LWMA Call/Put Binary Options Strategy
The LWMA-Crossover-Signal.ex4 indicator is basically a trend indicator and is used to pick out areas where there are has been a crossover of two moving averages.
In this case, the two moving averages are the 5-day and 6-day weighted moving averages, with the faster LWMA crossing above the slower LWMA for a bullish signal and the reverse cross occurring for a bearish signal.
Moving average cross signals are not very reliable, so it is important to get confirmation before trading. The confirmatory indicator used in this scenario is the HAMA_.ex4 indicator.
- MetaTrader4 Indicators: LWMA-Crossover-Signal.ex4 indicator (default setting); HAMA_.ex4 indicator (default settings).
- Preferred Time Frame(s): M1, M5, M15, M30
- Recommended Trading Sessions: Any time. Depends on when the indicator signal appears on the chart. Best signals appear when market is trending.
- Assets: Any
CALL Example (click the image for full size):
The strategy here is to identify a period in the price action when the LWMA-Crossover-Signal.ex4 indicator appears as arrow signals, signifying the direction of the cross. A green arrow which points upwards is a signal for a cross of the faster LWMA above the slower LWMA. A red arrow which points downwards shows that the reverse cross has occurred.
The essence of using the HAMA_.ex4 indicator for confirmation is to ensure that the trades are only made when the trend supports the entry. The entry parameters are displayed below.
CALL ENTRY RULES
A Call entry can be initiated when the following is displayed on the chart:
- The LWMA-Crossover-Signal.ex4 indicator shows a green arrow which appears under the candle bar that sits on the blue coloured bars of the HAMA_ex.4 indicator.
- Enter a Call trade when the arrow appears.
The duration of the trade is set to 4 candles in length. The time chart will determine how many minutes of trading this translates into. Since the example above was performed with a 15-minute chart, this puts the expiration of the trade at 60 minutes.
- It is possible to close the trade early with 15 minutes to go in the trade. This will involve closing the trade manually when the trade is in profit, but comes with a reduced payout.
PUT ENTRY RULES
A PUT entry is initiated when the following is displayed on the chart:
- The LWMA-Crossover-Signal.ex4 indicator shows a red arrow which appears above the candle bar that is butting against the red-coloured bars of the HAMA_ex.4 indicator.
- Enter a PUT trade when the arrow appears.
The expiration of the trade is set at 4 candles in length. The time chart will determine how many minutes of trading this translates into. This example also uses a 15-minute chart, so the expiration is set to 60 minutes.
- It is possible to close the trade early. This will involve closing the trade manually when the trade is in profit, but comes with a reduced payout.
About The Trading Indicator
The LWMA-Crossover-Signal.ex4 indicator is a trend trading indicator which also allows traders to trade off price bounce on the bars of the HAMA_.ex4 indicator.
The essence of using 4 candles for the duration of the trade is to ensure that the price action has moved sufficiently in the direction of the trade for success to be achieved.