Trading Strategy On Divergence Of The RSI Indicator

Divergence as a means of identifying trend market fluctuation reversal patterns is one of the most accurate trading signals for binary options. The instruments that determine divergence on the trading chart are various kinds of oscillators and analysis trend indicators. A classic example of an automatic indicator that effectively determines divergence is RSI, which clearly responds to movement of market quotes and using its algorithm, can build its own trends, which is necessary in this situation.

So, we offer you a trading strategy with highly effective signals, based on divergence of the RSI indicator, and with which you can easily earn at least 100% profit for a week of active trading on the binary market.

 

Conditions of the trading strategy

To use this type of market analysis for optimal trading results, we will require specific tools and trading conditions:

  • A trading terminal with an integrated RSI indicator
  • Trading conditions that contribute to proper money management
  • Precise quotes of the underlying assets
  • The necessary expiry term range

As a demonstration platform and excellent trading terminal, we have chosen the Binomo broker, as this company offers traders the most suitable parameters for the trading platform and trading conditions

  • An indicator set that includes RSI built into the trading terminal
  • The minimum trading conditions – transactions from 1 dollar, trading accounts start at 10 dollars
  • Quotes from a famous liquidity provider
  • Expiration of contracts from 60 seconds to 24 hours

Binomo broker

 

The «RSI Divergence» trading strategy

Divergence is an expressed discrepancy between an indicator and quote movement direction on a short-term trend. To identify it, we configure the standard RSI indicator settings on the quote of any underlying asset. Then, on the chart we find the period of market fluctuations where quote trends are in the opposite direction of the trend constructed on the RSI indicator. In practice, this type of market situation appears as follows:

The «RSI Divergence» trading strategy

 

Registering contracts on RSI divergence

To trade contracts on the binary market UP, we need to identify a reversal pattern of divergence of the following type:

  • The RSI indicator is building a local uptrend
  • Asset quotes are forming a short-term downtrend at the moment
  • Divergence is identified; we open a transaction UP

An additional signal to trade is a breakdown of the trend level on the asset quotes

Registering contracts on RSI divergence

To trade contracts on the binary market DOWN, we need to identify a reversal pattern of divergence of the following type:

  • The RSI indicator is building a local downtrend
  • Asset quotes are forming a short-term uptrend at the moment
  • Divergence is identified; we open a transaction DOWN

An additional signal to trade is a breakdown of the trend level on the asset quotes

Registering contracts on RSI divergence

Given the short duration of the timeframe of the chart of the underlying asset, the optimal period of expiration using this approach is a time range of 120 to 240 seconds. We use turbo options with the specified period of expiration for contracts. This will allow us to maximize the gains from trading.

 

Money management

The money management rules when trading on RSI divergence employ the classic settings. To reduce losses and insure trading capital, we use positions with a minimum value of $1. With an increase in capital funds, we raise the risk level to 3% of the amount of funds in the trading account.


Choosing A Reliable Broker

BrokerBonusMin DepositPayoutReviewOpen Account
IQ Option$10Up to 91% *ReviewVisit Broker
easyMarketsUp to 50%, not available in EU countries$100ReviewVisit Broker
OlympTradeUp to 100% deposit$10Up to 90%ReviewVisit Broker

Сomments

    iq

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