With the beginning of September, we began a new series of analyses in which we test and validate the effectiveness of various Binary Options strategies. So far we have reviewed the End of the Day strategy, a detailed summary of which is available in a separate article and the EMA Rainbow strategy, which summary of results you will find here. As promised, every second Saturday is the time to introduce another strategy that we will be testing for the next two weeks.
Since I did not find the official name for this strategy, I thought that due to the indicators used I will call it EMA 8/20. As you may have guessed, this strategy will be based on two exponential moving average (EMA): 8 and 21. Previously tested EMA Rainbow strategy was based on 3 moving average and its results were very satisfactory. Perhaps it is in the simplicity which makes strategy profitable ? Whether it is, we will see in the next two weeks.
The EMA 8/20 strategy uses two exponential moving averages:
- 8-period exponential moving average (EMA 8)
- 20-period exponential moving average (EMA 20)
The moving averages allow us to determine the direction of the trend that we will trade with and the level that will trigger our trade (open PUT in a downtrend or CALL in an uptrend).
The chart will look like this:
When to make a transaction:
Buy the CALL option:
The moving averages are facing upwards
When on the 1-minute chart (M1) faster (blue) moving average (EMA8) crosses the red moving average (EMA20), the CALL option is opened.
The expiration period of the option is 5 minutes – next 5 candles on the M1 chart.
Buy PUT option:
The moving averages are pointing downwards
When on the 1-minute chart (M1) faster (blue) moving average (EMA8) crosses the red moving average (EMA20), we open PUT
The expiration period of the option is 5 minutes – next 5 candles on the M1 chart.
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