Bullish King
A trading strategy using moving average and stochastic oscillator is explained in this video, with simple rules for entering buy or sell trades. Live trades are demonstrated and viewers are advised to practice before trading live.
Pocket Option Binary Trading Strategy: Understanding Moving Average and Stochastic Oscillator
Introduction
If you are a trader who wants to invest in binary options, you probably know that finding effective trading strategies can be challenging. One of the most widely-used tools in trading is a moving average and the stochastic oscillator. In this article, we will discuss how these technical indicators can help traders make informed decisions in binary options trading.
What is Moving Average?
A moving average is a simple yet powerful tool which is commonly used in technical analysis. The primary reason for calculating the moving average of a stock is to smooth out price data over a specific period by creating a constantly updated average price. A simple moving average is a formula that takes the arithmetic mean of a given set of prices over a specific number of days. It helps traders to understand the overall direction of the market trend.
What is the Stochastic Oscillator?
The stochastic oscillator is a momentum indicator that generates overbought and oversold signals. It is a popular technical indicator, first developed in the 1950s. Stochastic oscillators tend to vary around some mean price level, and they rely on an asset’s price history. The indicator moves between 0 and 100 as prices change, and it is calculated by comparing the highest and lowest prices over a defined period.
How to Use Moving Average and Stochastic Oscillator in Binary Trading
Now that we have briefly covered the basics of moving average and stochastic oscillator, let’s dive into a trading strategy that involves using these tools. The rules of this strategy are straightforward:
– Buy trade: Enter a trade if the candle breaks upward through the moving average line, and the stochastic oscillator candle is green in color.
– Sell trade: Enter a trade if the candle breaks downward through the moving average line, and the stochastic oscillator candle is red in color.
It is essential to note that traders need to have proper risk management in place, including setting stop-loss orders and take-profit orders. This strategy is not a guaranteed way to make a profit in binary trading. However, it can help traders identify potential entry and exit points in the market.
Live Trade Example
To illustrate this strategy better, let’s have some live trade examples.
– We open GBP/CHF asset, and the candle breaks downward through the moving average line, and the stochastic oscillator candle is red in color. So, we place a sell trade, and we win this trade.
– We open EU/RCAD asset, and the candle breaks downward through the moving average line, and the stochastic oscillator candle is red in color. So, we place a sell trade, and we win this trade as well.
– We open NZD/JPY asset, and the candle breaks downward through the moving average line, and the stochastic oscillator candle is red in color. So, we place a sell trade, and we win this trade too.
– We open AUD/NCD asset, and the candle breaks upwards through the moving average line, and the stochastic oscillator candle is green in color. So, we place a buy trade, and we win this trade too.
– We open EU/RCAD asset, and the candle breaks upwards through the moving average line, and the stochastic oscillator candle is green in color. So, we place a buy trade, and we win this trade too.
– We open AUD/USD asset, and the candle breaks downward through the moving average line, and the stochastic oscillator candle is red in color. So, we place a sell trade, and we win this last trade too.
Conclusion
When used correctly, moving average and stochastic oscillator can be powerful tools in binary options trading. By understanding trends and market behavior, traders can make informed decisions about when to enter and exit trades. However, it is always essential to practice and have proper risk management in place, including setting stop-loss orders and take-profit orders. We hope this article has been helpful for traders looking to incorporate moving average and stochastic oscillator into their trading strategy.
