If a moving average can provide support or resistance then when the price crosses over the MA it can indicate a trend reversal. Figure 2 shows this in action. The price respects the SMA during the uptrend, but then breaks below it the next time. This indicated a larger reversal was underway, and potentially a full-fledged trend reversal which is what occurred.

In other words, the price will continues whip back and across the SMA causing multiple false signals and losing trades. Once again, risk management and finding a way to profitably exit is up the trader. This simple approach only provides an entry area, or possibly confirmation of a reversal when trading other methods. Having two moving averages of different lengths on your chart can provide additional trade signals.

Longer-term traders will commonly use a day and day. Day traders may use a period and 15 or period likely minutes. When the shorter MA crosses above the longer MA it shows buying is picking up and presents a potential buying opportunity. Similar to the price-crossover strategy, it is possible to get multiple false signals when the MAs crisscross back and forth.

To help avoid this, only take trades in the direction of the overall trend. The key to success is a transaction in line with the trend catching the ends of the corrective move in the existing trend. It can be the best binary options strategy for beginners. We hope that you will enjoy today's strategy. Please share your thoughts in the comments section below.

General Risk Warning: The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose. Average rating 4. Vote count: No votes so far! Be the first to rate this post. Fulltime Day trading, and help Iq option wiki in my spare time to build an awesome platform to help beginners out there.

digital-nomad, traveling all over the world. Skip to content Share on Facebook Tweet Share on Twitter Share on Linkedin Pin it Share on Pinterest. Contents 1 The classic interpretation of moving averages 1. Trade now. How useful was this post?

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tom Borobudur October 23, This method is based on a moving average for a set period, and works by highlighting very strong support or resistance levels. There are two options when trading on moving averages - speculate on a bounce or a breakout. As the title of this article tells, this proven strategy is for trading the breakout.

The strategy itself is rather simple. Within the chart, you will be looking for instances where the market traded lower or higher than the moving average for a few days, and then tries to push past the SMA. False indicators are common, so some filtering out of potential entry points is necessary. This can be done using the MACD indicator, using the default settings of 12, 26, and 9.

For a Call option, the best entry would be when the hourly candle breaks the SMA and closes higher. The opposite applies for a Put option. Typically, this binary options strategy will offer you one or two entry points each week when trading it with a currency pair.

To get more use from it, consider using it along with more assets in more markets.

The only question however is that — are you using it properly? Furthermore, do you understand what the indicator means and the signals that it makes? Here are the essentials for this strategy on Pocket Option. Also, there are four different types of moving averages used in Pocket Option.

As you may have known, a moving average may not be as effective on its own. It needs other indicators to serve as confirmation of the analysis. SMA 8 will serve as the indicator for price data at a fast pace, while the SMA 21 will show the price data at a slower pace. A great advantage of using two moving average indicators is that it makes the possible entry and exit points visible on the chart.

These entry and exit points are made visible whenever the indicators cross or intersect each other. Furthermore, the trend of the market would be identified by simply knowing which indicator is on top of the other.

To set up two moving averages on the chart, simply look up the indicator setting from the upper left corner of the trading dashboard and click moving average twice. Choose periods 8 and 21 for each moving average, and choose SMA as MA type for both.

Binary options trading allows you to gain profits fast by trading in short time frames. When trading on Pocket Option, you get to choose between different time frames however with limited expiration times.

The expiration time simply refers to how long a forecast should remain valid to gain profits. This strategy also takes advantage of price breakouts on a chart. Price breakouts happen the price breaks through a moving average line. For a breakout on an uptrend, the candle should start from below the moving average and break out through the moving average.

The close of the candle should be above the moving average. The strategy takes advantage of price breakouts by assigning this as potential entry and exit points — for the assumption that the direction will start to reverse at the breakout point.

Another essential component of this strategy is the knowledge about candlestick patterns. Candlestick patterns show strong signals of how the market or trend would possibly react to price actions. Having a good knowledge about candlestick patterns provides you with confirmation for breakout points on a chart.

Furthermore, a good knowledge of candle patterns lets you verify if a breakout is a sign of reversal or trend continuation. The first step to do when using this strategy in trading is identifying the trend of the market.

With the two moving average indicators, it is easy to tell whether the market is on an uptrend or downtrend. Whenever the SMA8 is above the SMA21, the market is at an uptrend.

Whereas if the SMA21 is above the SMA8, the market is at a downtrend as shown in the example. To know which SMA is on the chart, notice how the lower SMA is always closer to the candles. After identifying the trend, check for breakout points on the chart. The breakout points would be easy to identify as they are the candles that break through the moving average indicators.

Lastly, enter or open a position when there is a good signal. Signals can be confirmed through candle dimensions and patterns. For this example, the trend is immediately confirmed to be an uptrend due to the SMA8 red line being above SMA21 blue line. Furthermore, the higher highs of every swing confirm the trend. In this example, there were three instances of possible entries for a long trade. These are the best openings for the reason that they are found after a breakout, and each has strong bullish candles that formed below the moving average indicators.

Candlestick patterns also show that these are cases of bullish engulfing patterns where the bearish candle is engulfed by a bullish candle that signals trend reversal to an uptrend. These are not classified as openings because of the weak signal of the bullish candle. For price decreases, the trend should be at a downtrend by making sure that the SMA21 blue line is above the SMA8 red line.

It is also determined by simply looking at the overall layout of the chart — which is sloping downwards. This particular example in the image also shows three possible entries on a downtrend. Each opening is located above the moving averages after a breakout. Also, the candles show overwhelming strength by the bearish candle than the bullish candle preceding it.

This is for the reason that the bearish candle is still too weak to signal trend reversal toward a downtrend. Furthermore, if we look at the preceding candles, the trend continued to move sideways before actually giving a strong bearish signal. One thing that we can note from this particular example is that weak candles may signal consolidation or sideways movement of the trend. Entering or opening positions during consolidations can be devastating since there is great unsure about the possible direction of the market.

Only trade with strong signals using strategy. The 1-minute strategy using SMA8 and SMA21 can only be powerful if you can identify possible entry and exit points on the chart. Knowledge of the best entry and exit points on the chart requires a good understanding of moving averages, breakout points, and candlestick patterns.

To master this strategy and to further improve your trading skills by trading real-time assets, check out the Pocket Option demo account. It allows you to trade in real-time without having to spend anything. If you find this article helpful in your trading, check out our other articles for more tips and hints on how you can become a better trader! For comments and suggestions, do let us know through the comment box below. Try Pocket option Now Risk Warning: The trading products offered by the companies listed on this website carry a high level of risk and can result in the loss of all your funds.

You should never trade money that you cannot afford to lose. Contents 1-Minute Trading Strategy Components Moving average Time Settings Price Breakouts Candlestick Patterns How To Use The Strategy On Actual Charts Opening positions on price increases Opening positions on price decreases Conclusion. Este sitio web utiliza cookies para mejorar su experiencia. Asumiremos que está de acuerdo con esto, pero puede optar por no participar si lo desea.

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Bart Bregman Fulltime Day trading, and help Iq option wiki in my spare time to build an awesome platform to help beginners out there. In the long term, the SMA is quite reliable. These cookies do not store any personal information. How To Trade Forex With SMA. To view or add a comment, sign in To view or add a comment, sign in.

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