One of the most reliable and profitable trading strategies that I have used exclusively for binary options throughout 2016 has been a variation of a common PSAR Bull/Sell Strategy that is exclusively designed for the Nadex trading platform.
Now although this trading strategy is more tailored towards the Nadex trading platform this strategy is still applicable to other traditional trading platforms such as SpotOption, TechFinancials and the Panda investing platform.
Online day traders who plan to utilize this strategy can expect to have an average success rate between 71 to 83% once you learn the basics of how to apply this investment strategy on a day-to-day investment basis.
Important Notes To Remember
Moving forward, one note that should be kept in mind would be that this strategy yields the best success rates when utilized during the New York and London trading session.
Now the reason why this strategy is best used during these investment hours would be that more low volatility assets are available to invest whereas the Tokyo trading session gives investors only a limited number of low volatility currency pairs to invest.
Another note to bear in mind would be to do your best to avoid investing when press releases are being announced, oftentimes these press releases can inadvertently affect the readings of our indicators and the price action of our targeted assets.
Now as many of you know I am mostly a fan of minimizing indicator usage but unfortunately that is certainly not that the case when using this high probability Nadex trading strategy.
We use a total of 4 different indicators when applying this investment strategy so having access to a charting solution such as FreeStockCharts, MT4, or MT5 is essential.
Once you have your charting solution up and running you will want to make sure that you are using a 4 hour time frame along with choosing assets that reflect relatively low volatility such as the Eur/Usd, Usd/Cad, Nzd/Usd, and Usd/Chf. Below are the settings and the function of each indicator that we are using in this binary options trading strategy.
Simple Moving Average (13): One of my favorite investment indicators would be the Moving Averages. Now there are a few different types of moving averages but for this technical analysis based trading strategy we are using a simple moving average set to a period of 13.
The function of this particular indicator is to serve as our support and resistance guide for our investment. If we notice that our simple moving average indicator slopes in an upward direction then a possible Buy investment is in order and vice versa for a slope heading in a downward direction (means possible Sell investment is in order).
Simple Moving Average (200): This simple moving average is set to a period of 200 and performs the main function of visually helping investors identify the overall trend of the targeted asset.
MACD Histogram: Quite a unique indicator, the MACD Histogram has the main function of showing investors market bias. When the MACD Histogram is showing positive values above the 0.00 line it indicates to investors that a bullish bias is in order.
Whereas, when the MACD Histogram is reflecting negative numerical values below the 0.00 line it notifies investors that a bearish (seller controlled market) bias is in effect.
Parabolic SAR: The Parabolic Stop and Reverse (SAR) is an underutilized trend indicator that has the main function of reflecting market bias, much like the MACD Histogram. When dots form above our Simple Moving Average (13) indicator it indicates to investors that a Selling bias is in effect whereas when the dots form below the SMA13 indicator it notifies investors that a Buying Bias is currently in effect.
Applying the Sell Trade
Now just like with any other technical analysis based trading strategies, certain conditions much be met prior to placing your investment. In the occasion for a Sell trade to occur we must have three conditions met.
The price of our targeted asset must reside below our Simple Moving Average (200) indicator but also be resisted at the Simple Moving Average (13) indicator, so essentially the Parabolic SAR dots must reside in-between the SMA (200) and SMA (13) indicators.
The second condition that must be met would be for the Parabolic SAR to produce a sell signal, this is effectively done when the Parabolic SAR indicator dots reside between both moving average indicators.
Lastly, we need the value of our MACD Histogram indicator to be a negative numerical value below the 0.00 level.
When utilizing the Nadex trading platform, you as an investor will need to make sure when executing this strategy and having a Sell Trade set up valid that you will need to choose the SELL option on their platform.
Just like with any investment that you may place on the Nadex trading platform, the asset price is added to $0 to give you the cumulative price per asset.
So for example, if our targeted asset is priced at $35.50 and you sell a total of 14 contracts with a pip value of $1 per pip and the expiration value of the asset is below the strike price of our targeted asset then accumulated profit would be as reflected below:
($0 + $35.50) x 14 contracts = $497 profit
Applying the Buy Trade
One of the unique aspects about this trading strategy would be how the Sell Trade and the Buy Trade set ups are essentially the opposite of each other. Below are the three conditions that must be met prior to placing a Buy investment on the Nadex trading platform.
The price of our targeted asset must reside above our Simple Moving Average (200) indicator (the higher it resides above the SMA200 the better) but it must also be resisted by a “bounce” underneath our SMA (13) indicator.
The dots of our Parabolic SAR indicator must also appear under the price value of our targeted asset.
Lastly, the value reflected by our MACD Histogram indicator must be a positive numerical value above our 0.00 level.
So when you are utilizing the Nadex trading platform and you come across a valid Buy trade set up when utilizing this strategy you will need to make sure to select the Buy option on their trading platform.
Below is another example of the profit potential that you have with the Nadex trading platform and when you are optimizing this strategy to its full strength.
You have a valid Buy Option set up in effect and the price of your asset is set at $30.00 and you decide to buy a total of 23 contracts. If and only if the expiration value of our targeted asset price value expires above the strike price then will you generate the profits yielded.
($0 + $30.00) x 23 contracts = $690 profit
Utilizing this strategy on an everyday investment basis is recommended especially if you are utilizing the Nadex platform. Bear in mind that this is a sound technical analysis based trading strategy so you will need access to a reliable charting solution and you need to make sure to incorporate 4 hour time frames once your charting solution is loaded.
I have had the most success when using this strategy on a few different low volatility currency pairs due to the main reason that many investment signals aren’t being generated due to the time frame needed with our signaling process.
So this strategy is more of a long-term and reliable trading strategy opposed to one of those technical analysis based trading strategies that focus on many short-term investments with more numerous yet fluctuating signals.
For those of you who took the time to read this strategy and are interested in applying this strategy please feel free to email us at [email protected] below at any time if you have any questions that may arise, we am here to help you out! As always thanks for reading and best of luck with your online day-trading endeavors!