The Very Simple Options Strategy Called «Sloth»
Binary trading is positioned as the easiest way to work on the financial market. However, many experts note that trading with futures contracts entails great difficulties in terms of forecasting the market in narrow time frames. It’s true that price movements do have extremely high building dynamics and they demonstrate very rapid trend changes precisely on minimum time frames – and this undoubtedly complicates things for the investor. But, in order to simplify trading, there are a lot of strategies that are capable of generating trading signals in the simplest format. Today we offer an example of this kind of analysis called “Sloth”, which will be understandable and accessible to any market player, and can also bring very good performance results.
How does the system work?
The principle of generating signals for the “Sloth” strategy is based on only two professional indicators, which, thanks to their simple algorithm for assessing the market, generate clear and effective signals for trading. To get started on the system, you will need to configure the following indicators on the minute chart of an asset whose volatility is relatively high:
- The Slow Heiken Ashi, as an assessment range for quotes and building range for price candlesticks, set the period to 10. This tool is configured directly on the liquidity quotes of the trading asset. The advantage of this analysis service is that it builds a price movement chart in a specialized format that allows you to eliminate market noise and high-frequency market fluctuations. Thus, we get an additional liquidity chart with smoothed signals and a shift relative to the underlying quotes. This will give you your work area markup, which means you can now open trades based on high-precision signals.
- 5-15 min Binary V2 – this specialized indicator was designed to generate trading signals that are necessary in binary trading. The service’s algorithm includes the principles of classic oscillators: MACD, Stochastic, and RSI. They took the best of the standard tools, and based on this, they created a new analysis tool for trading with futures. As a result, we get a highly efficient oscillator for filtering signals in a narrow time range and a service for generating forecasts on the minimum time frames of the asset chart.
The markup of the chart using these technical tools in practice looks like this:
An important point to keep in mind for using this trading system is that you will need an auxiliary technical resource to gain access to the system analysis tools. You can use any platform where the necessary indicators are available. To make the decision easier for you, we recommend using tradingview.com, which provides free access to the financial trading tools and analysis indicators needed to build the system template.
For CALL trading lots, use the following signals:
- As a result of the movement, the candlesticks of the main liquidity chart intersect the price quotes of the Slow Heiken Ashi indicator upwards
- On the “5-15 min Binary V2” oscillator, the trend movings intersect upwards and begin to form a large green cloud, which indicates strong momentum of the short-term uptrend
For PUT trading lots, use the following signals:
- As a result of the movement, the candlesticks of the main liquidity chart intersect the price quotes of the Slow Heiken Ashi indicator downwards
- On the “5-15 min Binary V2” oscillator, the trend movings intersect downwards and begin to form a large green cloud, which indicates strong momentum of the short-term downtrend
Taking into account the period of the liquidity chart that we are using for analysis, and under conditions of average volatility of market movement of the trading instrument, it is recommended that trading lots with an expiration period of 5 minutes be used to process the strategy forecasts, and the maximum expiry in this case should be 15 minutes. Thus, by adjusting the range of contract expiry depending on the volatility of asset fluctuations, you can obtain the best possible trading performance results.
To create safe working conditions on the market, apply the standard risk management restrictions – with the minimum-size account use trades starting at $1, and when working on a large investment account, use options not exceeding 3-5% of the amount of capital.
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