Now it’s time to talk about a very simple tool, which is based in its work on the basic models of market development.
In its essence Trade on Medium Terms strategy is very simple and is based on the use of only two indicators that complement each other:
Described tools create a quite productive model that defines the point of extreme price movements, when the market had exhausted its resources and there are no prospects for further trend emerging. In fact, we are talking about a situation where market participants who for a long time held the position opened in a certain direction, are ready to move on to a new job at correcting, since there is no potential of the previous trend.
In this regard, it should be remembered that the currency exchanges, like everything else in the world, have certain stages of development that we are going to use. After all, nothing is eternal. Any trend that started sooner or later will end. The same applies to corrections, and in general to all movements that may arise. This is what lies at the heart of this strategy.
We come to the most important part of this article – the use of trade on medium terms strategy. Here we observe the situations that provide signals to trade binary options. So, we can only talk about two directions of trade and two types of signals:
- Work for the increase. This entry point is formed on the intended bottom of the market when the power indicator drops into the zone below -300. If at this time the price of the underlying asset crossed BB stripes, then we can talk about getting the signal to increase.
- Work for the decrease. Here there is the reverse situation and purchase of a binary option for the decrease is made at the time when the CCI is above 300, and the price of the asset has crossed the upper line of the stripes.
There is a quite reasonable question – how to choose the expiration time of the option. The answer is simple – this tool allows you to make a prediction for the next 3 candles. That is, if, as in the example graph of 5 minutes is analyzed, then the item is purchased for 15 minutes. If we work with the 1 hour time frame, then the option should be purchased for 3 hours.
We have come, perhaps, to the most important part of our story. Here it is necessary to mention the fact that trading on medium terms strategy is not perfect and fully adapted for all stages of market development. Therefore, it should be remembered that the flat is a killer of this technique. As soon as a distinct flat has formed in the market or the price of the asset is just beginning to emerge from the lateral movement it is better to forget about the trade and give the market some time to recover.
In general, these universal guidelines should always be used, as any flat says about the approximate equality of buyers and traders, but the market cannot always be equal, and therefore, someone is preparing a new attack. And if you open position in the opposite direction in the beginning point of the attack, the result won’t be the one you expected. Just remember about candle combinations that can warn against careless actions.
That’s all for now. Got any questions? Just ask the expert!