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Momentum is an oscillator that measures the rate at which prices are changing over the observation period. It measures whether prices are rising or falling at an increasing or decreasing rate. The momentum calculation subtracts the current price from the price a set number of periods ago. This positive or negative difference is plotted about a zero line.

The most common uses of Momentum in binary options are to:

  • Indicates overbought and oversold conditions

An overbought or oversold market is one where the prices have risen or fallen too far and are therefore likely to retrace. The momentum line moves to a very high value above the zero line, this is a sign of an overbought market. If the momentum line moves to a very low value below the zero line, this is a sign of an oversold market. Overbought and oversold signals are most reliable in a non-trending market where prices are making series of equal highs and lows.

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If the market is trending, then signals in the direction of the trend are likely to be more reliable. For example if prices are in an uptrend, a safer trade entry may be obtained by waiting for prices to pullback giving an oversold signal and then turn up again.

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  • Indicate Bullish and Bearish Divergence

Divergence between the momentum line and the price indicates that tan up or down move is weakening. Bearish Divergence occurs when prices are making higher highs, but the momentum is making lower highs. This is a sign that the up move is weakening. Bullish Divergence occurs when prices are making lower lows but the Momentum is making higher lows. This is a sign that the down move is weakening.

It is important to note that although divergences indicate a weakening trend they do not in themselves indicate that the trend has reversed. The confirmation or signal that the trend has reversed must come from price action, for example a trend line break.

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Parameters:

Observation period: (default 10)

Normally the observation period is set to half the cycle length of the underlying instrument. This means that the momentum line will peak and bottom along with prices.

 

Momentum Binary Options Strategy

Momentum is an oscillator that measures the rate at which prices are changing over the observation period. It measures whether prices are rising or falling at an increasing or decreasing rate.

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A Moving Average is a moving mean of data. In other words, Moving Averages perform a mathematical function where data within a selected period is averages and the average “moves’ as new data is included in the calculation while older data is removed or lessened. Moving averages essentially smooth data by removing ‘noise’. This smoothing of data makes Moving Averages popular tools in identifying price trends and trend reversals.

The differences between the three types of moving averages lie in the way that they are calculated and whether they look at all the data available or only the data within a selected period. This means that each type of moving average has its own characteristics, for example how quickly each will respond to changes in the underlying price.

Simple Moving Average

Simple Moving Averages are the most common and popular form of moving average. The primary reason for this is the relative ease with which Simple Moving Averages are calculated. A Simple Moving Average is calculated by adding values over a set number of periods and then dividing the sum by the total number of values.

As with other types of moving averages, Simple Moving Averages smooth the data by removing ‘noise’ over the selected period. The ability to smooth data makes them a useful tool in identifying price trends and trend reversals.

Moving average – Weighted

As with Simple Moving Averages, Weighted Moving Averages smooth the data by removing “noise’ over the selected period. However a weighted Moving Average will be more sensitive to recent changes in data. This is because a Simple Moving Average gives all observations equal emphasis in its calculation, but a Weighted Moving Average assigns a greater weight to the most recent observations.

Moving average – Exponential

The Exponential Moving Average is similar to the Weighted Moving Average in that they both assign greater weight to the most recent data. Where they differ is that instead of dropping off the oldest data point in the selected period of the moving average, the Exponential Moving Average continues to maintain tall the data. In other words, a 5 day Exponential Moving Average will contain more than 5 pieces of data information. Each observation becomes progressively less significant but still includes in its calculation all the price data in the life of the instrument. The exponential Moving Average is another method of weighting a moving average.

The most common uses of Moving Averages in Binary Options trading:

  • Identify the trend

A common method involves looking at the slope of the Moving Average and the relationship of the prices to the Moving Average. For example, if the Moving Average is sloping down and prices are below the Moving Average then prices are considered to be in a downtrend. The opposite is true for an uptrend. If prices are moving above and below the Moving Average and the Moving Average is flat then a non-trending market exists.

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  • Give buy and sell signals

When trading binary options, this can be achieved a number of ways. The first method looks at the relationship between the close and a single Moving Average. If the market closes above the Moving Average then a buy signal is generated, if the market closes below the Moving Average then a sell signal is generated.

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The second method uses two Moving Averages, one with a shorter observation period than the other. Buy and sell signals are generated when the short moving average crosses over the long moving average. For example if the short moving average crosses above the long moving average, a buy signal is generated; a sell signal is generated when the short Moving Average crosses below the long Moving average.

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When trading binary options, both these buy and sell techniques is most effective when the market is trending. If the market is non-trending then these techniques are likely to give false signals. This is simply because the market needs to continue in the direction of the buy or sell signal in order for the trade to be profitable.

Exponential Moving averages are used in the same manner as the other types of moving average, usually to identify price trends and trend reversals.

Parameters

To use Moving averages in your binary options strategy, the exact averaging period to be used will depend on the purpose of the moving average. If you are using moving averages to identify the trend, the length of the averaging period should reflect the length of the trend you are trying to identify. The longer the trend – the longer the averaging period. For example, if you are looking at a daily chart to identify the long – term trend, you may decide to use an averaging period of 200. For short and medium term trends periods of 20 and 50 could be used respectively.

If you are using moving averages to generate buy and sell signals then shorter, more responsive averaging periods are normally used. For example a two moving average system may use averaging periods of 5 and 20.

It is also important to note that when selecting an averaging period there is a tradeoff between the averaging periods, the number of signals generated and the risk associated with the signal. A longer averaging period will generate fewer signals but will require a larger price move before responding, sacrificing potential profits in order to confirm the signal. A shorter averaging period will generate more signals and require less of a price move before responding, however the risk that the signal is false increases.

 

Moving Average Binary Options Strategy

A Moving Average is a moving mean of data. In other words, Moving Averages perform a mathematical function where data within a selected period is averages and the average “moves’ as new data is included in the calculation while older data is removed or lessened. Moving averages essentially smooth data by removing ‘noise’

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Parabolic Time Price is a system that always has a position in the market, either long or short. The SAR points resemble a parabolic curve as they begin to tighten and close in on prices once prices begin to trend. This explains the name –Parabolic Time Price.

Parabolic Time Price is usually charted with a bar analysis so that the stop and reverse points are easily identified. If you are long, the SAR points will be below the prices and the signal to go short will be when prices cross the current SAR point from above. If you are short, the SAR points will be above the prices and the signal to go long will be when prices cross the current SAR point from below.

When a new position is entered the SAR points will be positioned far enough away from the prices to permit some contra-trend price movement. As the market begins to trend the SAR points will move with prices and progressively tighten as the trend continues This is accomplished by the use of an acceleration factor that increase up to a given limit each time a new extreme in the direction of the trend is reached.

The most common uses of the Parabolic SAR in Binary Options:

  • As a Stop and Reverse system.

Signals to stop out of the current position and enter a reverse position are when prices cross the current SAR point. For example if the SAR points are below prices, you would be long with an order to close out the current long position and enter a short position at the period’s SAR point. Once you are stopped into a short position the SAR points will be above prices and the current period’s SAR point will be the level at which you will be stopped out of your short position and enter a long position.

When applied in its origin form, the Parabolic Sar is a system that is always in the market. In order for this technique to be successful, the underlying market needs to be trending strongly. If the Parabolic SAR is applied in a non-trending market, then it is likely to have more OTM trades, because the buy signals will occur at the top of the range and the sell signals at the bottom of the range.

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  • As an entry binary options system in a trending market.

By using the Parabolic Sar indicator, in conjunction with an analysis that indicates market trend such as MACD, you would take only buy trades when the trend’s up and only sell trades when the trend’s down.

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Parameters:

Acceleration factor: (default 0.02)

The Acceleration increment is the rate at which the SAR points will progressively tighten upon prices each time a new extreme in the direction of the trend is reached. A value greater (less) than 0.02 means that the SAR points will tighten more quickly (slowly) upon prices, leaving less (more) room for counter trend price movements

Maximum constant: (default 0.2)

When a new signal is given the acceleration factor will use the start acceleration as its initial value. Each time a new extreme is made in the direction of the trend the acceleration factor will increase by the value of the Acceleration increment until the acceleration factor equals the Maximum acceleration. A value greater (less) than 0.2 means that the SAR points will tighten more quickly (slowly) upon prices, leaving less (more) room for counter trend price movements.

 

Parabolic SAR Binary Options Strategy

Parabolic Time Price is a system that always has a position in the market, either long or short. The SAR points resemble a parabolic curve as they begin to tighten and close in on prices once prices begin to trend. This explains the name –Parabolic Time Price.

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Rate of change is an oscillator that measures how fast the momentum of the market is changing over the observation period. Rate of change is very similar to momentum in that it compares the current price with the price a specified number of periods ago; however Rate of Change is calculated differently. Where momentum subtracts the current price from the price a specified number of periods ago, Rate of change divides the current price by the price a specified number of periods ago and then multiplies the result by 100.

The most common uses of Rate of Change in Binary Options are to:

  • Indicate overbought and oversold conditions

An overbought or oversold market is one where the prices have risen or fallen too far and are there likely to retrace. If the Rate of change line moves to a very high value above the 100 line, this is a sign of an overbought market. If the Rate of Change line moves to a very low value below the 100 line, this is a sign of an oversold market. Overbought and oversold signals are most reliable in a non-trending market where prices are making a series of equal highs and lows.

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If the market is trending, then signals in the direction of the trend are likely to be more reliable. For example if prices are in an uptrend, a safer trade entry may be obtained by waiting for prices to pullback giving an oversold signal and then turn up again.

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  • Indicate Bullish and Bearish Divergence

Divergence between the Rate of Change line and the price indicates that an up or down move is weakening. Bearish Divergence occurs when prices are making higher highs but the Rate of Change is making lower highs. This is a sign that the up move is weakening.

Bullish Divergence occurs when prices are making lower lows but the Rate of Change is making higher lows. This is a sign that the down move is weakening. It is important to note that although Divergences indicate a weakening trend they do not in themselves indicate that the trend has reversed The confirmation or signal that the trend has reversed must come from price action, for example a trend line break.

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Parameters

Observation Period: (default 14)

Normally the Observation Period is set to half the cycle length of the underlying instrument. This means that the Rate of Change line will pea and bottom along with prices. Using a shorter Observation Period increases the responsiveness of the Rate of Change oscillator while also increasing the risk of false signals. Using a longer Observation Period slows the responsiveness of the oscillator to price changes, resulting in late signals.

 

Rate of Change Binary Options Strategy

Rate of change is an oscillator that measures how fast the momentum of the market is changing over the observation period. Rate of change is very similar to momentum in that it compares the current price with the price a specified number of periods ago; however Rate of Change is calculated differently

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Developed by. Welles Wilder, the Relative Strength Index calculates the difference in values between the closes over the Observation Period. These values are averaged, with an up average being calculated for periods with higher closes and a down- average being calculated for periods with lower closes. The up average is divided by the down average to create the Relative Strength. Finally, the Relative Strength is put into Relative Strength Index formula to produce an oscillator that fluctuates between 0 and 100.

By calculating the RSI in this way, Wilder was able to overcome two problems he had encountered with other momentum oscillators. Firstly, the RSI should avoid some of the erratic movements common to other momentum oscillators by smoothing the points used to calculate the oscillator. Secondly, the Y Axis scale for all instruments should be the same, 0 to 100. This would enable comparison between instruments and for objective levels to be used for overbought and oversold readings.

The most common uses of RSI in Binary Options trading are to:

  • Indicate overbought and oversold conditions

An overbought or oversold market is one where prices have risen or fallen too far and are therefore likely to retrace. If the RSI is above 70 then the market is considered to be overbought, and an RSI value below 30 indicates that the market is oversold. 80 and 20 can also be used to indicate overbought and oversold levels. Overbought and oversold signals re most reliable in a non-trending market where prices are making series of equal highs and lows.

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If the market is trending, then signals in the direction of the trend are likely to be more reliable. For example if prices are in an uptrend, a safer trade entry may be obtained by waiting for prices to pullback giving an oversold signal and then turn up again.

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  • Generate buy and sell signals.

If the RSI is above 70 and you are looking for the market to form a top, then the RSI crossing back below 70 can be used as a sell signal. The same is true for the market bottoms, buying after the RSI has moved back above 30. These signals are best used in non-trending markets.

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In trending markets, the most reliable signals will be in the direction of the trend. For example if the market is trending up, taking only buy signals after the RSI has moved back above 30 after dipping below it. The reason for taking signals only in the direction of the trend is that when the market is trending any counter trend signal is likely to indicate a small retracement against the underlying trend rather than true reversal.

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  • Indicate Bullish and Bearish Divergence

Divergence between the RSI and the price indicates that an up or down move is weakening. Bearish Divergence occurs when prices are making higher highs but the RSI is making lower highs. This is a sign that the up move is weakening. It is important to note that although Divergences indicate a weakening trend, they do not in themselves indicate that the trend has reversed. The confirmation or signal that the trend has reversed must come from price action, for example a trend line break.

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Parameters

Observation Period: (default 14)

Lower Bound percentage (default 30); this provides the lower boundary expressed as a percentage of the instrument’s value. The number must be less than the Upper Bound. Upper Bound percentage (default 70); this provides the upper boundary expressed as a percentage of the instrument’s value.

Wilder used 14 as an observation period although periods of 9 and 7 are also popular. Decreasing the observation period increases the sensitivity of the RSI to changes in price, resulting in a more responsive RSI. Note that a shorter observation period may also result in an increase in the number of false signals. A longer period results in a smoother RSI that will generate fewer signals.

 

RSI Forex and Binary Options Strategy

Developed by. Welles Wilder, the Relative Strength Index calculates the difference in values between the closes over the Observation Period. These values are averaged, with an up average being calculated for periods with highe

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Stochastics are an oscillator developed by George Lane and are based on the following observation:

As prices increase – closing prices tend to be closer to the upper end of the price range

As prices decrease – closing prices tend to be closer to the lower end of the price range. Fast Stochastics consists of two lines, % K and %D:

The %K line measures, as a percentage, where the current close is, in relation to the lowest low over the observation period. This is shown on a scale of 0 to 100, where 0 is the observation period low, and 100 is the observation period high.

The %D line is a Simple Moving Average of the %K. Because it is a moving average, this line is smoother than the %K and provides the signals for an overbought/oversold market.

Fast Stochastics are more sensitive than Slow Stochastics and therefore more likely to give false signals. As a result Fast Stochastics are less commonly used than Slow Stohastics.

The most common uses of Stochastics in Forex and Binary Options Strategies are to:

  • Indicate overbought and oversold conditions

An overbought or oversold market is one where the prices have risen or fallen too far and are therefore likely to retrace. If the %D line is above 80% then the close is near the top end of the range of the observation period, while a reading below 201% means that a close is near the bottom of the range of the observation period.

Generally the area above 80 is considered overbought, while the area below 20 is oversold. The specified overbought/oversold ranges vary. Other commonly used ranges include 75-25, 70 -30 and 85 -15. Overbought and oversold signals are most reliable in a non-trending market where prices are making a series of equal highs and lows.

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If the market is trending, then signals in the direction of the trend are likely to be more reliable. For example if prices are in an up trend, a safer trade entry may be obtained by waiting for prices to pullback giving an oversold signal and then turn up again.

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  • Generate buy and sell signals

For a buy or sell signal, the following conditions must be met in order.

  1. The %K and %D line move above 80 or below 20
  2. The %K and %D line cross
  3. The %K and %D lines move below 80 or below 20

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  • Indicate Bullish and Bearish Divergence

Divergence between Stochastics and the price indicates that an up or down move is weakening. Bearish Divergence occurs when prices are making higher highs but the Stochastics are making lower highs. This is a sign that the up move is weakening. Bullish Divergence occurs when prices are making lower lows but the Stochastics are making higher lows. This is a sign that the down move is weakening. It is important to note that although Divergences indicate the weakening trend, they do not in themselves indicate that the trend has reversed. The confirmation or signal that the trend has reversed must come from price action, for example a trend line break.

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Parameters Observation Period for %K FAST: (default 5) Observation Period for %D FAST: (default 3)

A value greater than the default results in a smoother less sensitive %K Fast line. The averaging period is the number of observations of %K FAST lines used in the moving average. The smaller the value, the close the %D will be to the %K

 

Stochastic Forex and Binary Options Strategy

A value greater than the default results in a smoother less sensitive %K Fast line. The averaging period is the number of observations of %K FAST lines used in the moving average. The smaller the value, the close the %D will be to the %K

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Developed by Larry Williams, the Williams %R is a momentum indicator that works much like the Commodity Channel Indicator or the CCI. It is especially popular for measuring overbought and oversold levels.

The scale ranges from 0 to -100 with readings from 0 to -20 considered overbought and readings from -80 to -100 considered oversold.

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The William %R shows the relationship of the close relative to the high-low range over a set period of time. The nearer the close is to the top of the range, the nearer to zero(higher) the indicator will be. The nearer the close is to the bottom of the range, the nearer to -100(lower) the indicator will be. If the close equals the high of the high – low range, then the indicator will show 0 (the highest reading). If the close equals the low of the high-low range, then the result will be -100 (the lowest reading).

The most common uses of Williams %R in Forex and Binary Options:

One method of using Williams %R might be to identify the underlying trend and then look for trading opportunities in the direction of the trend. In an up trend, traders may look to oversold readings to establish long positions. In a downtrend, traders may look to overbought readings to establish short positions.

Also, the Divergence between Williams %R and the price indicates that an up or down move is weakening. Bearish Divergence occurs when prices are making higher highs but the Wiliams %R is making lower highs. This is a sign that the up move is weakening. Bullish Divergence occurs when prices are making lower lows but the Williams %R is making higher lows. This is a sign that the down move is weakening.

 

Williams %R Forex and Binary Options Strategy

Developed by Larry Williams, the Williams %R is a momentum indicator that works much like the Commodity Channel Indicator or the CCI. It is especially popular for measuring overbought and oversold levels.

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Backtesting is the process of feeding historical data to your trading strategy to see how it would have performed. The hope is that its historical performance tells us what to expect for its future performance. The importance of this process is obvious if you have developed a binary options strategy from scratch, since you would certainly want to know how it has performed. But even if you read about a strategy from a publication, it is still imperative that you independently backtest the binary options strategy. There are several reasons for this.

Often, the profitability of a strategy depends sensitively on the details of implementation. Ideally, our backtesting program can be transformed into an automated execution program by the push of a button to ensure the exact implementation of details.

Once we have implemented every detail of a binary options strategy, in a backtest program, we can then put them under the microscope and look for pitfalls in the process or in the strategy itself. For example, in backtesting a binary options strategy based on technical indicators, on the Mt4 platform with both buy and sell positions, we have to take into account the different advantages of the different types of technical indicators involved, some will work well in trending markets and others in ranging markets.

More importantly, when backtesting binary options strategy ourselves, we often can find ways to refine and improve the strategy to make it more profitable or less risky. The backtesting process in binary options trading should follow the “scientific method.” We should start with a hypothesis about an arbitrage opportunity, maybe based on our own analysis of the markets. We then confirm or refute this hypothesis by a backtest. If the results of the backtest aren’t good enough, we can modify our hypothesis and repeat the process.

 

Backtesting your Binary Options Strategy

Backtesting is the process of feeding historical data to your trading strategy to see how it would have performed. The hope is that its historical performance tells us what to expect for its future performance.

Non repaint indicator is an MT4 indicator that does not change its location and value on the Forex chart.Meaning the arrows stay put, on the same time stamp and on the same candle.
Binary diaries has one of the best indicators online. Our main Non repaint indicator
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is the best MT4 indicator online. It gives the best results when trading forex.

 

The arrows on the chart are non repaint. They don’t move as time progresses, or if you switch times and re-open MT4. This is the best MT4 indicator online. Being a non repaint indicator gives lots of advantages to the user. It gives assurance,that you can plan your trades, knowingly and being fully aware of the risks involved.

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The arrows will not change location no matter what. This is what our: flagship indicator is all about. Visit :  https://binarydiaries.com/forex-holy-grail-best-mt4-indicator/  for more info on how to get the indicators.

Non Repaint MT4 Indicator

Non repaint indicator is an MT4 indicator that does not change its location and value on the Forex chart.Meaning the […]