Tuesday , January 23 2018

Classic binary options trading strategy using the MACD indicator

MACD is one the most popular indicator in the forex industry. Almost every single trader has used this indicator at least once in his lifetime. MACD which stands for Moving Average Convergence/Divergence is one of the most powerful and reliable momentum oscillators used by the professional trader. Trader waits for the signal line crossover and divergence in MACD to enter into a trade. When the red line is the histogram of the MACD professional options traders set their strike price to the nearest support zone. On the contrary, strike price of the put option trade is set at the nearest resistance zone when the red line in the MACD indicator remains below the histogram

Let’s see how the professional binary trader uses the MACD indicator and S/R zone

Figure: Call and put option setup using the MACD indicator


The MACD indicator is based on three exponential moving average.12 day exponential moving average, 26-day exponential moving average and the main Red line which is the 9-day exponential moving average. The histogram shows positive value when the MACD line is above the signal line which is a red line in the graph. It shows negative value when the MACD line is below the signal line. Professional trader loves to bring variation in the value of exponential moving average values used in the MACD indicator. However, variation MACD data is only applicable to the experienced professional trader. Professional trader test different values of MACD with the different time frame and market environment and chose the best possible value for them.

In the above figure, professional binary options traders wait patiently for the bullish indication in MACD indicator. When the red line crosses above the histogram of the MACD indicator professional binary options trader waits for minor retracement of the price. They set their call option strike price just near the minor support zone. Similarly when the red line crosses below the MACD indicator trained expert set their put option strike price just near the key resistance level. The system is extremely reliable and simple. But before trading, these system traders should have proper knowledge about support and resistance level. Since there is no price action confirmation signal. The best trading result can be found only by trading the major pairs in the longer time frame. Before you go live with this trading strategy make sure you know how to draw support and resistance level properly. If your support and resistance level are faulty then you will have very bad trading result by using this system. To be precise you need to be a master of finding support and resistance level in the chart. And during the event of major economic news release don’t use this system.

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