Trading system based on the detrained price oscillator

Trading system based on the detrained price oscillator

In this article we are going to explain with details a trading system based on the technical indicator detrained price oscillator (DPO). It also uses other indicators to confirm the signals of the DPO, in this case the MACD and the ADX. The ADX and its complements (-Di and + di) represent a group of indicators of directional motion and among other things measures the strength of the current trend.

The combination of these three indicators produces a system with signals of higher fiabililidad, which can be used to perform medium-term operations in time frames of 60 minutes.

As always, it is recommended to test this system in a demo account before using it to operate with real money.

System settings

Currency pairs: all.

1 Candle/bar graph with 1 hour time frame.

1 Simple moving average of 3 periods.

1 Simple moving average of 15 periods.

detrained Price Oscillator (DPO) indicator set to 12.

ADX indicator 14 with DM.

MACD with standard configuration (12.26, 9).

* You can download the DPO indicator for MT4 at the following link (the other indicators are already included in the platform):

-Indicator detrained price oscillator for MT4 and MT5

System rules

The opening of the buying and selling positions is based on the crossing of the DPO up/below the zero line. These signals are confirmed by the other indicators for greater reliability.

Buying positions

The DPO must cross the top of the zero line.

The line of the MACD must be above the signal line.

In the ADX, the + di must be above the-Di or at least must be crossing above the-Di. This is not 100% necessary, but it is preferable.

Finally, the moving average of 3 periods must cross over the moving average of 15 periods in a period that does not exceed three candles, either before or after the bullish crossing of the DPO.

The stop loss is placed below the moving average of 15 periods, at a distance of at least 10 pips, depending on the tolerance to the risk of the trader.

Sales positions

The DPO must cross below the zero line.

The line of the MACD must be below the signal line.

In the ADX, the + di must be down the – di or at least must be crossing down the – di. This is not 100% necessary, but it is preferable.

Finally, the moving average of 3 periods must cross the moving average of 15 periods in a period that does not exceed the three candles, either before or after the bullish crossing of the DPO.

The stop loss is placed above the moving average of 15 periods, at a distance of at least 10 pips, depending on the tolerance to the risk of the trader.

System examples

In the example above we can see a good sign of purchase in the EUR/USD. In the same candle, the Dpo crosses above the line zero, the bullion of the + Di is produced over the – di, the moving average of 3 periods crosses the moving average of 15 periods and the MACD has just moved above the signal line. In this case, we wait for the closing of the candle and open a position of purchase in the next candle to ensure the reliability of the crossover of moving socks. This is usually a good practice to avoid premature entry. As you can probably notice, there is another good sign of purchase which occurred shortly after the first position was closed, but not included in this example to keep it simple.

Purchase: 2629

Stop loss: 2601 (28 pips, ie 10 pips below the moving average of 15 pips)

Position closing: 2751 (when the bearish half-crossing of the Moving stockings occurs)

Benefit: 122 Pips.

In the image above we can see an excellent signal of sale with this system. The reason for this assertion is that each indicator shows a sales signal in the same candle simultaneously. We can see the Dpo crossing the line zero, and at the same time the + di crossed down the – di and came from a bearish crossover of the moving average of 3 periods and the moving average of 15 periods, which confirms the signal. The MACD was also below the signal line. The signs like this are the ones that are most likely to succeed. One thing we can notice is that the prices had a temporary setback almost to the average 15 minutes, and then continued in the expected direction. This is something that occurs more or less frequently, so it is recommended to place the stop loss on the opposite side of the moving average of 15 periods.

venta2338

Stop loss: 2368 (at a distance of 30 pips, ie 14 pips above the moving average of 15 pips)

Position close: 2029.

Benefit: 309 Pips.

US Employment reports and meetings of the BoE and RBA this week

US Employment reports and meetings of the BoE and RBA this week

In the UK, the BoE's "Super Thursday" policy meeting will likely become the focus of market attention, amid speculation that the bank could raise interest rates this year.

-in Australia, RBA is expected to decide to stay in wait. The market will probably focus on any statement indicating whether policymakers are comfortable with the latest increase in Australian yields as well as AUD appreciation.

-Employment data in the United States for July are expected to show that the labour market continues to improve. While this could support the expectations of another rise in interest rates in the Fed during this year, analysts believe that inflation data can be the main determinant of the next Fed's move.

-We also obtain key economic data from the United Kingdom, the United States, New Zealand and Canada.

July 31 Economic Calendar

On Monday, preliminary data from the eurozone's CPI for July will be in the spotlight of the market. Without a forecast available yet, experts consider that the figures of both the main rate and the underlying CPI rate have remained constant, with upward-biased risks. The Markit compound PMI of the eurozone showed that prices rose only modestly in July. We must also bear in mind that the monthly CPI data of July 2016, which should be excluded from the annual calculation now, were from-0.6% and-0.7% for the main rate and the underlying rate, respectively. Therefore, all of this implies that even if we now have unpromising monthly data, as long as they are better than the disappointing results produced in July 2016, they could still cause annual CPI rates to increase.

Economic calendar for the rest of the week

On Tuesday, during the Asian day, the RBA will announce its policy decision and the forecast is that the bank will keep the rates unchanged once again. July has been anything but boring for AUD investors and traders. The turmoil began after the minutes of the last meeting showed a debate among politicians about the level of the policy of neutral rates in Australia, which was enough to increase the speculation that the bank might be getting ready to raise interest rates soon. However, a few days later, both Governor Lowe and vice Governor Debelle Viertieron cold water on such expectations, noting that markets should not speculate or draw too much conclusions from these conversations. Lowe made it clear that RBA is likely to remain in wait in the near future.

However, this meeting is likely to be closely monitored for any updated signal on the policy and, in particular, to see if RBA is comfortable with the latest increase in Australian yields, as well as AUD appreciation. In fact, both Lowe and Debelle pointed out that it would be desirable to have a lower AUD, implying a modest risk that the statement accompanying the decision would communicate a similar nuisance with respect to the recent increase of AUD. However, it is likely that the main factor that will determine whether the RBA will become more "hawkish" could soon be the second-quarter wage data, to be published in mid-August, taking into account the most recent concerns of RBA officials regarding wage growth.

In the UK, the manufacturing PMI for July will be in the spotlight of the market. Then, on Wednesday, we will have the index of construction for the same month and later on Thursday, the always important indicator of services will be announced. Although there is no prognosis available for any of these figures, it is quite likely that they will be closely followed by the market in order to have an indicative of how the economy has behaved in the third quarter, after a relatively uninspiring result of GDP for the second quarter.

On Wednesday, from the United States, we have a series of economic data. The underlying price index for June, the personal income and expense data for June as well as the ISM manufacturing PMI for July will be published this week. Starting with the underlying price index PCE for June, without a forecast available, there is a possibility that the annual rate has remained unchanged. Despite the fact that the PMI composite Markit for the month showed that the average prices charged by the companies increased to the faster pace in what goes this year, the underlying inflation rate of the month remained unchanged, increasing the likelihood of a similar reaction in the underlying PCE rate.

On the same day, also from the United States, we will have the ADP employment report for July, two days before non-farm payrolls. The forecast is that the private sector has added 185,000 jobs, notably more than the 158000 in June. Such a strong impression could increase the speculation that Friday's NFP will also meet its forecast of 180000 posts. That said, however, it is important that operators have some precaution. Although ADP is the only important indicator of non-agricultural payrolls, the correlation between the two indicators has declined markedly in recent months.

Thursday is the "Super Thursday" in the UK. In addition to the BoE's interest rate decision and the minutes of the meeting, we will also have the quarterly inflation report, which will be presented by Governor Carney at a press conference after the meeting. At its June meeting, the bank kept its policy unchanged, but the vote to remain on hold was 5-3, much more closed than the 7-1 forecast indicated.

After the meeting, Governor Carney and chief economist Haldane, suggested that an increase in rates could soon be applied soon, generating speculation that the vote could be even more closed and that there might be a rise in interest rates already in this meeting. However, shortly thereafter, the data showed that UK inflation was significantly reduced, generating doubts as to whether the bank in fact will proceed to a rise in the foreseeable future. According to UK's overnight index swaps, the market is betting almost entirely on an increase in 25bps interest rates in December 2018.

We will also have the US ISM non-manufacturing PMI for July, as noted above. Finally on Friday, the U.S. employment report for July will take the center stage. The forecast is that the non-agricultural payrolls ham increased by 180000 posts, less than 222000 posts in June. The unemployment rate is expected to recede to 4.3%, while average earnings per hour are projected to have accelerated in monthly terms. However, this would still cause the annual rate to mark down.

In general, this would be another employment report consistent with an improvement in the labour market, which will be a pleasant news for Fed officials, and can increase market expectations a little with respect to the time of the next increase in rates. While June's "dot plot" points to another rate increase this year, according to the futures of the federal funds, the market only provides a 50% probability for such action. As for the general picture, analysts believe that the main determinants of whether the Fed, in fact, will proceed with another increase in interest rates this year are inflation data. The latest results showed that general inflation slowed for the fourth consecutive month, while the underlying rate remained unchanged after falling for four consecutive months. There is probably a strong upturn in inflation before the expectations of rising rates rise materially and help the dollar to reverse its latest downward trend.

DESCARGAR E ISTALAR META TRADER 4 PARA WINDOWS

DESCARGAR E ISTALAR META TRADER 4 PARA WINDOWS

La plataforma de trading MetaTrader 4 es una plataforma de Forex y CFD que le permite operar y analizar los mercados financieros. Además, MetaTrader 4 le ofrece la posibilidad de utilizar avanzadas herramientas de trading en un entorno rápido, seguro y fiable.

Simplemente debe descargar, instalar ¡y empezar a operar!
DESCARGAR AQUI: METATRADER 4

BENEFICIOS Y CARACTERISTICAS

FACIL DE USAR

FLEXIBLE

SEGURO

RAPIDA SENCIBLE

SOPORTE EN DIFERENTES IDIOMAS

CAPACIDADES AVANZADAS EN LOS GRAFICOS

PERMITE TRADING AUTOMATICO

TOTALMENTE PERSONALISABLE

Meta Trader 4 es la version mas acoplada con los indicadores, por este motivo es la preferidad de muchos usuarios, facil de usar, aunque hay otro version como el metatrader 5 sige esta version siendo la ma preferdia y utilizada, los trading se sienten comodos y les facilita mucho para armar sus estrategias para Opciones Binarias y Forex.

Descarga la version de metatrader 4 aqui 

SI LES GUSTO ESTE APORTE COMENTEN 

GRACIAS POR VISITARNOS

The Fibonacci theory in the Forex trading

What is the Fibonacci sequence?

The succession of Fibonnaci is defined in mathematics as a infitia succession of natural numbers as follows:

This succession begins with 0 and 1 and is from these that each number is the result of the sum of the previous two. Each of the elements of this succession is known as Fibonacci number. In the west it was initially described in Europe by an Italian mathematician named Leonardo de Pisa in the 13th century who was also known as Fibonacci. The Fibonacci theory currently has multiple applications in the field of mathematics, game theory, computing and even trading as we will see later.

Although many do not know, this numerical succession had been previously discovered by mathematicians of India in the 12th century by studying rhythmic patterns that were formed with syllables or the snitas of one or two pulses.

Without entering much detail about their mathematical properties, the Fibonacci succession has the following characteristics:

The ratio between each number (n) and the next (n + 1) in the series is always equal to 61.80%.

The ratio between each number (n) and the one following the next (n + 2) in the series is always equal to 38.19%.

If you make the division of any number of the Fibonacci series between the previous number as for example 34/21, 21/13, 144/89, 8/5, etc, the result will always tend to 1,618, which is the inverse of 0618.

If the division of any number of the succession is carried out between the next lower number not consecutive as for example 144/55, 55/21, 13/5, 21/8, etc, the result always tends to 2,618, which is the inverse of 0382.

In this case, the divergence between the result of those reasons and values such as 0618 or 1,618, is larger as the numbers used are smaller. Therefore the greater the number of employees of the succession, the more they will approach those limits.

These proportions were known since the antiquity and the Greeks gave it the name of "Reason Glow" to the proportion 1,618 and its inverse 0618. This radius, which is equal to its inverse plus the unit characterizes all the successions of its type, no matter what the initial number.

Once we understand these concepts we will see how the Fibonacci theory is used in trading:

Use of the Fibonnaci series in trading

In the field of financial markets the reality is that we are not too interested in the numbers of the Fibonacci series. What is interesting is the radios between the numbers that form the series which were defined in the previous section. These radios are used to determine levels of resistance or support, to locate price ranges, to identify objective prices to which the quotations of determined financial asset should be reached and to determine the period of time that possibly duraráun specific market movement. This information can be used by the trader to create strategies and to deepen the analysis of the market.

The levels or radios most used by operators are as follows: 23.6%, 38.2%, 38.4 and 161.8%. Some operators also tend to use levels 50% and 100%. Generally (though not always logically) the correction that occurs after a strong tendency movement (bullish or bearish) ends when it is next to the Fibonacci numbers 0318 or 0618 of the movement. In case the overall trend is bullish, these levels will work as supports but if it is bearish they'll work as resistances. Of course this does not mean that the correction in the market is going to end up in these levels with complete accuracy, but as levels of support or resistance it should be considered that there is a high probability that the correction will end in its proximity and the market resume its general trend. These are known as Fibonacci regressions.

To view the Fibonacci flashbacks in the chart, you must select two endpoints in the graph. They are usually applied to periods in which the market proves to have a clear tendency and are used to determine the levels in which the price when carrying out setbacks, is highly likely to bounce to give continuation to the trend.

The basic first here is that these countertrend movements normally stop at some of the Fibonacci levels as will be seen later in the examples. In the middle of the levels of 38.2 and 38.4 is usually formed a consolidation zone without clear tendency in which finally there is a turn that allows prices to continue with the main trend. But if the 38.4% Fibonacci level is traversed, the current correction is likely to be even greater and ends up correcting a larger stretch of the major trend. When this happens it should be taken as a sign that we can be faced with a change in the main trend of the market so we should be more careful in our operations.

Applying Fibonnaci levels in graphics

By placing the Fibonacci levels in a price chart, they allow us to divide the movements of the quotations in ranges or levels that are proportional to the spokes mentioned previously. As explained, each of these levels becomes a resistance or a support that can be used to determine target prices to open or close a market position. To better understand this concept we can see in the following chart for the EUR/USD pair a number of Fibonacci levels in which there is a high probability that Fibonacci regressions will occur (click on the figure to enlarge):

Looking at the chart above you might think it would be very easy to operate based on these levels. Clearly it can be seen as in several points of the Fibonacci radii the price rebounds and continues the upward trend. However if you look at the image you can find several breaks in these levels so it is important that the trader is careful and do not open a position automatically when the quotes approach the level 38.4% or 38.19% for example. Like any other indicator of technical analysis, Fibonacci radii can be very subjective in the sense that they provide a lot of leeway for interpretation and personal ideas. However as it will be seen then it is possible to counteract that subjectivity and to take advantage of the information that gives us the Fibonacci levels.

Where to set Fibonacci levels

To use the Fibonacci retracements in a quotation chart we must know where to place the anchors from which the respective levels will be calculated. First of all, estop depends on whether or not we are facing a bullish or bearish trend. If the market is in a bullish trend the anchor point 0% (level 0%) is placed at the maximum reached and point 100% (level 100%) in the minimum reached. If you take as an example the chart above can be seen as the price bounced on several occasions in the levels 23.6% and 38.2%, which are known and determined levels in advance and can be used as guides to open or close positions.

While it can be thought that what happened in this example is just a coincidence, the reality is that this type of relationship often occurs in all charts regardless of the time frame used, be it 5 minutes, 1 hour or 1 week.

The same graph shows an example of what could have been a trade using Fibonacci levels. In this case it shows a good gain/loss ratio, since the distance between the entry price and the stop loss (lower Fibonacci level) is considerably less than the distance from the entrance to the target price of profit. In this way Fibonacci regressions are a good tool to set stop loss, take profit and to operate with a good gain/loss radius.

Graphical examples of Fibonacci use

In the graph above it is possible to observe how Fibonacci levels were placed at the ends of a trend that lasted about a month during which the quotes fell from almost 1.2800 to 1.1925. Then, the price during the following year (approximately 9 months) fluctuated and was consolidated in the levels 23.6%, 38.2% and 38.4% to finally fall and finish through the level 0.0% continuing with the general trend of the market.

The following chart proceeds to move the anchor points from which Fibonacci levels are placed after the price reaches new minimum values. It can be seen as the consolidations of the previous levels in most cases, continue to coincide with the new levels. In this case could have left the highest Fibonacci level anchored in the maximum where it was before, however this is at the discretion of the operator which could consider instead place it in one of the most recent peaks so this example was run.

In the chart below, we move the Fibonacci tool anchors when at the price it reaches new minimum ends, and we observe how the consolidations in the old levels continue, for the most part, coinciding with the new levels. It could also have left the maximum anchored where it was previously, but most of the operators were already considering the most recent. The Red Arrows in the charts are used to indicate the displacement of the Fibonacci tool anchor.

Another observation that can be made with the previous chart is that in this case the maximum anchorage of keeps at the same price level as the previous one as they both match. What has varied is the minimum anchorage, which has been placed in the new minimum end that has been reached by the quotations of the asset. Again, short consolidations are being developed at the levels 38.2% and 23.6%, which indicates that the price behaviour takes into consideration these new levels.

As time passes and the market continues its course Fibonacci levels must be rearranged to the most recent endpoints. With this at the same time we are dividing the graph into shorter sections which the operator can use as entry points as follows:

The following chart has moved the lower anchor of the Fibonacci levels to a new minimum. You can see how the previous consolidations again coincide with the new levels, which are logically corridos. For example, the level that was previously 23.6% is now 38.2% and the same goes for others. At this point we must consider that this is not at all a coincidence, but the way in which this analytical tool works so that market quotes tend to respect these levels on multiple occasions. Generally, the levels where stronger consolidations occur are usually very clear when an analysis is carried out using Fibonacci regressions.

Final considerations

It is important that flashbacks or Fibonacci levels be calculated only after the end of a trend has been confirmed. This tool should never be used during a current trend.

If it is taken into account that any trend is part of a larger and longer term trend and in turn is formed by minor tendencies, the doubt arises on which of these tendencies the Fibonacci regressions should be calculated. There is actually no simple answer to this question. It can only be said that Fibonacci levels should be used in those tendencies that give clear signs of completion.

In general, weak tendencies experience a regression in the level 31.8% while strong tendencies usually present retrocessions at the level 38.4% before retaking the original direction.

The use of Fibonacci levels does not cease to have its detractors, especially those who base their criticism on the fundamentals of the theory of the random walk. These critics argue that there is no justification for stating that the movements of contributions have reason or reason to respect the Dee Fibonacci levels where there are supposed to be setbacks.

The Fibonacci levels applied in trading can be seen as an important part of Elliot's wave theory.

Some authors speak rather of critical areas located between levels 33% to 38.2% and 38.4% to 67% instead of the actual levels.

In trading techniques we include a tool for calculating Fibonacci levels to which you can access through the following link:

-Fibonacci Level Calculator

Some direct applications of the Fibonacci theory, in addition to the setbacks, in the analysis of the market are the following:

Fibonacci arcs.

Fibonacci Range.

Trading techniques that employ Fibonacci levels

Pure Trading System

ICWR Trading System

Laguerre stripped of RSI - indicator for MetaTrader 5

Laguerre stripped of RSI - indicator for MetaTrader 5

We are by now using different types of levels in different indicators. Here is one experiment to use some other way.

This indicator is using stripped Laguerre in a sort of "levels" applied to the RSI "experiment" (to remind, this version of RSI can use :

• Original RSI calculation.
• Use SMA for calculation.
• Use EMA for calculation.
• Use SMMA for calculation.
• Use LWMA for calculation.
• DOWNLOAD FREE: Laguerre stripped of RSI

Indicator for MetaTrader 5 much needed for any forex strategy and binary options and can even work only as binary robot with great success.

It is a tool that you can not miss in your investments in the forex market. You can integrate this indicator in MetaTrader 5 is very simple.

Leave me a comment if you liked this indicator

Tipu MACD-indicator for MetaTrader 4

Tipu MACD-indicator for MetaTrader 4

Tipu MACD is one of the most popular indicators in the market. It is based on the MACD oscillator that was devised by Gerald Appel at the end of 1970. MACD is an impulse oscillator that is calculated by subtracting the moving averages of two prices calculated on the price. It is one of the simplest indicators that offers the best of the trend and the impulse.

Download: Tipu MACD

Tipu MACD es uno de los indicadores más populares en el mercado. Se basa en el oscilador MACD que fue ideado por Gerald Appel a finales de 1970. MACD es un oscilador de impulso que se calcula restando las medias móviles de dos precios calculados sobre el precio. Es uno de los indicadores más simples que ofrece lo mejor de la tendencia y el impulso. Usted puede leer acerca de Tipu MACD aquí .

I modified the original code for Tipu MACD published on the market by eliminating the compatibility with Tipu panel. This version of Tipu MACD is for learning purposes and is open to anyone interested in developing an expert advisor using this indicator.

This indicator is one of the best to use it Vien is very important to invest it to 3 and 5 minutes

The image shows an opportunity to invest the ALSA and the other low,

We can identify when in the MACD the Blue Line crosses red and changes color and tendency the bars the arrows indicate that it goes down and on the other one that goes up.

It has a 90% effectiveness if the conditions are given.

Comment If you like this article

Review: 60 Seconds Trading Strategy

When starting yourself in binary options, you definitely want some strategy to trade by. Of course, you can jump into a live account and press Call/Put button listening to your intuition but that will not end up well for your financial prosperity.

This is a review of one of the strategies that can be freely used by any binary options trader. You will learn the strategy’s rules, get to know its advantages and find out how to avoid its main cons.

Before proceeding to the review of the 60 Seconds Trading Strategy, it is necessary to explain the strategy itself in details. And before doing that, it will not hurt to remind you of what “60 Seconds” option really is.

Here we go:

60 Seconds Option

60 Seconds is a special type of binary options where the outcome of a trade is determined within one minute time. If you have chosen Call and the underlying asset (currency pair or stock, or whatever) finished above the entry level, you win. If you have chosen Put and the underlying asset finished below the entry level, you also win. In other cases, you lose. It is really that simple.

Strategy

Although there are many strategies for trading 60 seconds options — complex, simple, technical, fundamental, genial or simply absurd, there is one strategy that is mentioned in several other binary options websites. This system is often called just 60 Seconds Binary Options Strategy and is usually given out for free. It is frequently described in connection with TradeRush trading account, though it is not a requirement as the strategy can be used with any other broker featuring “Option Popularity” indicator for its binary options (nearly all brokers with SpotOption platform have that.)

Step-by-Step

There are several variations of the 60 Seconds Binary Options Strategy, but usually it consists of only three simple steps:

Step 1

Find the underlying asset (a Forex pair or some commodity, or any other trading instrument), which is trading well above the middle of the chart or well below it. See example:

Step 2

Check the popularity indicator for this asset. It shows how many binary traders at this particular broker are choosing Put/Down or Call/Up for this option. If the asset is trading above the middle of the chart (see Step 1), popularity of Put should be higher than popularity of Call (more than 50%). If the asset is trading below the middle, popularity of Call needs to be higher than popularity of Put. See example:

Step 3

If both conditions are fulfilled, it is now time to assume a position. Remember, you choose Call only when the majority of traders is “calling” and you chose Put only when the majority is “putting.” If at least one of the conditions is not met, proceed to Step 1. In our example, we ought to choose Up (Call) for AUD/USD as both conditions apply:

Some More Examples

To understand how the system works, here are some more examples.

Bad. This EUR/USD example from GTOptions would fail on Step 1 as it is trading near the middle of the chart:

Bad. This EUR/USD example from DragonOptions fails at Step 2. While the first condition is fulfilled (the currency pair is trading quite below the chart’s middle line), the Put/Call ratio is not showing in our favor:

Good. This GBP/CHF example from DragonOptions is a perfect fit for the strategy’s conditions. It is trading far down below the chart’s middle and the Call popularity exceeds Put popularity by 38%:

Bad. This USD/JPY example from TradeRush is showing another mismatch — the pair is trading above the middle line, while the traders are predominantly choosing Call:

Bad. While there is a nice 40% difference in favor of Call popularity for Gold in this example from TradeRush broker, the metal itself is trading right at the middle of the chart and thus cannot be traded using 60 Seconds Binary Options Strategy:

Variants

While the steps described above may certainly be called canonical for the 60 Seconds Binary Options Strategy, there are many variants. Some are quite similar, while others are completely different.

The former ones only add or remove one step or alter money management rules. For example, they may omit the first step (disregard the relation of the current price to the chart’s average line) but add Martingale position sizing instead.

The latter ones may add steps to check like 3–5 technical indicators more on a third-party trading platform. For example, they may call for signal confirmation by MACD, Stochastic Oscillator and Parabolic SAR on MetaTrader 4chart for the traded asset. In any case, these heavily modified 60 seconds strategies are beyond the scope of this review, as they are very different from what is explained in the Step-by-Step section here.

Why It Can Work

While there is some potential in this strategy, the websites boasting “87% chance of winning” or something similar simply do not know what they are talking about. There are four noteworthy improvements this system has over random or “blind” trading.

Overbought/Oversold

By choosing only charts where the asset is trading significantly above or below the middle line we trade Calls only on oversold instruments and trade Puts only on overbought ones. Basically, what such chart disposition means is that the asset is trading well below or well above its average value for the last hour (that is the period those charts show). Buying something that is oversold and selling something that is overbought can be a good idea and is a basis for some popular Forex and stock trading strategies. That is until you get into some strong rally that way…

Sentiment Measure

By choosing only direction, which is currently prevailing among other traders, we go with the crowd in this strategy. Trading with the crowd is often considered lame and counter-productive, but since the position is lasting only 60 seconds with this BO strategy, we just make sure to go with the trend by gauging the current market sentiment.

Combo

Many traders try to create complex strategies combining multiple technical indicators, forgetting that some indicators are based on the same data set and combining them only reduces the amount of signals, while keeping their quality at the same low level. This 60 seconds BO strategy is doing it the right way — it combines technical indicator (chart average vs. current price) and sentiment indicator (Call/Put popularity). Although, these parameters are somewhat connected, they possess a satisfactory level of independence to be used together in a system.

Systematic Approach

What many newbie traders lack when they approach something as simple as binary options is a system. They trade almost randomly — buying (Call) and selling (Put) just by intuition. This lack of any system may lead to excess losses, overtrading, emotional instability and eventual disappointment in binary trading. Using a system, trader gets a set of rules to act upon, leaving a lot less space for errors, emotional trading and pure gambling. A systematic approach even with a subprime strategy may lead to brilliant results as it works miracles for trading discipline.

Why It May Fail

While it certainly has its advantages, the 60 Seconds Binary Options Strategy is not as good as some marketing gurus make it look to be. You should be aware of this strategy’s potential problems and real dangers. There are three important disadvantages to it.

Lack of Statistical Evidence

There is no statistical data that would prove this strategy’s long-term or even short-term profitability. While some websites show screenshots of statements full of winning trades, they are hardly proof to anything. The difficulty with this 60 seconds option strategy is that it is extremely hard to automate and backtest. And since binary brokers rarely provide demo accounts (at least for long period of time), you would have to risk your real money for potential gains.

Popularity Inconsistence

The popularity indicator is a great tool for measuring market sentiment for a given underlying asset. Unfortunately, it is not consistent between different brokers. It may show one value on one broker and at the same time show a different value on another broker. The readings may even contradict each other completely. See the screenshot of the AUD/USD popularity index at TradeRush:

And see the screenshot of the same pair taken almost simultaneously at GTOptions:

Evidently, the first chart shows Call popularity of 45% vs. Put popularity of 55%, while the second chart shows a strikingly different ratio of 62% vs. 38%. It is quite obvious that those two charts would generate totally different trading signals. In this case, GTOptions‘ chart would generate a Call signal, while TradeRush‘s chart would give no signal at all as the popularity index contradicts the current price position.

The source of the inconsistencies is in the fact that brokers know only their own traders’ positions and have no knowledge of the situation in the market as a whole. Additionally, some brokers may display completely random values for popularity indicator or even manipulate it to drive traders into some convenient (for broker, not for traders) direction.

Low Yield

The majority of brokers offer 70% yield on 60 Seconds binary options. Although 70% may sound a lot for a 60 second gain, it is not a lot compared to a potential loss of 100% within the same 60 seconds. According to our Broker’s Edge Calculator, 70% payout with no out-of-money reward results in 15% average loss per trade. This means that if you win at the same rate as you lose, you will be losing $1.5 on every $10 trade with 60 Seconds options.

To overcome the intrinsic losing predisposition of this option type, you would need to win at least 59% of your trades. It is a significant edge and even it would lead only to breakeven trading. You would require a better edge to earn consistently with 60 Seconds options. Whether the 60 Seconds Binary Options Strategy is able to provide the winning rate of 60%/40% is a million dollar question. Unfortunately, you would need to risk your hard-earned money to find out.

Tips and Recommendations

Although the strategy is in and of itself pretty instructive and with clearly defined rules, your experience with it may be improved significantly by knowing some of the accompanying nuances and applying some minor tweaks.

• Find a broker that gives higher payout than 70% on 60 Seconds binaries. For example, GTOptions offers 75% on 60 Seconds for some currency pairs and commodities. The rates may vary depending on market conditions, so check other brokers too. Shop for best offers!
• Do not forget that you may use price chart and popularity indicator from one broker to generate your trading signals and enter the actual trade with another broker. This can be very convenient if your main binary broker does not offer some of the tools required for the 60 Seconds Binary Options Strategy.
• Keep your positions small relatively to your total investment amount. Do not risk more than 1% or 2% of your capital on one trade. For example, if your deposit (which you can afford to lose) is $1,000, do not trade with option size bigger than $15-$20.
• Do not double up your stake on losses. It is a sure way to lose all your money.
• Be aware of your broker’s trading schedule — not all brokers offer 60 Seconds options during normal trading hours.
• Keep an eye on the trend strength. If the underlying asset is trending strongly, this strategy will produce to many bad signals. Just avoid trading this instrument for some time if you spot a stubborn rally or correction.
• You will get a lot of trading signals with this strategy, especially if you trade with several brokers and with many instruments. Do not lose your head in trading, keep calm and stop trading for some time if you start making mechanical errors.
• Try to keep a trading log. You will not be able to log every trade in real-time mode, but in the end of the day, open your account’s closed positions and write everything down, pointing out the “weak signal” trades, positions entered by mistake or any other peculiarities; calculate your win/loss ratio for the day and overall. Revise your approach to trading if you start making net losses for several days in a row.