Advanced ADX Correlation Binary Options Strategy

The advanced ADX correlation binary options strategy is based on the advanced ADX indicator. This indicator functions like an oscillator and is able to detect oversold and overbought conditions.

It can also be used to trade divergences. The strategy described today is a combination strategy using the advanced ADX indicator and the afl_winner.ex4 indicator.

Chart Setup

MetaTrader4 Indicators: Advanced ADX.ex4 (default setting), afl_winner.ex4 (default settings), Line tool (default setting)

Preferred Time Frame(s):  1-minutes, 5 minutes, 15-minutes

Recommended Trading Sessions: Any time the signal appears

Currency Pairs: any

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Buy CALL Trade Example (Click the picture for full size)

Adv_ADX_CALL-binary-options-strategy

STRATEGY

The strategy is to look for when the advanced_ADX.ex4 indicator and the afl_winner.ex4 indicator show the same colour, and when price is also trading on a bounce or on a rejection at a trend line joining the lows or highs of price action.

Both indicators have green bars and red bars. The afl_winner.ex4 indicator is unique in that it moves and shows colour changes at extremes of price action i.e. at oversold and overbought conditions. It changes to green and stays green when its bars move from oversold to overbought, and the bars become red and stay red when the bars move from overbought to oversold conditions.

This uniformity in colour of the afl_winner.ex4 indicator can be exploited to trade a 2-candle or 3-candle setup as a binary option Call/Put trade, using the advanced_ADX.ex4 indicator as a combination indicator for the strategy.

CALL Entry Rules:

A Call trade is initiated when the following indicator pattern is displayed on the chart:

  • The advanced_ADX.ex4 and afl_winner.ex4 are showing green coloured bars.
  • For the afl_winner.ex4 indicator, try to see if the entry candle corresponds to a green bar located in an oversold area.
  • Draw a trend line across two previous candle lows, and if the above conditions are met, execute a CALL trade.

PUT Entry Rules:

For the PUT entry, the trader should look for the following:

  • The advanced_ADX.ex4 and afl_winner.ex4 are showing red-coloured bars.
  • For the afl_winner.ex4 indicator, try to see if the entry candle corresponds to a red bar located in an overbought area. You can use a vertical line to do this as shown in the chart.
  • Draw a trend line across two previous candle highs, and if the above conditions are met, execute a PUT trade.

Adv_ADX_PUT-binary-options-strategy

Expiry: The expiry setup is simple. The trade’s duration is just two or three candles. However, if the trade is not looking like the profit objectives will be met (expiry value lower than entry price), use the Roll Over function to defer the expiry to the next candle.

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About The Trading Indicators

The advanced_ADX.ex4 indicator and afl_winner.ex4 indicator are both oscillators which can point out trade opportunities at price extreme areas. However, it is  essential that both indicators are combined to get the best possible binary options trade signals.

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