A LazyBear Indicator Trading Strategy
A benefit of interactive charts on TradingView (https://www.tradingview.com) is you can develop your own indicators and scripts. Thousands of users take advantage of this. The solutions developed are compiled in a catalog that holds all of the indicators users have created. The best creations are at the top of the list. The more likes from different traders, the higher the ranking.
One of the highest ranked users is LazyBear. He has developed dozens of highly-effective technical analysis indicators. These can be used to build effective binary options strategies. This article will focus on trading using signals from a combined system made up of two indicators.
A short overview of the tools and strategies used
It uses two indicators, the Weis Wave Volume and the Variable Moving Average. However, this isn’t a standard solution as there have been several modifications made to the calculation formula. To get a good grasp of the strategy principles, it is worth getting a brief overview of both tools.
Indicator: Weis Wave Volume [LazyBear]
This indicator relays the intensity of trade on the market within any specific time frame. This indicator not only enables you to evaluate the current situation but also forecast future growth at the same time. The behaviors of market participants largely determine price movements. The more active traders are at any given time, the more volatile the market will be. As soon as the number of trading operations begins to decrease, the level of volatility will drop, and the market moves into a flat or horizontal trend.
The indicator is made up of bar graphs. The elements are marked by two colors, green and red. The differentiated signals are interpreted as usual. Green marks the position of price trend growth, and red marks descending market movement. The key signal is the point where the colors intersect. It is especially significant if the market reversal is preceded by peak volatility. This appears on the bar graph as large tall columns.
Variable Moving Average [LazyBear]
This is a modified version of the classic VMA. First and foremost, it differs as there are colored indicators. That being said, they don’t play a key role in the strategy. As with every type of MA, the main signal is the curved intersection with the price on the chart.
The steps necessary prior to trading
TradingView is a market analysis platform that doesn’t provide trading. Therefore, you need to have a second browser open to an online trading terminal. We recommend that you use Binomo, Olymp Trade or another one of the most popular binary brokers.
- open your trading terminal (binomo.com) and the live chart (tradingview.com) for technical analysis;
- in both, select one asset and chart candle interval (1 minute);
- add the “Variable Moving Average [LazyBear]” to your live chart and the “Weis Wave Volume [LazyBear]”
Next, open the WWV settings, select “Style” and choose the “Columns” chart. This doesn’t impact the function, it just makes it easier to see the signals. You also need to change the settings of the Variable Moving Average by clicking “Arguments” and decreasing the “VMA Length” parameters to 3.
The strategy is based on combining the signals of these two indicators. Firstly, the candle formation should break through the curve of the VMA_LB. Secondly, the WWV_LB should also signal a trend reversal.
- The signal for decline – when the red candle breaks through the curve of the VMA_LB, as well as when the color of the WWV_LB column changes from green to red.
- The signal for growth – when the curved of the VMA is broken by the green ascending candle, as well as a similar trench change signal on the total indicator. However, in this case, the color of the column should change from red to green.
The trade expiration should be around 3-4 minutes. On Binomo’s platform, you should select the second to last option (out of the 5 available) for the turbo contract expiration period.
It is worth pointing out an important nuance. You should enter the market when there are clear signs of a trend reversal, at a time when there is a large number of operations taking place and there is high volatility. Meaning that if just prior to the trend reversal the column height is less than 1,000, it isn’t recommended that you open a trade. Stable trend reversals in most cases aren’t fully expressed and only last short periods. In essence, it is a short-term price movement-based correction, not a trend reversal. To make things easier for yourself, you can add a horizontal line to be sure it surpasses 1,000.