I present you the Trend Follower strategy. This is not a new one, it was quite popular in the 2006/2007. Later, due to the changing market conditions, it quickly became forgotten. I think that Binary Options ideally compensate its shortcomings and thus it will be quite profitable system – of course after learning and respecting certain rules.
First of all – broker. The ideal one would be TopOption because of the high return level (85%) on high/low options, accounts in many currencies and really low minimal deposit. Also 24Option offer sounds good – nice returns and many currency pairs.
Step by step, I am going to show you how to open your first account and start investing. You will also learn how to set up a free demo account with one of the FX brokers, install the platform and the Trend Follower system.
But first, I wanted to introduce you to the system itself . As the name suggests this is a trend following strategy (trading with a trend). Trend itself, is very nicely represented by a series of colored lines , which are nothing more than averages – if you did not have anything to do with them before is not important – the technique of drawing or understanding what indicators really mean, are not needed for this particular trading style.
Those lines, stacking up in concrete way show us how the trend will go. Let’s see this on the chart – lines narrowing indicates trend abnormality.
Line disturbance:
Another component is a very popular indicator – MACD. Once again, you do not have to know its interpretation. Just remember that for playing long positions it must be greater than zero and lower to play shorts.
The very heart of the system is Laguerre indicator which is, to be honest, the modified RSI. Yes, you do not have to know what the RSI is and how it exactly works! In short, if the index goes from oversold or overbought zone, it shows the end of the upward movement in the case if it is above 0,75 and overtakes that value from the top or if it is under 0,25 and overtakes that value from the bottom.
So we have the Trend Follower system components. But how interpret them and use them in real trading? The lines shows us the trend and we play only in accordance to it. MACD is used for additional signals filtering – they have to be consistent with the trend. The lines are laid down, we can only play short positions and only when the MACD is negative.
Meanwhile the Laguerre index give an automatic signal to open a position if in such situation price will cut the 0,75 level from the top showing the end of the correction.
Practically, that is almost everything. The best news is that the system automatically gives a signal indicating by alarm or on-screen pop-up, on which currency pair it occurred. After that you just have to open the position.
Is it enough to start trading effectively? Analyzes on demo and real accounts show that it’s enough. But I want to share with you some additional tips.
#1 – trading hours
End of the session in Tokyo, start in Europe – no earlier than 7:00 (CET) to 16:00-18:00 (CET), because the market volatility is getting lower.
#2 – hard-to-trade signals
Do not start trading when the system shows signal just below/above support/resistance zone. They are automatically marked on the chart and they can stop the price movement. Therefore, if sell signal is just above support it is better sometimes to wait with the transaction – the price can bounce from it. The same thing with buying – if the price is slightly below the resistance it will be better to abstain.
It is basically everything. Just one last and small thing – choosing the right currency pairs to trade. Personally I will advise you to trade only the biggest currencies. In exmaple, the ones that TopOption can offer:
- AUD / JPY – Australian Dollar / Yen
- AUD / NZD – Australian Dollar / New Zealand Dollar
- AUD / USD – Australian Dollar / U.S. Dollar
- EUR / AUD – Euro / Australian Dollar
- EUR / CAD – Euro / Canadian Dollar
- EUR / GBP – Euro / Pound Sterling
- EUR / JPY – Euro / Yen
- EUR / USD – Euro / U.S. Dollar
- GBP / JPY – Pound sterling / yen
- GBP / USD – Pound Sterling / U.S. Dollar
- USD / CAD – U.S. Dollar / Canadian Dollar
- USD / JPY – Dollar / Yen
In the next part I will present you the exact instructions how to install the platform, the system and how to open real Binary Options account. We will also learn how to open your first transaction and start the adventure with trading.
At the end – here are some examples of my own trades. Those are 5-minute candles so 12 candles after the signal the options are realized. The signal can occur during a candle. So if it is a really long one, the signal can occur as early as the beginning of its body.
Indicators that you will can be downloaded from our webpage. I know the most important thing you want to know is how to start trading properly and effectively. First of all you need is an account on broker’s platform which uses the MetaTrader 4.
