Simple MACD Binary Options Trading Strategy

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MACD Binary Options Strategy

MACD Binary Option Strategies makes use of one of the most effective trading indicators out there.

The Moving Average Convergence Divergence (MACD) is an indicator that incorporates trends and momentum.

The MACD has been proven its worth in the Forex and stock markets for a number of years and has been the staple tool for any technical analyst.

Yet the question remains, how effective is it when trading binary options?

We will take a look over some of the most effective MACD Binary Option Strategies.

What is the MACD Indicator?

The MACD was first developed in the 1970s by a man named Gerald Appel. It is a lagging indicator that is used to follow trends. The MACD consists of two exponential moving averages and a histogram. The MACD is calculated as the difference in the assets 26 day (slow) and 12 day (fast) Exponential moving averages (EMA). These indicators will use the closing price of the asset in their calculation.

Apart from the standard MACD indicator, there is also a 9 day EMA of the MACD that is plotted as well. This helps for the trader to decide whether they should be buying / selling. The general rule of thumb when it comes to the MACD indictor is that it is a bullish indicator when the MACD is above its 9 day moving average.

There is another indicator that is added to the MACD representation and that is the histogram. It is helpful as it is able to identify when the difference between the moving average and the MACD itself is positive / negative. It is easy to tell when looking at the histogram whether there is a bullish indicator or bearish indicator.

Interpretation of the MACD

The name says everything, the MACD is all about spotting periods when trends are either converging or diverging. Converging is when the price is going in the same direction of the underlying trends. Diverging is when the price is going in the opposite direction.

When looking at the MACD, when the short term EMA is above the long term indicator this is considered a divergence. It is a convergence when they are moving together.

Given that the MACD line is an oscillator, when the MACD line is above zero, this means that the short term EMA is moving away from the long term MA in a positive direction and this should be a bullish sign.

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Similarly, when the MACD is below zero it means that the short term EMA is diverging away from the long term EMA but on the downside. This is a bearish indicator.

When the Signal line and MACD histogram are included, the binary options trader is able to get a lot more colour and is able to determine whether the MACD indicator itself is converging or diverging.

For example, if the MACD histogram is positive it means that the 9 period moving average of the MACD is above the MACD and could mean the MACD is still heading in a positive direction. The opposite can be said for a Moving Average that is below the MACD.

Taking a look at an example, in the image to the right, we have the EURCHF currency pair with the MACD lines plotted below. We have also plotted the price charts using candlestick indicators and moving averages above which are for indicative purposes. AS you can see, the MACD is calculated as the difference between the two moving average lines in the main price chart.

Looking more specifically at the indicator chart, the light blue line is the MACD indicator, the red line is the moving average of the MACD and the histogram is the difference between the two. In the cases when the MACD was positive and the Moving average of the MACD was increasing, this was a bullish sign for the trader.

Binary Option MACD Strategies

MACDs are a great indicator to use when trading binary options as they help to identify when momentum is strong and when it is tapering off.

When the trader sets the MACD periods to the option expiry periods, an even more accurate reading is presented. It will help the trader assess whether they should indeed enter the option up or down.

The MACD indicators can also be used when the trader wants to employ more exotic binary options such as one touch and no touch options.

Below we will run through some examples of binary option trades that you can embark on once reading the MACD indicator.

MACD 0 Line Crossover

A 0 line crossover, or “center line” crossover occurs when the MACD line goes from positive to negative. This is an indication that the asset may be moving from a situation of positive momentum to negative momentum and vice versa.

When the MACD crosses from negative to positive then this is seen as a bullish sign and is called a bullish crossover. On the other end, when the MACD crosses from positive to negative this can be a bearish indicator and is called a bearish crossover.

Indeed, a 0 line crossover may not be an indication that momentum has switched. For example, there may be a situation where the MACD will remain close to the 0 line for some time going forward. These are indeed hard to read and just show that momentum is currently quite limited.

Taking a look at an example of a binary options MACD crossover trade, below we have the price of Ether (USD) with the time period set to five minute candles. This was a Bullish crossover and was an indication that there was a move to positive momentum in the price of Ether.

In this case, the trader should consider entering a 5 minute binary option CALL on the price of Ether. As we can see, the next candle ended up closing considerably up from its open. This means that the CALL option would have ended up in the money and paid the trader off.

MACD Signal Crossovers

As mentioned above, the MACD signal line is very helpful as it allows the trader to spot when the MACD indicator may itself turn. This could then be a prelude increasing / decreasing momentum in the assets price as the MACD itself may turn.

In general, when the MACD line goes over and crosses the signal line, this is a bullish (positive). On the other side, when the MACD crosses the signal line to the downside then this is considered a bearish crossover and shows that momentum could be turning the other way.

If the trader was using a simple high / low binary option strategy, they would look to enter a PUT option in the case of a Bearish Crossover and they would enter a CALL option for a Bullish crossover.

In the below chart, we have the price of Gold with Candlesticks placed on a 2 minute horizon. Hence, the trader should consider 2 minute binary option trades as the instrument.

As you can see, there was a signal crossover and this was a Bullish crossover as the MACD has passed over the signal line. We can also see that the Histogram has reversed and is now positive.

As this is a bullish signal with momentum reversing to the upside, the trader should place a 2 minute binary CALL option on the price of gold. Indeed, the trade would have expired in the money as the closing price of the candle was above the opening price.

Although trading binary options with the MACD can indeed be profitable, the trader needs to be careful placing trades when the MACD line is at all-time highs or lows.

MACD Momentum Divergence

A MACD divergence occurs when the movement of the price is different from that which is being demonstrated by the MACD indicator itself. This is usually a sign that the momentum is indeed tapering out and should make traders weary. As we have mentioned, momentum is a key ingredient in a trend continuing its trajectory.

Hence, if the binary options trader is to observe a divergence between the MACD and the underlying price then this is an indicator that they should consider placing a trade that is contrary to the trend. A reversal from the current trend in the price is indeed possible.

There are two types of MACD divergences. There is the Bullish divergence which occurs when the price of the asset continues reaching lower lows but the MACD indicator itself records a higher low. A bearish MACD divergence occurs when the price of the security reaches a higher high but the MACD indicator is recording a lower high.

Taking a look at a MACD convergence example, on the right we have the 10 minute chart of the S&P 500 index as well as the MACD indicator below. As you can see, the index is reaching higher highs but the MACD seems to be reaching lower highs. This is an indication that some of the momentum behind the price move is indeed eking out.

The trader should therefore consider entering a 10 minute Binary PUT option on the S&P 500. Of course, it is quite difficult to ascertain when this should exactly be done as we can see that the price kept on climbing even though the MACD was falling. At this stage, it should be an indication to avoid a CALL option trade at this point.

However, there appeared to be a Bearish MACD signal line crossover. In this case it appears to be occurring at the same time that we are having a bearish divergence. At this stage, the trader should place a 10 minute Binary PUT option in expectation of a fall in the price.

Indeed, if the trader had done this, the option would have expired in the money as the candle closed down below the open. The trade would have ended profitably and paid the trader out.

Other Considerations

These MACD strategies have worked effectively for a number of years and are borrowed from traditional forex and stock trading. However, even if you think that you have a perfect opportunity to enter a trade, you have to take into account other technical factors which could also have an impact on the price at that point in time.

It is also advisable not to embark on a strategy like this if you don’t have an understanding of the basics of binary options. Similarly, when using a binary options trading strategy, you need to also make use of a money management strategy. This is because profitability is impacted by more factors than just what trade is placed.

The trader will need to be measured in the amount that they would like to stake on each trade as well as know when to stop trading if the MACD binary option strategy is going contrary to expectations. Using a combination of different trading disciplines is a surefire way to trading binary options profitably.

Forex Trading Strategy #55 (MACD Forex Binary Options Strategy)

MACD Forex Binary Options Strategy For M5 Timeframe That Is Very Easy, Simple And Powerful

There are many forex binary options strategies available in the market. Trading forex binary options is much simpler as compared to forex. There is no stop loss or take profit. You just need to get the market direction correctly. That’s all. Now this is a very simple forex binary options strategy that uses a few candlestick pattern in combination with MACD. MACD is a very powerful momentum indicator.

MACD basically comprises of a signal line and a histogram. Signal line is the plot of EMA (9) while the histogram is the plot of the difference of two EMAs 26 and 12. When the signal line crosses the histogram, price momentum changes! This is something very important for you to grasp. When the signal line crosses the histogram and goes below it, price momentum shifts from down to up. In the same manner, when the signal line crosses and goes above the histogram, price momentum shifts from up to down. This is the concept behind this forex binary options strategy. We combine a few candlestick patterns with MACD signal line crossover in this simple strategy. Let’s make it clear using a few live trading examples!

Take a look at the above screenshot. In this screenshot, there is a very nice pinbar candle and MACD changed color from red to white and the signal line crossed the histogram and went below it which is a signal that price has sifted momentum from down to up. So we buy a call with expiry of 15 minutes. You can clearly see the price is up after the expiry of three 5 minute candles.

Now just after an hour, there is another good trading opportunity. There is a very nice hanging man candle pattern and the MACD signal line crossed the histogram and goes above it which is a strong signal that price momentum has shifted from up to down. So we buy a put with expiry of 15 minutes. You can clearly see from the screenshot that price ended a lot down after the expiry of three 5 minute candles.

In this screenshot, again there is a nice pinbar pattern and as you can see the MACD histogram has changed color from red to white and the signal line has crossed the histogram and gone below it which is a signal that price momentum has changed from down to up. So we buy a call with expiry of 15 minutes. You can clearly see from the screenshot that price ended up a lot higher after the expiry of three 5 minute candles.

You can also trade this forex binary options strategy on M15 timeframe. In that case the expiry of the option should be 60 minutes. Read more live trading examples of this forex binary options strategy and download the MACD indicator shown in the above screenshots FREE that changes color when price momentum changes and gives a sound as well as a popup alert when the signal line crosses the histogram.

Simple Strategy for Binary Options

You probably arrived here without knowing what Binary Options are, or what Olymp Trade is or IQ Option, or you already have some idea and are looking for a simple strategy to try.

Whatever your situation, this article is for beginners and laypersons, or simply for someone curious who saw an ad and wants to Make Money.

Let’s start at the beginning.

What are Binary Options?

1 – Binary Options appeared in 2008 and became a regulated investment in 2020.

2 – The way they work is similar to betting. We choose an asset to bet on (as this is a financial instrument, the assets are financial: shares of companies, currency pairs, crypto coins, etc.). Just like in bets, we just have to bet on one side or the other. In Binary Options, we bet if the price will go up or down, just that!

3 – The bet is open for a certain period of time. It can be 1 minute, 5 minutes, 1 hour or 1 day, we can choose. When the bet ends, we will win if we bet in the right direction, or lose if we bet in the wrong direction. In essence, these are the basics of Binary Options.

Tips from our Professional Trader: 6 reasons to have 2 accounts

Do you know that you should work with more than 1 broker?
Check the 6 reasons why you should have account with at least 2 brokers:
  1. Each platform has its differences. If you try different platforms you may find those more suitable to your trading style.
  2. Each broker has his own payouts that keep changing during the day. If you want to open a trade and one offers 60% and the other 80%, you will choose the one with best payout, no?
  3. Sometimes the brokers close some assets, if you have just one account and you want to trade on that asset and it is closed, you will LOSE that trade, no?
  4. If there is an issue with your Broker’s platform, or they are updating it you’re not able to trade, unless you have another account with other broker.
  5. Deposits and withdraws. Brokers keep changing the deposit and withdraw methods, imagine you need cash fast and your withdraw system is closed at that moment on your broker, what do you do?
  6. Each platform has its owns indicators and trading tools, imagine you found a new stratey and it does not work on your broker because it uses an indicator that your broker does not offer.

Below you can find our main trader suggestions on brokers:

What are the Advantages of this Investment System?

1 – It is much simpler to understand and put into practice. You don’t need years of expensive studies and courses to understand how it works. However, if you want to earn a consistent income, I advise taking a course to improve your knowledge and results.

2 – You can try it out on a demo account. There is no need to invest anything to experiment. Simply open a demo account at a broker (the companies that offer the platforms where we can make these bets) and experiment for as long as you want, for free.

3 – The registration with the companies that offer this type of investment is totally free and simple. It takes 1 minute to register and the platforms work directly in your browser or with a smartphone app. You do not have to install large and complicated programs.

4 – The platforms where the bets are made are light, simple and intuitive. Any layman or beginner will understand how to use them quickly.

5 – The value of the investments and trades is low. We can start with a $10 deposit and place $1 bets. It is within anyone’s reach to be able to invest and start making money in this market. In many markets, we need hundreds or even thousands of dollars to get started. Here we can begin with any value.

6 – The deposit and withdrawal methods are varied. Making a deposit and withdrawing your profits are both quick and most brokers do not charge fees or commissions to deposit or withdraw.

How can I get started?

As mentioned above, registration is simple and fast and it is not necessary to invest anything to experiment.

1 – To start, you must open a free demo account with one of the brokers that work with Binary Options. There are a lot of them. Below are some examples. The brokers below are the largest in the world and probably the best.

You can register with Olymp Trade directly in the form below

IQ Option > Click HERE to download the Mobile App for Android. If you have an iPhone then you can use the iOS App. Click HERE to go to the Apple Store.

IQ Option, has now another App for mobiles. It works in all devices, Android and iOS. It is called PWA. Click HERE to see it.

You can register with IQ Option directly in the form below

And now, what do I do? Now you use my Simple Strategy!

2 – Once you register you will be able to test how the process works with our simple strategy.

If you are a beginner or a complete layperson, it is normal not to know what to do next, so I have created a simple and very easy-to-apply strategy even if you have never traded.

The image below explains the simple strategy. Click the image to enlarge and see the explanation of the simple strategy.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    The Best Binary Options Broker 2020!
    Perfect For Beginners!
    Free Trading Education, Free Demo Account!
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  • Binomo
    Binomo

    Good Broker. Only For Experienced Traders!

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Binary Options Guide For Beginners
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