MACD and Bollinger binary option trading strategy

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The MACD and Bollinger Band Trading Strategy For Binary Options

I think it is a given that most free binary options signal service providers are really an affiliate marketing scheme. There really is no other reason for an SSP to provide free signals unless they want you to buy something, sign up with one of their recommended brokers or harass your friends into joining. Websites providing free binary options strategies are very similar but tend to be less scammy than the SSP’s. I know, I post strategies on several websites including my own. My goal is always to provided real, useful, information for traders. This is not the case with the strategy I will be reviewing here today.

Whenever I am reviewing a strategy I also have to look into who is presenting it. Believe it or not it can make a big difference. This strategy is provided by BinaryStrategy.EU, a website dedicated to binary options strategies and broker reviews. After thoroughly checking into the strategy and website I am more convinced than ever that this is nothing more than an SEO scam set up by someone who doesn’t know much about trading and probably had to use a translator program to get the page in English.

The MACD And Bollinger Band Strategy

I like MACD and use it every day in my trading and analysis. It is one of the best and most reliable indicators I know and when added to another tool such as support/resistance lines or Bollinger Bands as is the case here today can be highly effective for binary options traders. This is the MACD And Bollinger Band Trading Strategy For Binary Options. It is designed for trading 60 Second options and uses MACD, Bollinger Bands, Candlestick Charts and a new indicator I have never heard of, the Mobile Media. It is good for trading in either direction and comes highly recommended by the author, who is not named. Signals are derived from a MACD crossover that occurs at either extreme of the Bollinger Bands. In the given example a bearish candlestick is accompanied by a bearish MACD crossover while prices are at the upper range of the B Bands. In this case a 60 Second Put option is indicated. If the signal were a bullish crossover occurring at or near the lower B Band then a call would be indicated.

Benefits Of Using This Strategy

There are some benefits to using this strategy, but not enough. First, it uses MACD. I like, know and trust MACD for analysis and trading signals. I can recommend it to newbies and experienced alike. It also uses Bollinger Bands. B Bands, and any enveloping indicator, are great tools for traders as well. Other benefits include it’s usefulness as it can be used to trade in either direction and the well defined entry points. The thing is, these are not enough to outweigh the risks involved.

Risks Of Using This Strategy

There are too many risks to using this strategy to name in one article. First and foremost, it is based on 60 Second binary options. These are the riskiest of all binary options types and not one that I would recommend to anyone. Second, it makes no attempt to determine the underlying trend or to weed out whipsaws and false signals. Utilizing trend analysis would help to alleviate false signals and improve the strategies success rate, which I will point out is not listed on the website. False signals are a real problem for this system. The chart provided by the author points out several profitable entries but overlooks a number of false signals that would more than off set the good ones. Adding risk to this strategy is the use of a new indicator, I think, called the Mobile Media. When I looked I could find no mention of this indicator anywhere on the website or elsewhere on the web. In fact, I think it is possible the author is referring to the moving average used to smooth the MACD indicator.

My Conclusions On The MACD And Bollinger Band Strategy For Binary Options

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Binary Options Strategy Based on 2 indicators: MACD and Bollinger Bands

Binary Option Robot

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Strategies // Technical Analysis

Today I would like to introduce to you one very simple, yet efficient strategy for Binary Options. It is based on MACD trading indicator and we will filter out false signals with another indicator called Bollinger Bands (in some sources you will see it called BB).

To begin with, let me first give you a short explanation of how each trading indicator works and why we will be using it.

MACD stands for Moving Average Convergence Divergence. Most probably 99% of you will not even know what that means and that’s ok =) In simple words, MACD indicator helps us find points on the trading graph, where trend reverses. Basically, that’s all we need when we trade binary options.

Nevertheless, you have to keep in mind that the smaller the time-frame you are trading with, the more you will see false signals. Ideal time-frame for MACD binary options trading is day-graphs. In order to avoid buying wrong binary option, we will filter MACD trading signals with another indicator — Bollinger Bands.

Bollinger Bands (BB)

In the end of 20th century, John Bollinger has introduced to the world Bollinger Bands trading indicator, which helps traders to understand whether the market is oversold or overbought. For those of you who are not familiar with these terms, I can explain in simple words: with this indicator we can see when offers to buy certain asset have overgrew the expected amount and, thus, possible reverse of the trend is expected. Or vice versa, it shows us when the selling of the asset is hitting its peak and the upper trend is soon to come to the action.

Trading Strategy: MACD + Bollinger Bands

By using these two trading indicators together we can trade options with the shorter time frames and yet keep high percentage of successful trades (in average this strategy will bring you a little over 80% of successful deals).

On the above image you see a graph with overlay of Bollinger Bands on it (greenish cloud) and below the graph you can see the MACD indicator (I used standard settings: 12, 26, 9).

You should buy binary option when the blue MACD line is crossing orange (signal line). If MACD line crossed the signal line from the top, you should expect the price to drop and thus you should buy PUT option . If MACD blue line crossed orange signal line from the bottom, buy CALL option as the price will grow. You should also check the situation with Bollinger Bands. The closer the price to the Bollinger Band the shorter the trend will be.

For example, when the was the first crossing of lines, the price was very close to the border of the Bollinger Bands and thus we can estimate that the trend will be short. Taking into consideration that we are trading on H1 graph (each candle is 1 hour), I would open 1 hour option. In all other cases we can open binary options with even longer expiration time.

Please note that out of 6 trades, we had 5 trades in-the-money (marked with green oval).
You can see from this quick example that the profitability of this binary options strategy is 83%+

As you can see it is very simple yet effective binary options strategy. It fits not only advanced traders, but as well the beginning traders. To try it out you just need to open a trading account with one of the brokers of your choice. My personal recommendation would be 24option or OptionFair as they have the most convenient expiration times that fit nicely this strategy. Good Luck!

Tags: bollinger bands, MACD, trading indicator, trading strategy

60-second Binary Options Trading Strategy using Bollinger Bands

This strategy may suit the preferences of impatient binary option traders, as it may be applied on any trading instrument (currency pair, commodity, stock index, etc) during any trading session. In addition, it utilizes one of the most preferred technical indicators, the Bollinger Bands. For a detailed overview of this indicator, you can read the article in our Forex Academy.

The time frame is set to 1-minute, while the Bollinger Bands should be set to default (the middle band is a 20-day Exponential Moving Average, while the upper and lower bands represent two standard deviations from that average). The expiry time is 5 minutes.

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Buying a Call Option

In order to buy a call option, a trader needs to spot oversold conditions. In case the price of the trading instrument has broken below the lower band, a trader may anticipate a touch and a return within the two bands. Once this occurs and the trader has a confirmation of the move to the upside, he/she may place a buy order. The trader may use candlestick reversal patterns as confirmation.

Buying a Put Option

In order to buy a put option, a trader needs to spot overbought conditions. In case the price of the trading instrument has broken above the upper band, a trader may anticipate a touch and a return within the two bands. Once this occurs and the trader has a confirmation of the move to the downside, he/she may place a buy order. Again, candlestick reversal formations could be appropriate confirmation tools.

Some traders may prefer to use the Average Directional Index (ADX) in order to delimit the area of trading. Therefore, they will look for the ADX to be at or to fall below its 20.0 level.

On the 60-second chart of NZD/USD above the small triangles indicate spots where call and put options (3 puts, 1 call) can be bought respectively, while taking into account the conditions mentioned.

MACD and Bollinger binary option trading strategy

Today I want to explain to you a strategy to work with binary options to 60 seconds that we are successfully testing which is based on the analysis of Japanese candles chart in which we have added the indicator MACD 12-26 with mobile media to 9 periods to which we have applied Bollinger bands. The strategy is revealed extremely effective both for inputs in Put that in Call. Now what we are going to analyze are the inputs in Put.

The image above speaks for itself. In the upper part you find the candles chart of the Pound (GBP) compared to the american dollar (USD) and below the indicators of the MACD (continuous blue line) with the relative mobile media (dashed blue line) and the Bollinger bands that draw a sort of channel. Our strategy is that to enter with an option PUT (that is in short) when the MACD crosses the middle line from top to bottom in the proximity of the upper part of the Bollinger band.

Just to let you observe the power of this signal I want to show to you an image of a continuous sequence of this type of signal that provided us with continuous successes.

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From this strategy is born an observation which led us to another strategy on the binary options to 60 seconds: strategy of the cusps of the MACD.

How to Use MACD Indicator to Trade Stock & Binary Options

MACD (usually pronounced Mac-Dee) stands for Moving Average Convergence Divergence.

The MACD is the difference between the value of the 12 period EMA (exponential moving average) and the 26 period EMA of the asset price.

In short, the MACD indicator gives the short to medium term trend of the price action. A positive MACD value indicates upward price trend while a negative MACD value indicates a downward price trend.

A 9 period EMA of the MACD is superimposed on top as a Signal Line. In other words, the Signal Line is just a smoothed out, less choppy version of the MACD line.

There is also a histogram which measures the difference between the MACD line and the signal line. The histogram can help to assess the velocity of the upward or downward movement.

Buy & Sell Signals

Crossover Signals

Buy signal is generated when the MACD line crosses above the signal line.

Conversely, a sell signal is generated when the MACD line crosses below the signal line.

MACD Divergence Strategy

Another strategy often employed by traders using the MACD to find trading opportunities is the MACD divergence strategy.

When the MACD diverges from the price action, it can signal the end of a trend.

Bearish Divergence

When the price is on an uptrend but the MACD is on a downtrend, it signals a bearish divergence, indicating that the market may soon be turning bearish.

Bullish Divergence

When the price is on a downtrend but the MACD is on an uptrend, it signals a bullish divergence, indicating that the market may soon be turning bullish.

Continue Reading.

RSI (Relative Strength Index) Indicator Explained

The RSI or Relative Strength Index indicator is bounded momentum based technical indicator that attempts to predict a change in momentum. . [Read on. ]

MACD Indicator Explained

MACD (usually pronounced Mac-Dee) stands for Moving Average Convergence Divergence. The MACD indicator gives the short to medium term trend of the price action. [Read on. ]

Bollinger Bands Explained

The bollinger bands are adaptive trading bands that reflect changes in volatility and provide a better view of the true extent of the price action. [Read on. ]

Parabolic SAR Explained

The Parabolic SAR indicator (or PSAR) is designed to calculate the point in time when there emerges a better than average probability of a trend switching directions. [Read on. ]

ADX Indicator Explained

The ADX, or Average Directional Index measures the strength of a trend and can be useful to determine whether an asset is currently in a trending market or a ranging market. [Read on. ]

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    2nd place! Good choice!

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