Follow the Trend with the Moving Average trend strategy!
Use Moving Averages to determine the trend
Moving Averages are a great way to determine the trend and follow them. The base of the Moving average trend strategy are 2 simple Moving Averages with different time periods. Good periods to determine trends are 50 and 100. At the images below are the short SMA 50 red and the long SMA 100 blue. When the short moving average is above the long one, the asset is in an uptrend, else it is in a downtrend. The distance between both lines determined the trend strength. When both moving averages cross, the trend reverse.
React with MACD to strong trends
For binary option trading it is the best way to trade only at the best signals. A Moving Average Convergence/Divergence indicator (MACD) is a very good way to react at trend changes. The MACD has a base and a signal line. The base line is the difference between 2 exponential moving averages, and the signal line of the MACD is a simple moving average of the base line. A signal is generated if the signal line crosses the base line. Trade in the direction of the base line crossover respectively against the direction of the signal line. Now can you combine the MACD signals with the trend direction. Trade a CALL option if the signal line cross the MACD base line downward while the asset is in an uptrend, and place a PUT trade while the signal cross the MACD base line upwards while the asset is in a downtrend. For the Moving Average trend strategy is a MACD with the default periods 12, 26 and 9 recommended.
Play with the Moving Average trend strategy and indicators
Please trade never blind a strategy. It is every time important to train in a free demo account. The Moving Average trend strategy is perfect to experiment. The best asset to start with is EUR/USD. A signal is stronger, when the distance between the trend lines is higher. The Moving Average trend strategy has a high winning rate, but it is important to ignore false-positive signals. In an undirected trend market oscillate the MACD forward and back again fast. This is a great disadvantage of this trading system. In the best signals is the distance between the base and the signal line between the last and current crossover high. An Awesome Oscillator. It shows exactly this value. Learn more about technical indicators.
In the list of free custom indicators do you find a MetaTrade indicator. It is perfect to generate signals. The MACD is shown as lines, while the trend’s strength is a histogram.