One of the popular tools for identifying the current trend and its reversals is the Zig Zag indicator. It helps traders track significant historical changes in prices, predicting their continuation, and at the same time filtering out market “noise”.

This article will cover the main ways to use this indicator, and you can find it directly in the list of standard indicators in the Pocket Option platform.

What is Zig Zag and how to set it up?

Zig Zag is a trend indicator that helps highlight major trends and reversals, excluding minor price fluctuations. On the chart it displays segments that connect key extremes, which allows you to see the overall trend of the market more clearly.

The main goal of the indicator is to remove minor price fluctuations, leaving only significant price movements. Thanks to this, traders can more effectively identify long-term trends and their technical levels.

To use the Zig Zag indicator effectively, you need to set up the following parameter:

1. Percentage Deviation: It is the minimum percentage of price change considered significant for the indicator. It is recommended to set between 5% and 10%, depending on market volatility and the asset selected.
2. Depth: It is minimum number of candles for the indicator to consider when determining appearing extremes (highs or lows). The higher the depth value, the less often Zig Zag will change its lines, excluding smaller fluctuations.
3. Backstep: It is the minimum number of candles between extremes. Backstep helps filter out misleading frequent changes in the direction of the Zig Zag line.

You can customize the settings for specific trading conditions and assets. For example, for highly volatile markets, it is advisable to increase the percentage deviation to filter out small price fluctuations.

How to trade with Zig Zag Indicator?

The tool can be useful in binary options trading due to its ability to simplify the analysis of trends and reversals. Let’s discuss some ways to use it:

1. It help to define a trend

Zig Zag helps to clearly see trends on the chart. When the Zig Zag line points to a series of higher peaks, it indicates an uptrend. In this case, traders should look for opportunities to buy call options (CALL).

If the Zig Zag line forms a sequence of lower peaks, it indicates a downtrend, which may be a signal to buy put options (PUT).

2. It helps to foresee reversals

Zig Zag helps to identify potential trend reversals. When the indicator changes direction, forming a new high or low, it may indicate the beginning of a new move. If after an uptrend, Zig Zag starts forming lower peaks, it may signal the beginning of a downtrend, and vice versa.

Overall, the main advantage of the Zig Zag advisor is that it simplifies the analysis of market data by filtering minor price fluctuations and highlighting important movements. However, a trader should remember that the Zig-Zag indicator does not predict future movements: it only helps to work with historical data. Therefore, for maximum efficiency, it should be used in combination with other indicators.

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The combination’s synergy helps traders more accurately determine the moment to buy a particular contract. If you are interested in test driving the strategy, you will find both technical tools in the Pocket Option basic set. Perhaps, you will try to apply the method after reading the article.

How to set up the indicators?

Before you start using the Catch strategy, it is important to set up your trading platform to use effective analysis for decision making. Here, we pay attention to the choice of assets, timeframe and charts to adapt the strategy to current market conditions.

It is preferable to choose assets with strong trends. The most successful results can be achieved when trading currency pairs, especially those with high volatility, such as EUR/USD, GBP/USD, USD/JPY, etc. You can also use shares of large companies or commodities (gold and oil). Try to stay away from with low volatility, since the strategy is focused on strong trends.

What about timeframes? There is not limitations, the Catch system can work on various frames. However, it works best on frames 5 minutes to 1 hour. Charts with a time interval of 5, 15 or 30 minutes allow you to better track trends and price changes, avoiding market “noise”, but at the same time allow you to make several purchases during a trading session.

For better analysis, it is recommended to use Japanese candlesticks as a chart. Candlestick charts provide a clear picture of price movement, showing both the beginning and end of the period, as well as extreme points (maximums and minimums).

Now it’s time to set up the tools to catch right signals for a digital contract for the rise or fall of the selected asset:

1. ADX is used to measure the strength of the trend. It does not indicate the direction, but it helps to understand how stable the trend is. ADX values above 25 indicate a strong trend, below – a weak one. Use default settings.
2. Parabolic SAR is used to determine the moment of trend reversal. The indicator is displayed on the chart as dots that follow the price. When the dots are below the chart, this is a buy signal, when above, it is a sell signal. Use default settings.

How to trade with the Catch Strategy

The system works on a combination of ADX and Parabolic SAR signals. The main idea is to open trades only when the strength of the trend is confirmed by the ADX indicator, and the direction of the trend is confirmed by the Parabolic SAR indicator.

The purchase of a call option occurs under the following conditions:

• ADX shows a value above 25, which indicates a strong trend.
• Parabolic SAR is located below the price, indicating an uptrend.
• Confirmation: The price moves up, forming upward candles.

The purchase of a put option is carried out according to the rules:

• ADX is above 25, which confirms the presence of a strong trend.
• Parabolic SAR is above the price, signaling a downtrend.
• Confirmation: The price forms consecutive lows and highs lower than the previous ones.

It is advisable to choose the expiration time for binary options within 3-5 candles from the selected time frame. For example, if you work on a chart with 15-minute candles, the expiration time should be about 45-75 minutes.

The Catch strategy will be a great help for traders who prefer conservative trading. Using the ADX and Parabolic SAR indicators together allows not only to determine the trend direction, but also to assess its strength, which significantly increases the chances of successful transactions. Remember the importance of risk management and discipline in trading options.

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• The trading strategy is suitable for any asset.
• The trading strategy works for any time frame.
• The trading strategy is universal, simple, and understandable.

The trading strategy for digital options should be as simple as possible. In electronic contract trading, transactions are completed quickly, with a short expiration period. A trader simply does not have time to understand complex algorithms and their signals. We will discuss the Duet Trading Strategy in the article because many traders tested and used it to get  good results.

Introduction to the Duet strategy

The strategy got its name because it is based on two Stochastics installed on the work area. Is it even possible? Yes, it can be done when we have different parameters. George Lane developed the Stochastic back in the 1950s. However, it never goes out of fashion and be found in almost any trading site like the Pocket Option platform.

Most traders prefer Japanese candlesticks for trading using the Duet strategy. However, you can choose anything you like. In terms of time frame for binary options, there is no point in choosing higher time frames, the M5 will fit perfectly.

Choose a volatile asset because the oscillators work extremely ineffectively with flats. Therefore, it is better to choose a currency pair that contains the American dollar or euro. For the Stochastic oscillator we use three parameters: the fast line %D, the slow line %K and deceleration. After you install two advisors on the workspace, set the settings of the first to 5, 3, 3, and the second to 14, 5, 3.

The setup is complete and can start trading.

How the Duet strategy works?

With the Stochastic, traders are guided by one of its signals: entering or leaving the “overbought/oversold” zones or crossing the fast and slow lines. In this case, we will use both signals simultaneously.

CALL option must be purchased when both Stochastics are in the zone from 0 to 20. In addition, on both oscillators, the fast line must cross the slow one from bottom to top.

PUT option is purchased when both indicators fall into the zone from 80 to 100, and their fast lines intersect with the slow ones in a lower direction.

The expiration period is set to 10 minutes.

As mentioned above, the Duet system is extremely effective in the binary options market. However, it is worth recalling that none of the existing strategies can provide 100% results. Therefore, do not forget about the rules of money management.

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We are talking about indicators that appear on your workspace literally in one click and are capable of predicting the future price direction of the selected asset with amazing accuracy.

However, there is another side to the coin. Due to the wide range of available tools, many traders make the mistake of placing 5 or more advisors on the chart. As a result, there is confusion in the signals and it all ends in making the wrong decision.

In this article we will look at the Rainbow system, which is based on only one indicator – Moving Average (MA). At the same time, it is capable of giving extremely clear signals for buying a digital option and is suitable for use on any time frame, which is important for this market.

Setting up a workspace for trading using the Rainbow strategy

It is worth noting that MA is one of the oldest instruments in financial markets. During its existence, this indicator has worked on all types of exchanges, from stock exchanges, as well as commodities and ending with cryptocurrency.

The calculation of this tool is very simple. In our case, a simple moving average will be used, which means that each new point of the line being constructed is the arithmetic average of closing prices for a certain period.

Based on the above formula, the conclusion suggests itself that the curved indicator line that appears on the chart quickly reacts to price changes and practically follows the movement of the main trend. It is not surprising that the tool is often used instead of a trend line.

But there is one more nuance: the speed of the indicator’s reaction to price changes depends on its period. The smaller it is, the faster the line reacts.

It is this principle that formed the basis of the Rainbow strategy.

To implement it, we will need to install three MAs on the chart with periods of 5 (lilac), 10 (blue) and 15 (yellow).

Based on the logic of the tool’s operation, it can be stated that during a stable trend, all three lines will move in the same direction, parallel to each other.

However, if a reversal is planned in the market and the trend begins to change, then the moving average with the shortest period, in our case 5, will be the first to react to what is happening. The strategy is based on this fact.

How to trade using the Rainbow system

Based on the above, the intersection of the junior line with a period of 15 MA may indicate the beginning of a change in the main trend. At the same time, crossing the senior line of the moving average with a period of 10 is an excellent signal to buy an option.

CALL contract is purchased when both lines have crossed MA 15 from bottom to top.

PUT contract is done in the case when both lines have crossed MA 15 from top to bottom.

Expiration depends on the timeframe you choose. But it should not be less than the time it took to construct three bars.

Despite its simplicity, the Rainbow strategy is capable of bringing stable profits on binary options. However, it is necessary to take into account that on lower timeframes the likelihood of a false signal appearing will be higher.

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Technical analysis for trading includes several useful tools that are available on trading platforms like the Pocket Option. When you register, you can assess the market situation literally in one click. The RSI oscillator is included in the list and often used as a foundation for a trading strategy. The Index is in the list of standard indicators because it is very popular among traders.

Description of the RSI. What is it?

Relative Strength Index (RSI) is a level scale with a signal line at the bottom of the chart.

The famous businessman and financier Wells Wilder is the creator of the index. He was the first to propose the indicator in financial markets back in 1950.

More than 70 years have passed since that moment. However, RSI is still highly relevant. Many traders use it as one of the main tools in many strategies.

Let us look at the formula for calculating the Relative Strength Index. At first glance it may seem very complex and confusing, but, in fact, everything is extremely simple.

RSI =100 − [100/(1+ RS)], where RS = average profit / average loss

Do not be a skeptic and say that the formula is only useful for traditional “old school” mathematical trading. You can use it too because at the most broker trading platforms everything is calculated automatically, you will see the end result of the tech analysis on the screen.

Let us review some basics. Firstly, Wilder recommended 14 period. Secondly, the main levels to set by default are 30 and 70. They represent oversold and overbought conditions respectively. In other words, extreme selling in the market begins when the RSI falls below 30, and buying when it rises above 70.

Some tips on how to trade with RSI?

The index is often used to search for reversal and correction signals. Therefore, based on the above, it would be logical to conclude that the chart will reverse after falling when leaving the 0-30 zone, and growth will stop after the line drops below the 70-100 zone.

The CALL option is bought when the RSI line crosses level 30 from bottom to top.

The PUT option is purchased when RSI line crosses level 70 from top to bottom.

The expiration is recommended to set at least the formation of two candles.

It is no coincidence that the relative strength index is very popular among binary options traders. After all, the tool allows you to make quick transactions and at the same time shows a high level of profitability.

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This article will discuss an effective trading strategy “Double Cross” in the digital options market. The strategy is built on two popular advisors – MA and Stochastic, which you can find in the Pocket Option and other trading platforms.

The two central advantages of this strategy are its simplicity and efficiency. Impressively, the trading efficiency of the system reaches 90%. Moreover, it is suitable for almost any asset and can be used on the lowest time frames, which is most important for the binary options market.

How to set up parameters?

As mentioned above, the strategy is universal and works for all types of assets. It depends on the preference of the trader and the trading session.

Two Moving Averages. Even though it is recommended to set the timeframe between M1 and M15, we suggest M5 because it is  best suited for our purpose. On the one hand, transactions are completed quite quickly and with a short expiration period. On the other hand, indicators are less susceptible to market noise, which means the risks of making a mistake when buying an option are lower.

Now let’s move on to directly setting up the tools. Moving Average needs to be set to 2, use simple type and choose the 5 and 10 period. It is advisable to use different colors so that it is visually clear where is fast and where is slow MAs.

Stochastic. Taking into account the fact that we are working on lower time intervals, we configure it as follows: %K – 5, %B – 3, slowdown – 3. For higher time frames, the parameters are 14, 5 and 3, respectively.

How to trade using the Double Cross strategy?

Two moving averages act as an improvised trend line. When the trend is stable, they fit in its direction and move in parallel. Meanwhile, as soon as a reversal or correction is planned, one of the MAs (with a period of 5) will react to this event faster and cross the second moving average in the direction of the future movement. This signal will be used in the strategy.

Stochastic also has fast and slow lines. Their intersection in one of the directions acts as a similar signal.

The CALL option must be purchased after the lines on both indicators cross in the upward direction.

The PUT option is done when the lines cross from top to bottom.

The expiration period in the case of trading on the M5 timeframe will be 10 minutes.

Please note that Stochastic reacts to future price changes a little earlier than MA. This feature can also be used in trading, receiving a warning signal, and already preparing to buy a contract when it is confirmed.

The post The Double Cross Strategy appeared first on Pocket Option.

Before the advent of such a type of chart as Japanese candlesticks, methods for making money in financial markets were indeed quite complex. Today, you can make a profit simply by observing the shape and position of the candle on the chart. Among traders, this trend even received a separate name “Candlestick Analysis” or Price Action.

It is worth noting that such a trading system is ideally suited for the electronic contracts market, as it allows you to make many transactions in one trading session.

In this article we will look at one of the models indicating a reversal of the current movement and called Pinocchio.

What are Japanese candlesticks?

In most cases, a candlestick formation is called a rectangle, the upper and lower parts of which follow the same line. The latter are called thorns or shadows.

The rectangle itself is called the body of the candle and it is formed during the time period selected by the user. For example, if the chart timeframe is M1, then each new candle will be formed for exactly one minute.

The candle body is the distance between the closing price and the opening price. If the first is below and the second is above, the candle is downward, and if vice versa, then it is upward. However, often the downward candle in the terminals is colored red, and the upward candle – green.

But that is not all. For example, the price could open, begin to rise, and then return and close below the opening price. In this case, a spike appears above the candle, indicating where the price was during the formation of the candle.

How to trade using the Pinocchio strategy?

Now we smoothly come to the most important thing. Let’s imagine a situation where the chart is moving upward, the candles are colored green, but after the last one closes, a spike has formed above it, significantly larger than the size of its body.

From this we can conclude that something prevented the upward impulse movement. Perhaps a large trader has fixed a position, or perhaps the chart has reached a psychological level or important news has come out. Be that as it may, this situation indicates a high probability of a market reversal.

CALL contract is done when a red candle with a long spike at the bottom appears on a downward movement.

PUT contract is done when a green candle with a long tail on top appears on an upward movement, as described above.

As for the name of the strategy, it just got it because of the long shadows or spikes. When Pinocchio lied in the fairy tale, his nose grew bigger. By analogy, when the market is about to reverse and leave traders with a loss, the spike at the last candle grows.

It is worth noting that price models’ action are a popular but very risky trading method. Therefore, be sure to adhere to the rules of money management.

The post Intro to the Pinocchio Trading Strategy appeared first on Pocket Option.

Nevertheless, there are instances where your trade might seem promising, yet the market takes a swift turn before the expiration, resulting in a sizable reversal candle. This often occurs when you enter a trade toward the end of the current surge or during a trend reversal.

On the flip side, there exist traders who exhibit surgical precision, initiating their positions right at the inception of an impulse movement, and confidently reaping their well-earned profits.

So, what’s their secret? It begins with a tried-and-true, dependable trading system. The article introduces the “Three in One” trading strategy, which not only helps you discern the current movement’s direction but also gauges its potential, providing valuable insights for your trading success.

Description of the strategy

This trading system is structured around three key indicators: Stochastic, RSI, and SMA (Simple Moving Average). The good news is that these essential tools come pre-installed in the Pocket Option broker trading platform.

To gauge the current movement’s potential and determine if it’s approaching its conclusion, we’ll utilize two widely recognized oscillators, aided by their overbought and oversold zones. Specifically, for the Stochastic oscillator, we’ll consider the range of 0-20 and 80-100, while for RSI, we’ll focus on the 0-30 and 70-100 ranges. Additionally, RSI incorporates a pivotal level of 50, signifying the strength of the ongoing movement.

The Moving Averages in this strategy assume the role of signal indicators. In this context, two Moving Averages are involved, and the crux of decision-making hinges on their intersection.

Setting up your workspace

In the “Three in One” strategy, consider the following key points.

As for asset selection, opt for an asset with medium to high volatility. This strategy performs poorly on charts that predominantly remain flat. Ideal choices include currency pairs or cryptocurrencies. You can select a timeframe spanning from 60 seconds to 15 minutes. This choice depends on your trading style and how frequently you’re willing to make contract purchase decisions.

Employ Japanese candlesticks or bar charts for analysis.

Indicator Settings:

• RSI: Use the default settings with a period of 14.
• Stochastic: Configure the parameters as 5; 5; 3.
• Moving Averages: Assign a period of 10 for the first MA and 5 for the second.

Consider using distinct colors for the moving averages for enhanced clarity.

Trading using the “Three in One” strategy

Despite incorporating several indicators, the system remains remarkably straightforward and intuitive.

To initiate a CALL option, look for these specific conditions:

• Stochastic emerges from oversold conditions and is trending upward.
• RSI surpasses the 50 level but has not yet reached 70.
• The 5-period MA crosses the 10-period MA in an upward direction.

Conversely, for a PUT option, you should consider the following conditions:

• Stochastic moves out of overbought territory and trends downward.
• RSI falls below the 50 level but hasn’t reached the 30 level.
• The 5-period MA crosses the 10-period MA in a downward direction.

The expiration period is set equal to the time of formation of three bars.

When determining your trading course, the foremost signal is the crossover of the moving averages. This marks a significant turning point. Once this crossover has transpired, it’s vital to corroborate with the oscillators to gauge the movement’s potential.

Historical data suggests that this strategy boasts an impressive success rate, with a profit generated in over 90% of transactions. However, to secure a successful contract purchase, it’s imperative that all the conditions outlined above align seamlessly.

In conclusion, the “Three in One” strategy, with its systematic approach and focus on the interplay between moving averages and oscillators, holds promise for traders seeking reliable outcomes. While it doesn’t guarantee flawless results, it presents a well-structured framework for enhancing your binary options trading endeavors.

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Remarkably, the Stochastic oscillator has not only endured but also found a place in relatively recent forms of exchanges, including binary options. Most brokers offering their clients the ability to trade digital contracts include the Stochastic Oscillator as one of the preinstalled tools in their trading platform, and Pocket Option is no exception. Their trading platform is rightfully recognized as one of the most feature-rich in the industry.

More about the Scholastic

It’s essential to recognize that the fame of the Stochastic oscillator is well-deserved. This tool was crafted in the mid-20th century. In those days, the choices available to traders were rather limited, practically ensuring the instrument’s popularity.

Even in the contemporary era, Stochastic would undoubtedly attract attention. It stands as one of the premier oscillators for identifying overbought and oversold market conditions, instances where it may already be too late to initiate buying or selling.

Stochastic is typically displayed in a separate window beneath the price chart and comprises a scale with levels and two signal lines.

As for the latter, they represent moving averages that respond to market price fluctuations over a specific period. The faster one is denoted as % K, appearing as a blue moving average, while the slower one is % D, marked in red.

The predefined levels within the indicator hold a crucial significance in trading. Consequently, the presence of lines within the range of 0 to 20 signifies an oversupply in the market. Conversely, the zone between 80 and 100 indicates an excess of demand. The existence of lines within either of these zones serves as a signal of an impending change in the prevailing trend.

How to trade using the Stochastic indicator

From the information presented, it is evident that it is advisable to initiate contracts when the signal lines exit the regions characterized by excess demand or supply. In other words, this occurs when a new trend is emerging and taking shape.

To be more specific, a CALL contract is done when the signal lines cross above level 20 from below. This indicates a favorable moment to take action.

On the other hand, a PUT contract is obtained when the moving averages intersect and descend from above the 80 level.

Occasionally, traders employ a less overt yet effective method. They enter a trade when the fast and slow Stochastic lines intersect, purchasing the contract in the direction in which the blue line crosses the red one.

Recommendations for trading with the Stochastic

You should remember the specific conditions for effectively using Stochastic, which can significantly reduce your risks while enhancing profits.

To begin with, Stochastic tends to perform inadequately in sideways markets. Consequently, it’s advisable to employ the oscillator primarily when a clear trend is present.

Secondly, it’s essential to customize settings for different timeframes. For instance, for timeframes shorter than H4, the recommended values for the fast, slow, and signal lines are 5, 3, and 3, respectively. On the other hand, for timeframes exceeding H4, it’s advisable to adjust the parameters to 14, 5, and 3.

Lastly, Stochastic should be avoided in highly volatile markets like cryptocurrencies. The indicator reacts swiftly to price fluctuations, making it prone to generating false signals.

In conclusion, Stochastic is a valuable tool for traders when used under the right conditions. It can be a powerful asset in identifying entry and exit points in a trending market. However, it’s important to recognize its limitations, including its ineffectiveness in sideways markets and its susceptibility to providing false signals in highly volatile environments, such as the cryptocurrency market. By adhering to these guidelines and adjusting settings based on the timeframe, traders can harness the full potential of the Stochastic oscillator while minimizing risks and maximizing profits.

The post The Stochastic Oscillator and its Applications in Trading appeared first on Pocket Option.

The primary allure of binary options lies in their capacity for frequent trading, coupled with the potential for substantial earnings. Here, profit isn’t contingent on how many price points have been traversed.

On the flip side, it would be misleading to assert that electronic contracts are categorically easier than Forex or other financial markets. Success in any domain of finance hinges on the presence of a well-crafted strategy.

This often leaves newcomers pondering: Where can one acquire such a system to kickstart their digital options journey? Fortunately, such methods do exist, and we’ll delve into one of them in this article.

The “Intersection Point” strategy, our topic of discussion, boasts several merits. Firstly, it harnesses the power of two indicators, bolstering the reliability of contract purchase signals. Secondly, it’s remarkably straightforward to put into practice, with no need for an in-depth grasp of the tools’ intricacies. One more advantage is that the IP strategy is good for lower timeframes, which makes such a system ideal in the binary options market.

How to set up a trading area?

To put the “Intersection Point” system into action, you’ll want to focus on a highly volatile asset like the EUR/USD or GBP/USD currency pair.

Set the timeframe to M5. According to the majority of traders, this particular time frame is ideal for binary options trading, as it offers frequent trading opportunities while being less risky compared to turbo options that last only 60 seconds.

For chart analysis, you can opt for either a bar chart or Japanese candlesticks.

In this system, we’ll be relying on two indicators, namely the trend Parabolic SAR and the Stochastic oscillator. You’ll find both indicators readily available in the Pocket Option terminal, and the best part is that you don’t even need to tweak their settings – the default configurations are perfectly suited for this technique.

How to trade with the “Intersection Point” Strategy?

The heart of this system is encapsulated in its very name, quite literally. Your main task revolves around observing the Parabolic points and the intersections of the Stochastic lines.

In this strategy, to initiate a CALL option, you should make your move when the fast Stochastic line crosses over the slower one from the bottom to the top, and concurrently, a Parabolic point forms beneath the candle or bar.

In contrast, for a PUT option, you’ll want to act when the blue Stochastic line crosses below the orange line, and simultaneously, a Parabolic SAR point takes shape above the bar.

Set the expiration period equal to the duration of two bars or 10 minutes.

This illustrates that certain strategies can be harnessed effectively even without an extensive understanding of trading. The “Intersection Point” technique is intuitive and accessible, making it well-suited for beginners.

However, it’s crucial to recognize that no trading system can promise a flawless 100% success rate. Consequently, it’s imperative not to disregard the principles of prudent money management, which means refraining from allocating more than 3% of your deposit to a single transaction.

In conclusion, the “Intersection Point” strategy offers a practical approach for trading binary options, especially for those new to the trading world. While it doesn’t guarantee foolproof results, when applied with disciplined risk management, it can be a valuable tool in your trading arsenal.

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