The
strategy is called EMA Rainbow and
from a technical point of view it is extremely easy. All this because it uses
only one indicator, which is the exponential moving average (EMA). Word
“Rainbow”, signals that we will use several different settings of this
indicator but don’t worry it is wery
simple.
The Rainbow EMA strategy uses three exponential moving average EMAs:
Moving averages make it possible to determine the trend and level allowing to make transaction. In various sources I have found various information about the time frame used, so this strategy can be used from the interval M1 to H1 mainly but higher intervals are not excluded.
When to make a transaction:
Buy CALL option:
If we observe a 1 minute interval, the option expires after 3 minutes
If we observe a 5 minute interval, the option expires after 15 minutes
If we observe the 15 minute interval, the option expires after 45 minutes
If we observe a 30 minute interval, the option expires after 90 minutes (1.5 hours).
Buy PUT option:
If we observe a 1 minute interval, the option expires after 3 minutes
If we observe a 5 minute interval, the option expires after 15 minutes
If we observe the 15 minute interval, the option expires after 45 minutes
If we observe a 30 minute interval, the option expires after 90 minutes (1.5 hours).
If we observe a 1 hour interval, the option expires after 3 hours
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