We have published a large enough number of strategies that do not contain indicators. In these strategies trading signals are obtained in most cases due to the break of certain levels. All of these strategies are simple to work with even for the beginners.
However, binary options strategy MACD Divergence is simple, though it includes an indicator. But as you get acquainted with it, you will really understand that it is no big deal.
In order to understand how it works, you must understand its tools to the full. MACD is used as an indicator in this strategy. This is one of the simplest indicators. In addition, we only need to know what the divergence is in order to regularly make a profit on such strategy.
So, let’s appeal to the graph.
We have identified divergence on the graph by ascending and descending lines. It is simple enough to find it even without our guidance. Highs of prices continue to be updated at the time as the MACD indicator bars do not update their highs. This divergence is called bearish and after it the price usually goes down.
Basically, this is the essence of the principle of binary options trading – the divergence of MACD indicators and asset prices. As can be seen, the work on this strategy is really simple and it does not need serious knowledge in the field of technical analysis. In the next section we will look at the trading signals that help to work with this strategy.
Next we will tell the traders how to use this trading strategy and how to get the signals over it, since without the signals any strategy is useless. So, the first thing to do is to find a divergence on the graph. As we already noted above, to make it is quite simple. To do this, you must carefully monitor the situation with the extremes of prices and extremes of indicator MACD graph.
Trading signal based on the principle of MACD divergence is obtained by the following principles: after a trader has found the divergence, he determines its type and can open a deal in the direction to which it points. On the example above you can see a bearish divergence. When it starts, the trader is recommended to buy a Put option.
There are also situations when a bullish divergence appears on the graph. In this case, the price continues to update highs, while the curve of the indicator bars does not update the lows any longer. In this case it is recommended to buy a Call option.ris
This strategy is really very simple, but it has a quite serious drawback, especially for binary options. Any divergence can continue to form, at the time, the trader will believe that it is already beginning to work. That is, there may be a few extreme updates on the graph. Besides, another drawback is that the divergence has the property to work off not against the current trend, but in the lateral direction. In this case, the trader also runs the risk of not getting the profit.
Thus, the binary option strategy MACD Divergence is a quite a simple tool for getting profit. In order to work on this strategy, the trader does not necessarily possess certain knowledge of technical analysis. However, as we mentioned in the article, this strategy has a number of drawbacks that may have an impact on the final result of the trader’s work.
That’s all for now. Got any questions? Just ask the expert!