Utilizing the Moving Averages with Binary Options

Ted Capwell Updated:

Trading on the fixed-term contract market is correlated with a high-yielding method for earning a profit on the financial market. However, to achieve stable results and trade effectively using this tool, you need a specific set of methods and strategies, which help with analysis, assessing market indicators, and accurate forecasting trading positions. Usually, in this situation, investors use multi-faceted trading strategies, based on automatic indicators. The list of such analysis resources and trading systems is practically endless, however, in the list of basic indicator tools, there are several which are considered to be classic and more effective tools for modeling market movements, which are worth acquainting yourself with. In this case, the Moving Average is one of the most famous and popular, the function of which we will examine in as much detail as possible in our piece.

So, the Moving Average is a strategy for defining the market trends of a specific financial asset. It functions through a simple and effective algorithm, which calculates the average asset prices within a set time range. To put it simply, the indicator forms a dynamic trend line on the chart, which reflects the statistical average asset cost indicator within a defined time range. Therefore, we receive from our method the chart liquidity, from which is provided the flattest market indicators without any reflected sound or narrow short-term asset fluctuation.


Combined Trading System


Even though the computing algorithm is simple, the Moving Average is an incredibly effective tool for forecasting. It’s especially of note, how effective it is with a binary options trading regime. It’s possible to explain the approximate working format of a set-time contract, where the most important profit producing indicator is an accurate forecast of an asset rate’s direction of movement. Once you understand that the Moving Average is a trend indicator, the purpose of which is to define the direction of market movement at any current time, you have a more effective tool at your disposal.

When working with the MA, professional financial analysts note the number of advantages: the lack of the redrawing of indicators, the relatively accurate reactions to shifts in the situation of the market, the indicator’s wide selection of different types and variations.

The last fact enables, on the basis of the strategy, the creation of a long list of professional strategies and other indicator tools for technical analysis

When working with the MA, the following are worth emphasizing as the most traditional and popular types and formats:

  • The Simple MA – It is the simple and classic MA, employed using the standard algorithm. Usually, for a specific trend, investors use the SMA with a period of 50, meaning that the MA highlights the asset price value, factoring in the indicators of the last 50 rate candles.
  • The Exponential MA – It is a MA with an exponential regime, which takes into account when calculating the dynamic MA, not only the average asset cost indicator within a defined period, but also the cost change coefficient as it relates to the opening and closing price of the rate candles.
  • The Weighted MA – The WMA is the asset cost value. For this one, the indicator’s algorithm is more complicated, factoring in not only the opening and closing candles’ rate but historical information as well. To put it simply, we receive weighted market movement trend indicators with analysis of indicators within the context of their historical chart movements.

Today, there are dozens of various MA modifications and configurations. Becoming acquainted with them all would take a substantial amount of time. Therefore, we recommend only the basic variations of the MA. Undoubtedly, even this minimal selection is more than enough to develop an effective trading strategy and achieve results in the market for binary options. We recommend considering the classical strategies as methods, which work off of the various MAs.



The Classic System for the Moving Average

In this regime, set up the SMA indicator on the chart with a period of 50. As a signal for placing a set-time contract, the approximate formation direction of the MA is used, which reflects the general dynamic growth of the asset trend rate movement:


The MA Breakdown Strategy


This method is very effective as a strategy for day trading or package trades. Therefore, when you use stable and well-forecasted market movements, you can obtain as many financial indicators as possible.



The MA Breakdown Strategy

The MA, when formed on an active asset chart, has the ability to generate a multitude of trade rate formation signals. So, when using the classic MA, we can accurately identify, on the chart of the trading tool, the turning points of the trend movement, which are amongst the most profitable conditions for earning profit from a binary contract. In this MA method regime, the signal is the asset rate breakdown of the MA, noting that rates must be opened in the direction of the breakdown:


The Classic System for the Moving Average


This format of indicator trading signals produces more than 80% successful options, which creates the opportunity to quickly and consistently increase the profitability of your trading indicators.



Combined Trading System

This type of analysis system works by combining MAs with several format customizations and market price indicator periods. To employ this strategy, set up on your chart MAs in this format:

  • SMA 30
  • EMA 20
  • EMA10

For the EMA change the color of the MA. Therefore, we are given the opportunity to analyze the market in several time and technical periods at once, increasing accuracy, the quality of the trading forecast, and leading to more consistent trading results. When using this strategy to trade, use simple indicator signals as a short-term concentration of MAs in one point, followed by divergence in the defined direction:


Utilizing the Moving Average with Binary Options


The advantage of this strategy is in its universality. This method produces accurate trading signals on any asset chart timeframe, on all financial tools without exception, at any time of day. Therefore, the basic MA variations form a highly effective strategy for trading with binary options.

In conclusion, even though the MA has been well known by market participants for a very long time, it still is one of the most effective and in demand strategies for technical analysis and forecasting around today.


“General Risk Warning: Binary options trading carry a high level of risk and can result in the loss of all your funds.”