Dr. EUR and Mr. USD: When Strategy Faces Reality in Binary Options Trading
Dr. EUR and Mr. USD: When Strategy Faces Reality in Binary Options TradingApril 9, 2013
If you have traded forex binary options before, you should already know that EUR/USD currency pairs can be an extremely fickle and unpredictable financial instrument. Still, the profit margins on contracts expiring in the money are immensely high, and that is what makes pair trading so attractive to investors.
Let’s assume for all intents and purposes that you have formulated an effective trading strategy using an effective Fibonacci-based resistance line signaling model and you have your finger on the pulse of the financial news. Now, if you are an experienced trader you should know that if you start losing trades too many times you need to reevaluate your positions and start over. Still, for some reason you can’t manage to make gains despite your consistent attempts to adapt and re-adjust your positions, what to do next?
When you get into this situation you always get back to the basics:
Life Saver (Tried & Tested): Use the EUR/USD Simple Trading System using Parabolic SAR on MACD indicators on 30 minute contracts.
What is a Parabolic SAR? It is an effective technical tool in allowing traders to anticipate a certain movement in the price of a given financial asset.
Key Indicators: MACD (on the 12th, 26th, 9th) + Parabolic SAR settings (0.02 & 0.2)
Entry Signal: The buy signal is when the lines are crossed in an upward formation.
* When Parabolic SAR gives sell signal and MACD lines crossed downwards – sell.
Exit Signal: Look for the next MACD lines crossover. If the market starts trading sideways reevaluate your positions.
This is my best back up strategy, and I tried about 10 of them before I got the one that works best for me. I always look for these specific formations (chart above) and the small hammer (dark background) works great on the sell. I have used a variety of trading software like Esignal and Ninja Trader and found all of them useful in helping me analyze Candlestick and Bollinger bands patterns, at the end of the day I usually find myself trading on either the Spotoption or Tradologic platforms.
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