Trading binary options involves not only the short-term deals, but also the medium-term and even long-term. For those who choose the medium-term trading strategy, the expiration period can be from one day or more. Therefore, for technical analysis a trader needs graphics with time scales ranging from one day or more. It is important to remember that for a such strategy, a trend should be in the market. Only in this case a trader can use Medium-term strategy. Medium-term strategy for binary options uses Simple Moving Average indicator. Support and resistance levels are also used here.
Since one of the main conditions for working with binary options strategy Medium-term trading is the presence of a trend, the trader should always monitor either upward or downward movement in the market. This trading strategy is perfect for those who do not like to take risks and strongly prefer a measured trade. Huge advantage of using such trading strategy is that the trader has a much better chance to make a profit. Although the final yield on it is significantly lower than, for example, on any of the intraday strategies.
To trade within the medium-term trading strategy is recommended with amount, which shall not exceed four percent of the deposit. As mentioned above, as the indicator for this trading strategy simple moving average is used. The time interval may be one day or more. Moving averages, which are used in this strategy, must have different periods. The shortest one has a period of four and is colored blue. A curve with a period of eight is colored red. Finally, the longest one has a period of forty and is colored green.
For ease of use of this strategy, the trader can plot a trendline on the graph or at least visually mark the extremes to understand in what direction the current movement develops. The operation of this system is quite simple. Most importantly, you need to determine the direction of the current trend. You can use the longest moving average with a period of forty (in the example it is shown in green). If the graph is under the moving average, the market is experiencing a downward movement. In cases where the graph is above the moving average, the market is experiencing an upward movement.
In order to determine the possibility of buying a binary option, it is necessary to look at all the curves of the moving averages. When all of them are reversed in the same direction, the trader is recommended to prepare for work. It is not necessarily to check the position of the moving averages on the graph every five minutes. It is enough to look at the situation once a day and make appropriate conclusions.
If the longer red moving average on the graph crosses the shorter blue one top to bottom, wherein the green moving average is directed downwards, you can buy a Put option. The same, only in reverse, is recommended to do when the moving average is blue and red from the bottom up. In this case it is recommended to buy a Call option, as the market begins an upward movement. At the same time, the green moving average with a period of forty should be directed upwards.
That’s all for now. Got any questions? Just ask the expert!