The «Way» Trading Strategy For Binomo
The wide variety of trading strategies available provides the trader with free choice, which is of key importance for beginners. Due to their limited experience, they have not yet developed their own trading systems. Therefore, in order to trade successfully, they must follow the rules of established systems. Strategies are developed by experienced traders who understand the principles of indicator operation and are also familiar with the mechanisms of pricing on the market.
The Binomo trading platform, unlike many of its competitors, allows you to conduct technical analysis directly on the terminal. However, the limited range of instruments imposes serious limitations in terms of available trading systems. The workaround in this situation is to use third-party sites. An excellent choice is TradingView. We have already examined dozens of strategies on our site using this service. In this article, we’ll consider the “Way” system, which consists of two indicators.
Overview of the trading strategy
The algorithm of the system is based on the use of two tools with different approaches to assessing market signals. First, it’s the classic ADX, which you might already be familiar with. By the way, this indicator is built into the Binomo trading platform (open a demo account). The second tool is “CM_Stochastic_MTF.” It is the leader in this bundle and the ADX acts as a signal filter. This indicator can be found only on the TradingView platform.
“ADX and DI” – this is a directional movement system. A trader can use it to determine the strength of ascending and descending price movements. There is also an average index which is not tied to the type of trend. It is called ADX, and the other two lines are +DI (positive index) and -DI (negative index). In our case, we only need ADX, so for the sake of convenience it’s best to hide the other two lines. We will discuss how to do that later.
“CM_Stochastic_MTF” – this is a stochastic oscillator, as its name suggests. However, it differs from the classic version of this indicator. There are two main differences. First, it’s the advanced formula for calculating the values of curves. Secondly, it’s the understandable interface. The signals of this indicator are clearly highlighted in color, so it is difficult to miss them.
Setting up the platform
To trade on this strategy, you need to open two sites in different tabs of the browser. In the first – TradingView (open terminal), in the second – Binomo (open terminal). The parameters for the trading asset, candlestick chart type, and time frame should be identical in both windows.
- asset: currency pairs (EUR/USD, AUD/USD, or other high-yield ones);
- chart: candlestick display mode, interval – 1 minute.
On the TradingView chart, you will need to add two indicators. Open the search window and copy and paste the names of these instruments: “ADX and DI” and “CM_Stochastic_MTF”. Leave the Stochastic settings unchanged, the standard ones will be quite suitable.
By default, the ADX includes 3 lines. However, in this strategy, we only need the main index, so we remove the other two curves. Open the style settings for the indicator and remove the check marks opposite the “+DI” and “-DI” lines.
Trading signals for the strategy
The “Way” system is simple, so this strategy can be easily recommended to novice traders. You should work off of the colors of the Stochastic Oscillator, and with the help of ADX, conduct a final check of the signal before entering the market.
- The signal for an increase – the appearance of the green band on the CM_Stochastic, combined with growth of the ADX line.
- The signal for a decrease – the appearance of the red band on the CM_Stochastic, as well as growth of the ADX index.
The above picture clearly illustrates true and false signals, which in most cases will not allow you to make a profit. If the Stochastic oscillator issues a signal, but the ADX index falls, then it is not recommended to enter the market. In fact, this indicator shows the strength of price movement. If the impulse is weak or fading, then soon the price movement will stop. When the strength of the trend increases, it means that the movement will continue for some time. This will allow you to make a profit on the transaction.
After you get the signal on the live chart, you must immediately go to the Binomo terminal to open the transaction. However, before this, you must manually select the expiration time so that it is approximately 5 minutes. In the “Time” drop-down list of the terminal, you must select the last or the next-to-last time value, highlighted in orange.
In conclusion, we should note that when trading on this strategy, you must follow the basic rules of trading. Don’t forget about the limitation of 5% of your account balance. You should also be aware of periods of low volatility. ADX is an excellent tool for determining the level of market activity.