Effective trading strategies do not always have to be complex and confusing. Often a simple scheme produces more exhaust than a heavyweight, inexplicable for a novice trader templates. Because it’s easier to understand simple instructions and optimize for yourself.
Today’s trading strategy on the 5 minute binary options trading is based on signals of indicators and moving averages for multiple time frames. It sounds scary, but in fact it’s simple. If you trade on IQ Option, it is enough to make a few clicks to implement the strategy – and all the necessary information will be displayed automatically.
Characteristics of the strategy
- Complexity: simple;
- Potential profitability: from 80%;
- Expiration period: 5 minutes;
- Preferred assets: any assets with high volatility;
- Indicators used: MACD, MA, RSI, Alligator, Parabolic SAR, Stochastic.
How the strategy works
Select an asset. It is desirable to work in those markets that have high volatility. The ideal option is high-capitalization cryptocurrencies (Bitcoin, Ethereum, DASH, NEM, etc.) during a stable trend.
Adjust the duration of the transaction for 5 minutes. Make sure that the chart is divided into 5-minute time intervals.
Turn on the following indicators:
- Parabolic SAR;
Open a notebook or take a sheet and write down what signals the indicators are broadcasting. If all indicators show a synchronized signal for a sale or purchase, mark it in notebook.
Set the expiration period to 15 minutes. Check that all indicators show a signal similar to the first one. If that’s all, mark it in your notebook. Next, by analogy, it is necessary to set the 30-minute and 60-minute options.
Attention: if the indicators show the same signal on all timeframes mentioned above, it is possible to open a trade. If there are strong differences, then it is necessary to wait or change the asset.
Tips for improving the profitability of the strategy
- Do not take more than three assets at a time, until you roll back the strategy to automatism;
- Experiment. The strategy was tested on options with a duration of 5 minutes, but this is not a panacea. In certain markets, longer options can work better. It can be learned only by an experienced method;
- Before moving to trade for “real”, try to roll back the scheme on a demo account. Experiments with a decrease or increase in the expiration period should also be carried out on a demo account;
- If the option goes into a minus, overlap it with another deal to level out the losses. This principle is called the averaging method.
To improve the stability of trade, we recommend you to use the economic calendar. Before and after the release of important news that can affect the price fluctuations, you do not need to trade. Wait a few hours until the market settles down and becomes more stable, or choose another asset.
Use the economic calendar
What news can affect the market? Any. The shortage of most information reasons is that they appear unpredictably. No one will warn traders that an article is published in the New York Times, which is capable of temporarily collapsing, for example, the crypto-currency market. But you can take into account the planned news, such as:
- CPI is the monthly basic consumer price index;
- Publication of statistics on applications for unemployment benefits;
- Issue of shares of a commercial company in free sale;
- Annual distribution of the budget of the country or individual regions;
- Acceptance or rejection of important laws, etc.
It is important to understand that many news do not have a significant impact on quotes, but one should never underestimate the ability of the media to influence the market. If you trade steadily and carefully, take the advice from this article and do not neglect the use of the economic calendar, you have every chance to keep profitability even above the level of 80%.
NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future
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