Stochastic for Binary Options

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42# RSI and Stochastic Binary Options Strategy

RSI and Stochastic Oscillator Binary Options Strategy multi time frame High/Low

Submit by FreddyFX 17/01/2020

RSI and Stochastic Oscillator Binary Options Strategy multi time frame High/Low is a trend momentum trading system.

Markets:Forex (EUR/USD, USD/JPY, AUD/USD, USD/CHF, GBP/JPY, EUR/JPY,

Indicies (S&P 500, Nasdaq, DAX, FTSE), Metals (Gold and Silver).

Time Frame 15min and 1 min.

Expires time 10 min max 15 min.

Open 15 minute candlestick chart, add the following indicators:

RSI (4 period, levels 25 an 75).

Stochastic (with the default settings of 5,3,3)

Open also 1 minte chart with the same indicators.

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Rules for RSI and Stochastic Binary Options Strategy

trade only in the direction of the trend-momentum.

On the 15 min chart the RSI closing below 25 level

open the 1 minute chart and look at the stochastic indicator if it’s crossing upward, place your trade and buy call option.

On the 15 min chart the RSI closing above 75 level

open the 1 minute chart and look at the stochastic indicator if it’s crossing downward, place your trade and buy put option.

This strategy is also good for scalping in the forex market on major.

Target price 7-10 pips depends by currency pair or the Fibonacci levels.

Stochastics Oscillator in Binary Options

What is the Stochastic Indicator?

The Stochastics indicator is an oscillator indicator seen on many forex trading platforms, and it is used to measure primarily overbought and oversold conditions in the market.

The Stochastics oscillator is not usually used in trading binary options as a stand-alone indicator. You have to combine it with other indicators, or use it as part of a strategy or with other indicators in order to produce signals that are accurate and non-ambiguous.

Stochastics in Binary Options: Using Stochs and Candlesticks

Stochastics detect conditions when the asset is overbought or oversold. An overbought asset registers Stochastics readings of >75 with the traditional settings of 10,3,3. With Stochastics readings of Using the Stochastics in Strategies

The Stochastics oscillator is also used as a component of trading strategies such as those used in range trading the market. When the market is range-bound, it allows the asset to bounce between the upper and lower trend lines. The exact tradable bounces can be confirmed using the Stochastics oscillator. As such, the following trades can be taken with the Stochastics oscillator as a component of the range-bound trading strategy:

a) Retreat from the upper trend line (traced to cut across three recent price highs) PLUS Overbought Stochastics = PUT trade

b) Bounce from lower trend line (traced to cut across three recent lows) PLUS oversold Stochastics = CALL trade

The Touch/No Touch and Boundary trade types can also be traded using the range-bound setup described above. For the boundary trade, the trader can use the upper and lower trend line as the price boundaries for the In/Out trade and set the trades based on whether the asset will touch any one of these boundaries or simply stay within the range without touching any one of these boundaries. Different brokers will have different variants for the In/Out trade, but that offered by proprietary brokers like BOM offer very exciting prospects.

The Touch/No Touch trade can also be set using a price located close to, or at the trend lines. This would of course require that the price is either moving towards (TOUCH) or away from (NO TOUCH) the strike price used in setting either bet option.

There are other strategies that incorporate the Stochastics oscillator which can be used to pick out trading signals. It is left for traders to decide on which of the strategies that will suit their trading styles and profit targets. What works for one person may not necessarily work for the other. However the strategies do work when they are used properly.

The binary options trader is also encouraged to try different Stochastics settings and apply them to different setups on the chart. This was how yours truly was able to devise a trading system which actually works for long term trading. There is no limit to what is possible when working with momentum indicators such as the Stochastics oscillator.

More About Adam

Adam is an experienced financial trader who writes about Forex trading, binary options, technical analysis and more.

7 Binary Options

Stochastics have been used as a predictive stock indicator since the late 1950’s and are applied to a broad range of trading today including binary options trading. It is a trade analysis that is made based on a ‘stochastic oscillator’, which is simply technical analysis that uses a momentum indicator by comparing a securities asset’s current closing price with its historical price over a set period of time. It is an oscillation type indicator.

Stochastic oscillators tend to have reduced market sensitivity and area more accurate means of determining potential asset price movement when established using an adjustment of a time period or when they are calculated by using a moving average to determine them.

Contrary to popular belief, a stochastic indicator does not follow price or volume. It is an analysis tool that follows the momentum of price. Things such as bearish and bullish divergences can then be used to predict trend reversals on which to make profitable trades.

When it comes to analyzing potential binary options trades the stochastic indicator generally has a set value in the up side of 80 and a set value on the down side of 20. The indicator consists of two lines; one represents what is often referred to as the fast stochastic and the other line is often referred to as the slow stochastic. It is the intersection of these two lines that are of particular interest to a trader.

These intersections or crossing of the lines are then analyzed to see if the asset that is being tracked is currently in an oversold or undersold range. Based on which of these the asset is in, it is then considered a good time to place a put or call option on that asset.

One of the key considerations in making a profitable trade is the time frame that the indicator is plotted for. This holds true because more often than not the successful trade largely depends on determining an accurate expiration date. As a result of this, it is not logical to use a 5 minute chart to make a determination and then place your option on a daily or weekly expiration date. So it is extremely important to take note of this and follow this general rule on a consistent basis.

As you can see, a stochastic indicator can be very useful when it comes to making trades which are based on identifying a trend reversal.

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