ADX Candles Binary Options Indicator

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Binary Option Trading using the ADX and EMA Cross System

This system is based on two indicators only and offers consistent profits. It is called the ADX and EMA Cross System and it is an uncomplicated system suitable even for amateur traders. This system on reflection appears suitable for binary option trading as well. The system is based on an average directional movement index (ADX) set on period 14 and having the EMA’s set at two periods (3 and 10). It is important to have an idea of ADX to give you some perspective, but there is no need to go in depth with your studies of it.

The cross system strategy is fairly simple and it is best if you use indicators that are easy to read. Set your EMA 3 and your +DI to a single colour and your EMA 10 and -DI to a second colour. This allows you to see exactly where one colour crosses the other. Say you set the first 2 to red and the second 2 to green, when green crosses red from underneath, it is possibly a call opportunity and when the opposite happens, it is a put signal. Check both your ADX and your EMAs for the cross to be sure the signal is valid. This strategy has been used successfully for trading using daily charts and works well with currency pairs and stocks. Check your candlestick patterns to ensure they have closed before you confirm your signals.

When the ADX turns bullish and is confirmed by the moving average crossover becoming bullish as well, this will indicate a call signal. Make sure the current candle has closed and that the EMA and ADX lines are fixed where you would want them to be. The opposite works exactly the same. The ADX will become bearish and the moving average crossover will do the same, this is then a Put signal. Wait for candle closure to double check the lines of the EMA and ADX are fixed in the right direction before acting on the signal. Due to this being a forex strategy, there is no information on expiries. While Arsalan suggests working on the basis of daily charts, it may be possible to try the strategy on M30 and above when working on binaries.

Pros and Cons of using the ADX and EMA Cross System

This strategy appears to work quite well and the ADX is a reliable, strong indicator to work with. When using the colour matching system, it is easy for even an amateur to use the system. This specific strategy has been tried and tested by its creator and has made profits consistently. When used on time frames that are higher, the signals are even more reliable.

The charts are neat and tidy and there aren’t any unusual or complicated rules to take in to account when working with the system. Watching toe two colours and noting their cross over points is enough to help you have a profitable strategy. If you are prepared to put in some effort, this strategy could work for you too. Perhaps do a test run at a higher time frame (perhaps daily to start) until you get used to the system. Thereafter you could perhaps look at lower time frames such as the M30.

Best ADX Strategy Built by Professional Traders

All Forex traders strive to build their own profitable strategies. Well, this day is your lucky day! We’re willing to share the best ADX strategy with you, which was built by a professional trader. Our team at Trading Strategy Guides firmly believes the easiest way to become a profitable trader is to mimic the behavior of professional traders.

However, we haven’t covered how to measure the strength of the trend in any possible time frame. You can only measure the strength of the trend by using a special trading indicator. For example, the ADX, which is an acronym for Average Directional Index.

Detecting a strong directional move is the most important skill for all traders to have. No matter what type of trader you are, after you enter a position you need a strong directional move. In order to make a profit, the move must be in the direction of your trade.

The ADX indicator trading rules can help you achieve your financial goals.

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Before moving forward, we must define which technical indicator we need for the best ADX strategy. We will define the rules of ADX indicator trading. Also, read the hidden secrets of moving average, for more information.

ADX Indicators for Futures

The principles of the Average Directional Index can apply to almost all tradable assets including stocks, exchange-traded funds, mutual funds, and futures contracts. ADX has become exceptionally useful in futures markets for many reasons:

  • With a standard range of 14 bars, ADX offers a “bigger picture” than many other technical indicators.
  • ADX is time adjusted, meaning that the most recent data is given exceptional weight.
  • ADX helps you identify the strength of a trend, which will be useful for any contract being executed in the near future.
  • ADX makes it very easy to compare mutually exclusive futures contracts at once.

Futures traders enjoy using ADX as a metric because it offers the perfect blend of past and present data and future predictability. Successfully purchasing futures contracts will require you to identify which potential contracts are mispriced in the status quo. Using ordinary ADX readings for future contracts makes this possible.

Using ADX readings for major indexes (such as the DJIA, S&P 500, and others) can also help you identify whether the general market is experiencing bearish or bullish conditions.

ADX Indicator Trading Rules

Before going further into the ADX indicator trading rules, let’s define what the ADX indicator is and how you can profit from it.

The ADX indicator simply measures the strength of a trend and whether we’re in a trading or non-trading period. In other words, the ADX is a trend strength indicator. This method of technical analysis is used to identify the emergence of strong downtrends and buy signals.

We need to be very careful about how we read and interpret the ADX indicator. It is not a bullish and bearish indicator. ADX’s moving average only measures the strength of the trend.

So, if the price is going UP, and the ADX indicator is also going UP, then we have the case for a strong bullish case.

The same is true if the price is going DOWN and the ADX indicator is going UP. Then we have the case for a strong bearish case.

The first ADX indicator trading rule says, a reading below 25 signals a period of non-trading or ranging market. The second ADX indicator trading rule says, when the ADX is above 25 is enough to signal the presence of a strong bullish/bearish trend.

Going forward, keep in mind that the ADX indicator doesn’t give you any information about the direction of the market. It just provides you with information about the strength of a trend.

ADX Indicator settings

The ADX indicator uses a smoothing moving average in its calculation. We find out that the best ADX indicator settings to use is 14 periods. With our ADX indicator settings, you’ll have more accurate signals and it will help you get in a trade earlier.

The ADX indicator works best when used in combination with other technical indicators.

The best ADX strategy also incorporates the RSI indicator in order to time the market. The ADX indicator can only help us to gauge the intensity of the trend. We need to RSI indicator for entry signals.

The RSI uses a 20-period setting, which is the same as the ADX indicator settings.

Finally, your chart setup should have at the bottom both the ADX and RSI indicator. It should be the same as in the figure below.

Now, let’s see how you can effectively trade with the best ADX strategy. You will learn how to make profits by applying the ADX indicator trading rules.

The Best ADX Strategy

The ADX indicator trading rules will ensure that you only trade when there is a strong trend on the 5-minute chart or the daily chart. In this regard, the best ADX strategy is a universal strategy that performs the same, regardless of the time frame used.

Moving forward, we’re going to look for selling opportunities.

Step #1: Wait for the ADX indicator to show a reading above 25.

Before we even look to see if the market goes up or down, we must first wait for the ADX indicator to show a reading above 25. Based on the ADX indicator trading rules, a reading above 25 is signaling a strong trend and the likelihood of a trend developing.

We all know that the trend is our friend, but without real strength behind the trend, the newly trend formed can quickly fade away.

In order to gauge the direction of the trend, we also need to look at the actual price action. This brings us to the next step of the best ADX strategy.

Step #2: Use the last 50 candlesticks to determine the trend. For sell signals, look for price to develop a bearish trend.

No matter of your time frame, we need a practical way to determine the direction of the trend.

By using a sample size of 50 candlesticks to determine the trend we ensure that we trade in the moment of now. We like to keep things simple, so if the price is heading lower during the last 50 candlesticks we’re in a bearish trend.

Now, it’s time to focus on the catalyst that will trigger our sell signal for the best ADX strategy.

Step #3: Sell when the RSI indicator breaks and show a reading below 30.

For our entry signal, we’ll be using the RSI indicator that uses the same settings as the ADX indicator settings. Normally the RSI reading below 30 shows an oversold market and a reversal zone. However, smart trading means looking beyond what the textbook is saying.

In a strong trend as it’s defined by the ADX indicator that’s precisely what we want to see. We want more sellers coming into the market.

So, we want to sell when the RSI indicator breaks and shows a reading below 30.

The next important thing we need to establish is where to place your protective stop loss.

Step #4: Protective Stop Loss should be placed at the last ADX high.

In order to determine the stop-loss location for the best ADX strategy, first identify the point where the ADX made the last high prior to our entry. Secondly, find the corresponding high on the price chart from the ADX high and there you have it your SL level.

Last but not least the best ADX strategy also needs a place where we need to take profits, which brings us to the last step of this unique strategy.

Step #5: Take Profit when the ADX indicator breaks back below 25.

The best ADX strategy seeks to only capture those profits resulted from the presence of a strong trend. Once the prospects of a strong trend fade away we look to take profits and wait for another trading opportunity.

To accomplish this we take profits as soon as the ADX indicator breaks back below 25.

An ADX reading back below 25 suggests the prevailing trend is running out of strength.

Note** The above was an example of a SELL trade using the ADX indicator trading rules. Use the same rules but in reverse, for a BUY trade. In the figure below you can see an actual BUY trade example.

Conclusion – ADX Indicator

The best ADX strategy gives us very useful information because a lot of the time, we as traders don’t want to get into something that’s moving nowhere and not trending in a strong fashion. By applying the ADX indicator trading rules one can take advantage of the strength of the trend and cash in quick profits. The bottom line is that the best profits come from catching strong trends and the best ADX strategy can help you accomplish your trading goals.

You can also read about the Trader Profile Quiz.

The best ADX strategy is similar to the Best Momentum Trading Strategy for Quick Profits because both strategies seek to take advantage of the strength of the trend.

Thank you for reading!

Please leave a comment below if you have any questions about this strategy!

Also, please give this strategy a 5 star if you enjoyed it!

(37 votes, average: 4.35 out of 5)
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ADX EMA 60 Seconds Strategy for Binary Options

60 Seconds Strategy – Quick and effective trading

I am well aware that many of you expect the fastest possible results and real profits from transactions on Binary Options. So I prepared a brief description of a strategy, which I find not only very effective, but also simple to use. It is based on the combination of two standard indicators available in each analytical program – ADX and EMA. We recommend uTrader, which is a regulated broker in the EU, and has an accounts in many local currencies.

ADX EMA strategy

To use this strategy we will use price charts with a one-minute time frame. The expiration time of the operation as the name suggests will be 60 seconds. As I just mentioned, we use two indicators here:

ADX

ADX (Average Directional Movement Index) – average directional index of movement. This is a standard indicator for the MetaTrader 4 platform. The default period for the indicator is 14 candles (in our strategy it will be 5 candles). The period is working, because the more investors see the signals, the better because of the accumulation of purchasing power.

ADX alone verifies only the occurrence of a trend when it exceeds the value of “20” and continues to rise and the strength of the trend. This is complemented by two additional lines – + DI (line of bullish movement) and -DI (line of bearish movement). Thanks to them, we receive confirmation of input or exit signals.

Settings for ADX indicator Change colours of lines

Moving Average

Moving Average – in our case, 28 periods. If we used only this indicator, closing or opening positions would occur at the moment of crossing the Exponential Moving Average by price.

Settings for Exponential Moving Average 28

CALL OPTION – GROWTH

In the case of a 60 second ADX EMA strategy we decide to open CALL option,when :

  • the green ADX line is located above the red line
  • price crosses and is above EMA 28
  • the body of the signal candle presents an upward trend
  • the signal is even stronger when the candle preceding the signal candle also has a bullish body

Price crosses the moving average, the green line ADX is above the red line, while the body of the signal is bullish.

PUT OPTIONS – FALL

In the case of the 60-second ADX EMA strategy, we decide to open the PUT option when:

  • the red ADX line is above the green line
  • price crosses and is below EMA 28
  • the body of the signal candle presents a downward trend
  • the signal is even stronger when the candle preceding the signal candle also has a bearish body

The price crosses the moving average, the red line is above the green, and the signal candle body is bearish

The chart below shows some examples of bets on GBP/USD M1 :

The first three strong signals – all the assumptions are met. The last signal is weak – because the candle that precedes the signal hasn’t bearish but bullish body.

Based on: https://www.binaryoptionsdaily.com

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