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.

Chart Setup

  • MetaTrader4 Indicators: LWMA-Crossover-Signal.ex4 indicator (default setting); HAMA_.ex4 indicator (default settings).
  • Preferred Time Frame(s):┬áM1, 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

Download

Download the LWMA CALL/PUT Binary Options Strategy

CALL Example (click the image for full size):

LWMA_Call-binary-options-strategy

Strategy

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.

Expiry

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.

Exit Strategy

  • 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.

LWMA_Put-Binary-Options-Strategy

Expiry

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.

Exit Strategy

  • 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.

Free Download

Download the LWMA CALL/PUT Binary Options Strategy

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.

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