Binary Option Simple Balanced System
Binary Option Simple Balanced System is a perfect strategy for any newcomer who needs a simple method to begin trading but still has advanced options for more complex business once they get used with the market. This system is available on http://forex-strategies-revealed.com. It uses two Exponential Moving Averages (one with a period of 5 and one with a period of 10), Relative Strength Index (RSI) with default settings of 14 and the Stochastic indicator with settings of 14, 3, 3.
How Binary Option Simple Balanced System works
To begin with, you need to activate all the indicators before trading. Therefore, follow the path on your Meta Trader 4 chart: Insert – Indicators – Oscillators to enable both the Relative Strength Index and the Stochastic. The Exponential Moving Average is activated through another path: Insert – Indicators – Trend – Moving Average and choose Exponential.
Trading Rules of Binary Option Simple Balanced System
For a Call, we need the 5 EMA to cross the 10 EMA upwards + the RSI to be above the 50 level (this is not a default level so you will have to add it manually) + the Stochastic to be heading up but not in Overbought territory. The word “and” is written in bold letters because we absolutely need all three conditions to be met at the time of entry. It will probably not happen simultaneously so wait until they are all met.
- EMA 5 crosses EMA 10 upwards
- RSI is above 50
- Stochastic is heading up but it is not in Overbought territory
For a valid put entry we need to reverse all three conditions: EMA 5 must cross EMA 10 downwards + the RSI must be below the 50 level (drawn manually) + Stochastic needs to be heading down, but not in Oversold territory. Again, all three conditions must be met at the time of the entry.
- EMA 5 crosses EMA 10 downwards
- RSI is below 50
- Stochastic is heading down but it is not in Oversold territory
If things happen as we expect, there would be no problem at all. The price would move in your foreseen directions. However, in the real markets with real conditions, unexpected events could occurs and intervene the whole process. False signals and inaccurate results also appear due to the instability and the wide range of the periods.
The mechanism of this strategy naturally has positive effects on the outcome of the trade. In particular, this system demands a full combination of three conditions before trading which certainly reduces the possibility of inaccurate signals and misdirection. Moreover, having RSI over the 50 level is the exact confirmation about whether our trade is moving in the expected direction or not. And even in case you are not satisfied with RSI, EMA cross and Stochastic are also valuable indicators that may strengthen your decision. So with three indicators, this system is undoubtedly reliable.
The bottom line
This system is simple but its not a system, its a strategy. This strategy provides analysis and rules for entering trades but nothing about position size, money or risk management. That being said if you use some sound money management techniques you should be able to produce consistent positive results with this strategy. I like that it uses multiple indicators to provide signal confirmations, I also like that the combination of indicators is easy to use. What I don’t like is that, as originally written, it does not take trend or support/resistance into consideration. Applying trend analysis is a good way to weed out false, bad and weak signals. Keeping support and resistance in the equation is a good way to weed out good signals that have an unusually high probability of failure. I also don’t like that you have to change the standard settings of the indicators. To me, this is a sure path to failure but it seems to work here.