Trading By Means Of The Moving Average Arno Legu
Moving Averages along with oscillators are very popular indicators. On their basis, many tools for technical analysis have been developed. The most significant drawback of classic moving averages is an obvious delay. Their signals have a high accuracy, but due to the fact they show up too late the optimal entry point to the market is often overlooked by traders.
Fortunately, this problem is partly solved in the indicator ALMA (the Moving Average Arno Lego). It was designed by Alan Hall. It’s a fairly well-known Australian trader, who set the task to create a tool for technical analysis of the market with a minimum delay of signals but without compromising their patency. The task was solved quite successfully. What’s more – his product has been included in the standard set of Live Chart from TradingView (go to the site).
The ALMA indicator is a powerful tool with great potential. There are several strategies based on it. However, this article will be solely devoted to the review of the indicator itself and the use of it with default settings. In the future, on our site, we’ll review more effective trading strategies (more than 300 strategies in the blog).
Prepare your trading platform and chart
In this case, binary options trading is conducted on the professional platform Binomo. However, for technical analysis, we need to open the TradingView chart. So, choose the required currency and install it on both platforms. The timeframe should be either 1 minute or 5. The optimal choice is EUR/USD. The given asset usually guarantees the maximum percentage of profits. So, in the list of indicators, you need to find a tool dubbed «Moving Average Arno Lego», and add it to the chart. Standard settings shouldn’t be changed, but for greater convenience, you can increase the thickness of the line.
The signal to buy the UP option
Trading rules are very simple, so even a beginner can cope. You’d better trade the global trend, as the leading traders of the world recommend. The signal to buy the UP option is when the price has crossed the moving average, and when an ascending candle has broken through the moving averages and closed above it.
It’s important to learn how to filter false signals. We can’t give you a universal advice here. You just need to gain experience and trust your intuition. For example, you can’t trade during a lull when the market is flat. At that time the price practically stands still within a narrow horizontal corridor. For clarity, this moment is illustrated in the picture above.
The signal to buy the DOWN option
In this case, you require trading the downtrend. The signal to buy the DOWN option is similar. You should enter the market as soon as the descending red candle breaks the moving average.
On the picture above, there are 4 signals, of which 3 are reliable and only 1 is false. If we analyze the historical data from the graph, then on the average we’ll get the same thing. About 70% of deals will bring you profits. If you adhere to the rules of money management, you’ll be able to make money even when trading in assets with an average return.
An example of real trading with ALMA
The advantage of trading using the indicator Arno Legu is a large number of signals, especially in a market with high volatility. Therefore, in order to confirm the effectiveness of the proposed strategy and to consolidate the information received, we have specifically opened this transaction for this article on a real account, fixing each step in the screenshot.
So, on the Live TradingView chart, there’s a breakdown of the ALMA line from the bottom position. To be exact, the price has come close to it. Therefore, on the Binomo platform (go to the site) we buy the UP option for a period of 3 minutes. The investment is 10 dollars.
3 minutes have passed, the chart shows a strong growth of the asset’s value. This morning has turned out to be very volatile for the currency pair EUR/USD, which is noticeable on the screenshots of the chart in the article. The deal is closed with a profit, we have received 80% of the net profit from the investment.
The higher the volatility of the market, the greater the number of reliable signals we can observe. In this respect, CRYPTO IDX has good indicators. With the help of it, you can trade even at night and on weekends. High volatility enables you to trade at small time intervals.
The rules of money management and expiration
You need to invest no more than 5% of your deposit. Ideally, you should stick with 1% or even less. This approach enables you to insure yourself against losses. It’s impossible to follow Martingale with a constant increase in the volume of the bet, as it’s the direct way to lose all your money. As for the expiration, it should be chosen individually. If the volatility is high, you’d better use 3 candles. If the volatility is average or low, use 4-6 candles.