The Trading Strategy For Binomo
The “Triple Line” strategy is a trading system that consists of three linear indicators. All the tools used are available in the standard range of trading platforms from Binomo. Therefore, you will not need to go to third-party services to trade using this strategy. This is very convenient for traders who prefer to open short-term trades.
The strategy is based on the RSI, Momentum, and ATR indicators. The first two enable you to determine the state of the market, and the third indicates the current strength of the price trend.
Overview of the indicators used
RSI (Relative Strength Index). This is a classic solution from the oscillator group. Its operating principle is similar to the Stochastic. However, it consists of only one line curve. The tool is easy to use. When moving within the region, the line enters the so-called oversold (located below) and overbought (located above) zones.
Momentum. Another indicator from the oscillator range. This curve’s movement in many ways repeats the RSI. If this happens, it means the indicators are signaling a forthcoming market reversal. If the values of the two separate instruments differ, it is better to refrain from trading. Externally, Momentum also consists of a single line curve that moves in a separate window divided into overbought and oversold zones.
ATR (Average True Range). In comparison with the previous two indicators, this tool works on a different principle. At first glance, the absence of any levels, and even the boundaries of the area where the curve is constructed, is striking. This means that the indicator does not allow you to get specific values. All that it tells you is the movement tendency: up or down. If the line is rushing upwards, this indicates a strengthening of the trend; downward, a weakening of the price movement.
Setting up the trading terminal
The strategy is universal, so choose any asset with a high percentage of profitability. However, for the 5-second interval, the CRYPTO IDX shows itself best. So, we add the three indicators:
- ATR – standard period settings;
- Momentum – with a period of 28;
- RSI – period 28, both levels marked at 50.
The timeframe of the candlestick chart is 5 seconds. The scale of the chart is recommended to be selected in such a way that one cell of the grid takes exactly 60 seconds. The terms of the transaction are minimal (30-90 seconds). The size of investment in the contract is determined by the amount in the account. Less is better. But no more than 5% of the balance for one transaction.
The concept of the strategy
Momentum and RSI have a similar calculation formula. However, their simultaneous use is justified in the sense that it increases the overall accuracy of the signals. There are often situations on the market where one of the indicators individually produces a trading signal. However, the second tool does not confirm it. This helps prevent erroneous entry into the market.
In this bundle, ATR plays the role of the final filter. The indicator is very mobile and its tick movements are often oscillating. Therefore, we need to evaluate the overall picture of what is happening, which is often difficult for beginners. But we can give two practical tips. First, if the ATR is growing on the signal candle, then this is a clear confirmation of the signal. Secondly, rapid deceleration of the curve falling and the beginning of line building in the horizontal plane is also a confirmation of the signal. Recognizing such a fine line is not very easy, but it comes with experience.
Trading signals on the strategy
At the heart of the strategy is the main principle of trading – entering the market at the time of trend reversal. The indicators used will help to not miss this key moment.
- The signal for an increase is the intersection of the RSI curve and Momentum at the N/A level downwards, and ATR growth.
- The signal for a decrease is the intersection of the RSI and Momentum at the N/A level upwards, and ATR growth.
The pictures above show examples of trading signals with the duration of the transaction indicated.
Example of real trading
To conclude the review of this strategy, we’ll provide an example of trading on the system.
So, all three indicators on the chart have given signals. However, there is some uncertainty about the ATR. But in this case, the decline on the last candle should be ignored, as the general trend over the last 5 bars is positive. Given the combination of factors, we open the trade on a decrease.
Despite the fact that the transaction closed with a profit, the example cannot be considered indicative. Almost immediately after entering the market, the correction period began with a short rollback of the price in the opposite direction.
This is the divergence phenomenon when the signals of the indicators diverge from the real price chart. In this case, the values of the oscillators should be taken into account, which is then confirmed. Just 15 seconds before the close of the transaction, the correction stopped, and the market rushed in the main direction. As a result, we made a full profit. The strategy works and enables you to earn approximately 65% in profitable trades.