal was provided by the crossover of the moving averages indicated on the chart by the second white arrow. When the period moving average crossed above the period moving average, the price closed at 1. Bullish momentum is confirmed as at this entry the RSI is larger than The exit is still the same at 1.

The chart below shows GBP-USD on the daily timeframe. The slower moving average is trending above the faster moving average indicating a downward trend.

The best strategy in this case is to wait for the price to test the resistance provided by the moving averages and then enter a short position when the price action closes back below the moving averages. For example, in the chart above the price action briefly trades above the moving averages for a few days in December. Then we obtained a sell signal when the daily close was below both of the moving averages at 1. Also, using the RSI we see that the index indicates bearish momentum since it is below So a short position or put option would be entered into at this level 1.

The stop loss would be either of the moving averages and an exit point is reached once the market is indicated to be oversold which occurred when the price action closed around 1. Using shorter time periods for moving averages is more likely to lead to false signals whereas longer period moving averages are likely to give more successful signals.

Similarly, using technical indicators on longer-term timeframes provides more reliable signals than those on lower timeframes.

The strategy is best used on the 4-hour, daily or weekly timeframe. Purely technical analysis most also watch out for any fundamentals and the economic calendar. Traders just focusing on technical aspects will get a shock when an unexpected data reading is released. Therefore it is important to be aware of any important data releases that may affect your trade plan based on this strategy.

In summary, this strategy is easy to use, effective and can be used to trade a range of instruments. By using Fibonacci numbers for the moving average period captures herd behaviour in the market. Two types of crossovers generate entry signals which should be confirmed with the RSI.

Exits are determined by both the moving average and RSI depending on whether the trade is successful or not. When making a trade, you just wait for the RSI to indicate overbought or oversold conditions and then exit with your profit. FM Home.

Being lagging indicators, they do not predict future trends but instead give confirmation of trend continuation. Binary Options Trading Strategies. May 29, at am. Risk Warning: Stocks, futures and binary options trading discussed on this website can be considered High-Risk Trading Operations and their execution can be very risky and may result in significant losses or even in a total loss of all funds on your account. So first we will go to the screen option on the top right of the tool bar and select 2 View Vertical. Next, look at the RSI window.

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