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A binary options strategy for beginners called “Trend trapper”

The “Trend trapper” options trading system is one of the most elementary indicator approaches to market forecasting which has a very high level of efficiency at the same time. The strategy is based on two technical indicators, the combined signals of which allow you to achieve a profit on 85% of the contracts you register.

The operating principle of the trading strategy for beginners called “Trend trapper”

The main focus of this trading system is that there is no need to bother with building complex markups or overloading the chart with multiple indicators. The main analysis tools in this system are the RSI and the Moving Average Exponential with special settings. Thus, the moving average of the exponential type will determine the moments of mid-term trend changes, and the RSI in the classic format will filter the trading signals, confirming the consolidation of a new trend and its duration.

The main condition for using this system is the availability of a trading terminal on which there are technical indicators and the ability to install them on a price chart with various settings. For example, in our article we will show you the most correct format for determining trading signals using the platform from the Binomo options broker, as it has all the functions and tools we need for trading.

This method works on any foreign currency asset, so you will only need to choose one that has a trend on its market. It is best to choose M1 or M5 for the chart interval, as there is a lot of market noise on the second timeframes, which significantly reduces the effectiveness of the strategy. In our example, we will install M1. Now the following indicators should be applied to the asset chart with the necessary settings:

  • Moving Average – Exponential format and period 10
  • RSI – period 5 and level marks 50/50

After all the necessary settings, you will get approximately the following markup on the chart:

binary options strategy Trend trapper

The best strategy for beginners, “Trend Trapper”

So, your task is to catch the trend, and two technical indicators will help you with their trading signals – the asset price will break through the EMA moving average, and in the window of the RSI oscillator, the moving average will break through level 50 in the same direction.

We trade UP when the following happens:

  • the quotes intersect the exponential average from bottom to top
  • in the RSI window, the moving average breaks through trend level 50 with upward directionality

You should trade on the next candle after the one that broke through the EMA moving average. Here’s how it appears on the graph:

trading strategies + for beginners

We trade DOWN when the following happens:

  • the quotes intersect the exponential average from top to bottom
  • in the RSI window, the moving average breaks through trend level 50 with downward directionality

You should trade on the next candle after the one that broke through the EMA moving average. Here’s how it appears on the graph:

the best strategy + for the beginner

As you can see, the trading signals are quite simple to identify, which allows you to make precise entries and close them with profit 85% of the time. In addition, it is thanks to the RSI indicator that you can filter out fraudulent price maneuvers to determine only the real changes in the trend.

Expiry time

Our example of trading on this system was demonstrated on the M1 timeframe, for which the optimal duration of contracts will be a period of 5-10 minutes.You can also trade on this system on a 5-minute timeframe – in this case, the expiration of options should be on the 5th candle. It is with such parameters that the “Trend trapper” system will work with the above-mentioned efficiency.

Risk management

We apply the standard parameters of risk management for the strategy, namely the amount of each contract is limited to 5% of the volume of the account. For traders with a small amount of operating funds, it is best to reduce the amount of each lot to the minimum available. For example, on the Binomo site the minimum option is 1 dollar, which helps to avoid account drawdown even after a series of unprofitable contracts.

Start trading

 

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A binary options strategy for beginners called “Trend trapper” updated: October 7, 2018 author: admin

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