Thursday , July 19 2018

Advanced call options trading strategy using 8 and 21 day EMA along with modified RSI

Professional traders use many different kinds of indicators to trade the financial instrument in the world. The use indicators completely vary from person to person. There are many professional traders who have made the indicators one of the most powerful trading tools by tweaking its default value. It’s true that indicators sometimes can create massive confusion in trading discipline but if it is used properly we can definitely get the best benefit out of these indicators. The exponential moving average is one of the most widely used indicators in today’s binary options trading since it allows the trader to identify the potential price reversal in currency pairs. Experts use EMAs along with RSI and key support and resistance zone to identify high probability trade in the market.

Let us see how the professional use the EMA and modified RSI in option trading

Figure: Perfect call options trading strategy using the EMAs and modified RSI
Figure: Perfect call options trading strategy using the EMAs and modified RSI


Options trading can be extremely profitable if anyone knows how to deal with the dynamic market. In the above figure, the blue line is the 8 day EMA and is the yellow line is 21 day EMA. When the blue line crosses the yellow line it is considered to be bullish crossover which means a potential bullish reversal is going to happen in the market. Professional options traders wait patiently for the market to create higher high associated with higher lows in the market. In the above figure, the green shaded region was the critical resistance level which turned into support for the pair. Traders must know how to draw important support and resistance level before trading this strategy. Once such a key resistance level turns into support professional traders wait cautiously for an oversold RSI. Here the traders use the 3 periods in the RSI indicator for better precision.

In the above figure, the blue shaded region is considered to be perfect call option zone. But before you use this trading strategy make sure that you are executing you call option order in the market when the price is above the EMA. This system works best when traded in the shorter time frame. But make sure you trade in the direction of the long-term prevailing trend in order to get a high level of accuracy. Though the system is extremely profitable and reliable traders are highly advised to use proper risk management factors. In the eyes of expert option traders, proper money management is the key to success in this industry.

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