Profitable binary options trading requires an effective trading strategy. Otherwise, there is a high probability of losing the invested funds. The "Three in a row" strategy is an indicator trading system that combines the most effective tools of computer analysis. Despite the fact that this technique is not new, it is still possible to show high results in trading with its help.
Trading strategy indicators
The "Three in a row" method is based on such indicators as:
- - Stochastic;
- - RSI;
- - Simple moving average (MA).
The secret of the high performance of the system lies in the fact that the complex use of the above-mentioned computer analysis tools provides good filtering of false signals to buy an option. These indicators complement each other well. Their combined use in trading will ensure a stable increase in starting investments even when working with small time intervals.
Moving averages with different parameters are used in almost every indicator strategy. Even some oscillators have been developed based on these instruments. The intersection of moving averages indicates a trend change. This signal is used by many professional traders. The key advantage of moving averages is ease of use and clear interpretation of trading signals.
The relative strength index (RSI) is necessary to determine the direction of the current trend and its intensity. The standard settings of the oscillator involve the use of levels 30 and 70, which are the boundaries of the overbought and oversold zones. To work with the "Three in a row" strategy, the use of these values is not required, therefore, when installing the indicator on the price chart, it is necessary to remove unnecessary levels in the settings and add a threshold of 50. This is the center of the additional oscillator window. If the RSI curve is formed above the level of 50, then this will indicate the presence of an upward trend in the development of the value of the asset, if below - downward.
The strategy also uses the Stochastic indicator with standard settings. In the additional window of this oscillator, you can see levels 20 and 80. If the moving averages cross within one of them, and then go in the opposite direction, then this indicates a good opportunity to buy the corresponding option.
For the "Three in a row" strategy to work correctly, you will need to correctly configure the necessary indicators:
- - 2 simple moving averages on the price chart with periods of 5 and 10 (for a comfortable visual perception, it is recommended to color them in different colors);
- - RSI with period 14 and level 50;
- - Stochastic with standard settings 14,3,3.
Applying the "Three in a Row" Strategy in Practice
In order to buy an Call option, the following conditions must be met:
- The price chart breaks through two moving averages from the bottom up.
- MA with period 5 crosses MA 10 from bottom to top.
- The RSI line is forming above level 50.
- Moving averages of the Stochastic are directed upwards and are in the range between the overbought/oversold zones. It is important that before the appearance of a signal in the oversold area there should be a crossover of the moving averages in the oscillator window.
For example, a chart with a period of M15 for the EUR/USD currency pair. A distinctive feature of the "Three in a row" strategy is the absence of the need to wait for the formation of a confirming candle to buy an option. The deal should be opened immediately after the breakout element is closed.
To buy a down option, you should wait for the formation of confirming indicator signals:
- Breakout of the moving average candles and closing below the moving averages.
- MA with a period of 5 crosses MA 10 from top to bottom.
- The RSI curve is forming below the zero level.
- The stochastic lines are leaving the overbought zone and are directed downwards. It is important that before the price chart breaks out the moving averages in the oscillator window, cross at the level of 80.
An example of a correct short trade:
Before trading according to the rules of the "3 in a row" strategy on a real account, it is recommended to practice trading skills in demo mode. The preparatory phase should last at least 2 weeks. It is important to achieve stable profitability during this period.
Recommendations for improving trading efficiency
The "Three in a row" strategy is an effective method of making money in any financial market. Novice traders should give preference to working with charts with time intervals from H1 and above. This will significantly reduce the intensity of the trading process, but will have a positive effect on the quality of the signals. Over time, it is possible to change the timeframe to a lower one.
According to statistics, the signals received from the indicators of the "Three in a row" strategy are 70% effective. Therefore, for work, you should choose assets with the highest percentage of payments with the correct forecast. The rates can be found on the broker's website or request information from the customer support service. In addition, it is important to give preference to brokers that provide users with the opportunity to close profitable contracts ahead of schedule with lower payouts.
More experienced traders can use the Martingale method in combination with this trading system. Beginners are advised to refrain from such a trading approach, since the result is unpredictable. If you follow these rules of the strategy, then there will be no need to apply the principle of doubling the amount of the initial investment.
Trading system "Three in a row" is an effective method of earning money in any financial market. The strategy algorithm involves the use of time-tested indicators and traders. If you follow the rules of the strategy and show self-discipline, it is possible to achieve impressive results when working with binary options
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