The MACD is by definition a trend-following momentum-indicator, which means that it is well suited for use by beginners as it can be made into the centerpiece of some of the simplest — yet still efficient — binary option trading systems. In the case of the MACD, the key word is EMA Exponential Moving Indicator , which is used to calculate the MACD itself as well as the signal line which is used in combination with the MACD to generate trading signals.

The MACD is calculated by subtracting the day EMA from the day one. The signal line will be the 9-day EMA. There are three ways to gain a trading signal out of the way the MACD and the above said signal line relate to each other. The first way is to look for the two to cross. If on the other hand, the MACD crosses above the signal line, the signal is a bullish one.

When it and the asset price show a divergence, it is taken as a signal that the current trend is about to come to an end and experience a reversal, obviously. Last but not least, we have situations when the MACD rises sharply, which is an indication that the asset is in an overbought position, that is about to be corrected shortly. Considering that a rise in the MACD can be translated as the shorter-term moving average pulling away from the longer-term one, the above conclusion is a logical one indeed.

Keeping with that train of thought: As said above, the MACD is great for spotting trend reversals as part of various trend-following strategies, and because of its simplicity, it lends itself well to beginner strategies.

Like the MACD, the stochastic oscillator is a momentum-based indicator, which is also aimed at predicting trend-reversals in an asset-price, by comparing the current price of the asset with the range that the price had covered over a number of previous trading sessions. The stochastic oscillator can actually be expressed through a mathematical formula: In this formula, H14 is the highest asset-price level reached over the last 14 days, while L14 is the lowest such price.

With that out of the way, it is clear how the stochastic oscillator works and what it sets out to accomplish. In the case of a bullish trend, the asset-price tends to close near its highs, while in the case of a bearish trend, it closes near its lows on a more consistent basis.

As a range-bound variable, the stochastic oscillator is great for identifying overbought and oversold situations, and to that end, it can offer trading clues by itself: Under 20, the asset-price is oversold and as such, trend-reversals are likely in both cases. Another way that the stochastic oscillator will serve up trading signals is when it exhibits divergence with the asset-price action.

Binary Options with MACD Indicator | FBO Academy

Such a divergence is considered a sign of an impending trend-shift. The Parabolic SAR is quite suitable for such mechanical trading indeed.

For a trending market, the Parabolic SAR Stop and Reversal is one of a most potent and easy-to-use tools, aimed at establishing the momentum of an asset-price and finding a point at which the probability of a trend-reversal is higher than normal. On a chart, the Parabolic SAR takes the shape of a series of dots positioned above or below the actual asset-price. If we have a bullish trend and the SAR dots are below the asset-price, we get a bullish signal, which essentially tells us that the bullish trend will continue.

Dots showing up above the asset-price graph indicate a bearish trend. A sell signal is generated as soon as the first SAR dot shows up at the top of a price-action candlestick at the end of a bullish trend.

As all the other indicators presented above, the parabolic SAR is at its best when used in combination with other indicators. For instance, a reversal signal generated by this indicator is much more valuable when it comes as the price is below a long-term moving average than otherwise. EU CPI and unemployment rate report April 29th.

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How to use the MACD Indicator in Binary Options - gohabizaw.web.fc2.com

Great Britain GDP Q3 Analisys. EURGBP 27 October John Murphy's Book on Technical Analysis. Advices From a Guru. Platform Upgrades IQ Option Indicators — MACD, Stochastic, Parabolic SAR. This article is not an investment advice.

The Best MACD Entries Strategy for Binary Options Trading

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