The 30-Second Strategy «Two Crossroads»
Options trading experts reasonably believe that high-frequency binary options trading, despite the high trading risks, is the most effective approach to profiting in the financial market. But this requires a stable operating system with precise trading signals. The 30-second strategy, “Two crossroads”, is a system that is specially designed and tested to trade fast (short-term) options. Its simplicity and efficiency contribute to profitable statistics and you’ll quickly increase your trading capital. The rules and conditions for this system will be described in this article.
The basics of the 30-second «Two crossroads» strategy
“Two crossroads” is a trading strategy that is based on a highly accurate trend indicator, the moving average, and the laws of quote movement in relation to this technical analysis tool. And here is the first, rather important, issue – the technical capabilities of options platforms. Most of them do not support indicators at all, and those that do, do not let you use several moving averages simultaneously. But we found a solution to this problem, and the effectiveness of the strategy actually increased by 12%. We used the trading platform from the brokerage company Binomo and, instead of using the classic moving average, we used migrated moving averages of the Alligator indicator, which, as everyone knows, are moving averages.
Now to configure the signal lines. Open the settings window on the Alligator indicator and change the time period of the “jaw” line to 10 shift 2, and “teeth” to 5 shift 2. The line representing the “lips” of the Alligator should be removed from the chart – just change the display color to white. The result of those settings will look as follows:
The use of such short periods to construct moving averages is due to the short period (30 seconds) of contract expiry and the use of quote tick charts of underlying assets. The Alligator-like nature of these moving averages can also be used to your benefit for trading on this simple 30-second binary options strategy. But more on that later, for now let’s consider the main system signals.
The 30-second «Two crossroads» strategy – trading signals
We acquire an option with a decline forecast for the quote of the underlying asset when the following occurs:
- Quote candlesticks intersect both of the moving averages downward
- The lines of the moving average intersect downward
Contracts DOWN are registered after the closing of the candlestick signal:
We acquire an option with a growth forecast for the quote of the underlying asset when the following occurs:
- Quote candlesticks intersect both of the moving averages upward
- The lines of the moving average intersect upward
Contracts UP are registered after the closing of the candlestick signal:
Having changed the periods of the indicator lines, we were able to trade on absolutely all quote fluctuations and, thus, obtain profits from high-frequency trading. The system signals are generated on the trading chart with a rate of about 25-30 per hour, and 80% of them will result in profitable positions. This lean towards lucrative trades will contribute to high dynamics of growth of trading capital.
Now, let’s talk about the other features of moving average lines. It is a question of the degree of divergence between those lines themselves. If, after the intersection of moving averages, they rapidly begin to move away from each other, then this situation would demonstrate the strength of the emerging trend and it could be used for profitable trading, just by making out additional contracts in the direction of the main strategy signal:
Earnings on binary options in this case will be higher. And a high income from trading is the most important goal of any trader.
High-frequency trading is certainly a high-risk approach to financial trading. To protect your trading capital from total loss and raise the level of recovery, you need to trade contracts with minimal volumes. For example, the Binomo broker (visit website) offers lots at $1, which is quite optimal for this system. When trading on the 30-second “Two crossroads” strategy, you have to refrain from using higher-value contracts, or a few series of unprofitable transactions will quickly destroy your trading capital.