RSI Divergence Binary Options Strategy

The Laguerre RSI binary trading strategy is based on the LaguerreRSI.ex4 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 the divergence BO strategy with the Laguerre RSI indicator.

Chart Setup

MetaTrader4 Indicators: LaguerreRSI.ex4 (default setting), Line tool (default setting)

Preferred Time Frame(s):  Any

Recommended Trading Sessions: Any time the signal appears

Currency Pairs: any

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Buy CALL Trade Example

RSI-divergence-binary-options-strategy

STRATEGY

The strategy is to look for when the LaguerreRSI.ex4 indicator starts to diverge from the price action. Usually the price action will eventually correct itself in the direction of the divergence.

The key is to identify the divergence and this is done by using the line tool to trace the highs and lows of both price and indicator.

Once the divergence is identified, the trade is made off the trend line which is used to demarcate the lows or the highs of price action, depending on where the trader wants to effect the trade.

CALL Entry Rules:

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

  • The indicator’s trend line is forming higher lows when price action trend line shows price action forming lower lows.
  • Extend the trend lines and allow the candle to pullback on the price action trend line.
  • At the moment the pullback candle touches the trend line, initiate a CALL trade.

Expiry: The expiry setup is simple. The trade’s duration is just two candles, which is equivalent to 30 minutes. The trade is set to expire at the 30-minute mark, which is when the 2nd candle closes.

Early Closure: The early closure function should not be used for this trade. The trade should be allowed to head to its logical conclusion for a good payout.

PUT Entry Rules:

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

  • The indicator’s trend line is forming lower highs when price action trend line shows price action forming higher highs.
  • Extend the trend lines and allow the candles to pullback to the price action trend line.
  • At the moment the pullback candle touches the trend line connecting the price highs, initiate a PUT trade.

RSI-divergence-binary-options-system

Expiry: The expiry setup is simple. The trade’s duration is just two candles, which is equivalent to 30 minutes. The trade is set to expire at the 30-minute mark, which is when the 2nd candle closes.

Early Closure: The early closure function should not be used for this trade. The trade should be allowed to head to its logical conclusion for a good payout.

Free Download

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About The Trading Indicators

The LaguerreRSI.ex4 indicator is an oscillator which can point out divergence signals as well as price extreme points. The best divergence signals are seen when the indicator line is located in the price extreme zones as shown above.

This allows for good reversal price action which is just enough to enable short term binary options trading.

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