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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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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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 optimal moment to initiate a digital contract is when there’s a discernible shift in the prevailing trend. Accurately predicting price direction is the key  and doing so at the inception of a trend’s development often leads to a high likelihood of success.

This is precisely why many binary options traders favor using signals that indicate a potential trend reversal or correction as their entry points.

Nonetheless, pinpointing the precise point the reversal is a challenging task. Fortunately, there are tools to assist, with one of the most valuable being the Parabolic SAR. Its primary advantage lies in its real-time responsiveness — it neither anticipates nor lags behind market events. Consequently, it offers current trend information, enabling timely contract execution.

Of you use the Pocket Option trading platform, you can find Parabolic Indicator preinstalled, ready for online trading.

About the Parabolic Indicator

The renowned trader, W. Wilder introduced the concept underpinning the functionality of the Parabolic SAR indicator. He also created many other tools designed for technical analysis and trading strategies.

Interestingly, the name of this indicator aptly mirrors its visual representation. When integrated into the workspace, the Parabolic SAR populates the screen with multiple parabolic lines.

As for the recommended setting, please use a minimum acceleration of 0.02 and a maximum acceleration of 0.2. The mathematical formula is rather complicated but fortunately, you do not have to solve it manually.

When it comes to executing trades based on Parabolic SAR signals, it’s advisable to focus on timeframes ranging from M30 to H4, particularly when dealing with binary options. While this market isn’t particularly conducive to medium-term trading, employing this strategy yields relatively infrequent but highly precise signals, devoid of market noise.

How to trade with Parabolic Indicator

As previously mentioned, many binary options traders focus on reversals or corrections. In light of the conditions outlined above, the start of new trend is recognized when you see a point on the opposite side of the price chart.

Williams identifies four distinct states for this indicator:

• Points located below the price chart denote an upward trend.
• Points positioned above the price chart signify a descending trend.
• When the gap between these points increases, it indicates a strengthening trend.
• When the gap between these points decreases, it suggests a weakening trend.

Using the Parabolic as a reference, you can:

Execute a CALL option when a new point has materialized below the price chart. This indicates the potential commencement of an upward trend, which presents a favorable opportunity for buying contracts and participating in the bullish market.

Conversely, a PUT option should be acquired when a dot emerges above the most recent price bar. This signifies a potential start of a downward trend, making it an opportune moment to engage in the market with a bearish perspective.

The expiration must equal the time of formation of at least two bars.

In conclusion, understanding how to work with the Parabolic SAR indicator is a valuable asset for binary options traders. By interpreting the states of this indicator and making informed decisions based on the appearance of a new point on the opposite side of the price chart, traders can strategically choose between CALL and PUT options. Utilizing the Parabolic SAR as a guiding signal allows traders to align their trades with the prevailing market trends, ultimately enhancing their potential for success in binary options trading.

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Remarkably, this indicator has also proven its mettle in the binary options market, despite not being originally designed for electronic contract trading. Let’s start by unraveling its cryptic name: MACD stands for “Moving Average Convergence/Divergence”. This nomenclature alone hints at its reliance on moving averages for its formula, though we’ll delve into the specific settings shortly.

The MACD owes its existence to the diligent efforts of stock trader J. Appel, who first began employing it on the stock exchange way back in 1979. Since that time, it has retained its popularity and remained a cherished tool among financiers.

You’ll find “Moving Average Convergence/Divergence” available in most trading platforms, including the Pocket Option trading platform.

Description of the MACD, its Formula and Advantages

When discussing the visual representation of MACD, it’s distinctly unique. The key feature is that within this oscillator’s window, you’ll find not just one but two elements coexisting: moving averages and a histogram column.

Important Note: Novice traders often confuse the latter with another popular indicator – volume. However, it’s crucial to understand that these two tools are derived from entirely distinct formulas. Thus, utilizing MACD as a gauge for exchange participants’ activity is not recommended, even though it does provide some partial insight into it.

Now, let’s return to “Moving Average Convergence/Divergence” or “MACD” for short.

Among the parameters that need to be configured before commencing trading, you will have control over the settings for fast- and slow-moving averages, as well as the histogram. By default, in the Pocket Option terminal, these values are preset to 12, 26, and 9, respectively.

It’s worth noting that the tool’s developer himself recommends using these same parameters. Therefore, it is advisable to stick with the suggested values.

Regarding the advantages of MACD, it offers versatility as its primary strength. This indicator can effectively signal both the direction of a trend and its potential reversal.

For instance, the positioning of the histogram above or below the zero level provides insight into the present trend, and the moment when the bars transition from one half to the other signifies a shift in that trend. Furthermore, a reversal or correction in the trend is signaled by the crossing of the signal moving averages. It is upon these signals that trading systems involving MACD are constructed.

How to trade using “MA Convergence/Divergence”

Considering that in binary options trading, there’s no obligation to follow the primary trend, it is often more prudent to focus on trend reversals. These reversals tend to provide more robust signals.

Hence, in light of the above, it is recommended to acquire a CALL option when the histogram shifts to the upper region, and the signal lines intersect from bottom to top.

Conversely, a PUT option should be acquired when the histogram drops into the negative section of the window, and the fast moving average crosses below the slow moving average.

The expiration should not be less than the formation time of two candles.

The MACD excels in effectively identifying divergence, although it’s worth noting that this task can be handled by nearly any oscillator in the market.

In conclusion, while “Moving Average Convergence/Divergence” provides reasonably accurate signals, it may not function optimally in extremely volatile market conditions. Consequently, it is advisable to exercise caution and refrain from using it when trading cryptocurrencies, where volatility can be exceptionally high.

The post Insights into the MACD Indicator appeared first on Pocket Option.

Working with Andrew’s Pitchfork is not difficult if you know some basic rules. Once you learn how to use it, it can become the basis of your trading strategy. It is created by placing three points at the end of previous trends and then drawing a line from the first point that runs through the midpoint of the other two points.

If you are client of Pocket Option Broker, you get access to Andrew’s Pitchfork in your Tools List. Read the article to learn more about how to set up and use this technical indicator to make money on trading electronic contracts.

Rules for Setting and Tuning the Indicator Up

If you look for Andrew’s Pitchfork in your Tools on the platform, find it in the menu of technical lines (not in the indicators).

Here is some basic advice:

Advice #1. Andrew’s Pitchfork is used exclusively on a chart with an uptrend or downtrend. It does not work sideways.

Advice #2. Before plotting the indicator, wait for a definite breakdown and a change (or strengthening) of the current trend. Only after such even it is possible to apply “pitchfork” on the chart.

Advice #3. After you click on the name of the tool, five parallel rays will appear on the main screen. The central ray should be placed starting at the last high or low (depending on the trend) and passing exactly in the middle of the breakout wave.

The reason this indicator is called a “pitchfork” is apparent from the shape on the chart. As you see on the chart, it is a downtrend on the chart that left its previous channel after the momentum. The central line of Andrews Pitchfork passes through the middle.

As a result, after the construction is completed, you will see a pitchfork, consisting of a central line and two parallel lines on each side.

Please note that the zones formed by the lines are colored green and red. It is important.

Trading with Andrew’s

The central line indicates the “fair price” of the asset, and the sides indicate the possible deviation. Andrews Pitchfork helps to trade on a rebound. Follow the strong signals of rebounds from the center line or from the extreme border of the green zone. In turn, reversals from the borders of the red zone are risky and should be used only with a confirming signal from another indicator or the Martingale system.

It is recommended to set the expiration time at least two bars. A rebound from a particular line must be confirmed (the next candle of the same color).

You can trade with Andrews on any timeframe. Signals from the indicator do not come often, but can bring profit in 80% of trades. That is why this tool is often used by professional traders.

Ultimately, there are no hard and fast rules about how to place your points and draw the channels; it’s a matter of judgment that can only come from experience.

In general, traders will purchase the asset when the price falls near the support of either the center trendline or the lowest trendline. Conversely, they’ll sell the asset when it approaches the resistance of either the center line or the highest trendline. Even though the center line can be used to identify areas where a security may find support or resistance, it is generally not as strong as the two outside lines. In practice, the levels identified by this indicator are very useful for identifying strategic positions.

The post Implementing Andrew’s Pitchfork in Your Trading appeared first on Pocket Option.

The OsMA is an abbreviation for the term oscillator of a moving average. The OsMA is a technical indicator that shows the difference between an oscillator and its moving average over a given period.

The OsMA is included in the list of standard tools in the trading platform of the Pocket Option Broker. Read the article and you will be able to take advantage of all the advantages of the adviser.

Appearance and settings

OsMA has a telling name that speaks for itself: Moving Average Oscillator. It is presented on the histogram.

As you see, the tool will be located under your trading screen. OsMA differs from MACD by the absence of signal lines above the histogram. Obviously, it presents an indisputable advantage because it is faster than MACD by several columns of the same histogram. MAs (of an oscillator) move slower than the oscillator. Therefore, an increasing OsMA is bullish as prices are rising and vice-versa.

It is the feature that brings the maximum benefit in binary options trading. After all, for successful trading it is enough to determine the direction of the price, and OsMA certainly predicts any reversal of the current trend.

As for the settings, after you click on the pencil image located next to the indicator name, a menu will open in front of you where you need to specify the periods of moving averages.

The following settings are recommended:

• Fast EMA – 12;
• Slow EMA – 26;
• Signal SMA – 9.

OsMA works effectively on almost any timeframe, so choose the best chart timeframe for you. For the most part, traders working on binary options prefer lower timeframes, which allows you to make more transactions for more profit.

How to trade with OsMA

When the OsMA goes from positive to negative that may indicate a downtrend is starting. Generally, when the OsMA is positive it helps confirm a price uptrend, and when negative helps confirm a downtrend in price. Given that the indicator is far ahead of MACD, professional traders often use it to look for divergences. This is a situation where the indicators on the chart are the exact opposite of those on the indicator. For example, on a histogram, the first peak is below the next one, but on a graph, it is vice versa. In this case, it is time to CALL (to buy a contract on the signal).

The expiration time in working with divergences should be at least 4 candles. In other words, if you are trading on the 5-minute timeframe, then the contract will have a life of 20 minutes.

If you are a beginner, follow the recommended strategy. In this case, it is enough to buy a contract in the direction of the columns crossing the zero level.

For example, if all columns were at the top, and then one formed below zero, you do a PUT contract.

In this case, it is enough to set the expiration time in the amount of 3 candles.

Any trading is risky that is why it is recommended to use Martingale principle. Overall, OsMA can significantly improve your trading performance in the binary options market. You just need to include it in your trading strategy.

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Schaff Trend Cycle (STC) is a charting indicator used to help spot buy and sell points in the forex market.

STC Indicator combines the properties of two well-known oscillators: Stochastic and MACD. Compared to the popular MACD indicator, STC will react faster to changing market conditions. A drawback to STC is that it can stay in overbought or oversold territory for long stretches of time.

A well-known trader and founder of FX strategy Doug Schaff invented the instrument. Rumor has it that he invented it back in the late 90s but presented to the public only in 2008.

Now Schaff Trend Cycle indicator is available to all Pocket Option Broker traders. You can install it on your screen when you click on it in the list of standard indicators.

Description and settings of the indicator

As you know, Stochastic and MACD have significant drawbacks: the former is lagging, the latter is running fast. In addition, both oscillators are ineffective during the period of a strong trend movements.

In Schaff Trend Cycle Expert Advisor, Doug Schaff fixed the above-mentioned drawbacks and even added corrections for cyclical movements. Thus, the STC indicator generates accurate and timely signals that is effective during trend reversals.

Appearance of the indicator is very similar to its siblings: it has two 25 and 75 levels, as well as a signal line. The Schaff Trend Cycle is in a separate window under the price chart.

The experts recommend using the following settings:

• Fast line – 23;
• Slow line – 50;
• Cycle- 10.

We recommend leaving the pre-set parameters if you are a beginner in trading.

How to trade options with the Schaff Trend Cycle?

We recommend using the STC indicator based on the similar principles as the Stochastic.

• Execute CALL option when the signal line leaves the oversold zone and crosses 25 from the bottom up.
• Execute PUT option when the signal line crosses the 75 from top to bottom.

Another huge advantage is that the above-mentioned indicator is suitable for any asset.

It is recommended to set the expiration period at least 3 bars.

Schaff Trend Cycle indicator gained its popularity in the Forex market. Many traders put it in the heart of their trading system. Later, some traders moved it to the stock market and electronic contracts as it became clear that it suits the market much better.

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Here is good news: Pocket Option Broker recently added a SuperTrend Indicator to the list of standard instruments for technical analysis. Therefore, even beginning traders can start making money on binary options right by activating simple preliminary settings.

The appearance and formula the SuperTrend Indicator

In the settings, Supertrend indicator displays directly on the price chart. In appearance, it looks like interchanging red and green candles.

You might have guessed that the first line is a resistance line, and the second is a support line.

Each line is calculated as follows:

• ST higher = (higher + lower) / 2 + m * ATR (n)
• ST lower = (higher + lower) / 2 – m * ATR (n)

The variable n indicates the number of ATR periods, and m is the volatility multiplier.

Since everything is automated, you do not need to make calculations of ST indicator: All calculations and construction are performed by the algorithms.

When you trade with ST indicator, you should specify the correct ATR period and multiplier value. By default, the platform has ATR period  = 10 and multiplier value = 3, respectively. You can use preset options because they are recommended by experts for medium-term trading. However, if you want to do short- or long-term options, think about changing the pre-set options and adjust your formula.

If you enter smaller numbers for ATR and multiplier, the  ST indicator will overreact to price changes, increasing market noise. If you enter higher numbers for ATR and multiplier, it will lead to a delay in signals.

Expert recommendations for ST indicator

We want to share a few basic tips for SuperTrend indicator to help you minimize risks while trading binary options. First of all, it is not recommended to buy contracts based on signals from the indicator when the chart is flat. You should remember that ST indicator is a trending indicator, which works the best during price movement. If you want, you can change the ATR calculation method from the settings. Default method is RMA, when the alternative method is SMA. The indicator is easy to use and gives an accurate reading about an ongoing trend.

Secondly, experts recommend using the timeframes of 30 minutes and above for more reliable signals. As you know such timeframes are not suitable for short-term trading.

And finally, let’s move on to the method of trading electronic contracts based on signals from an indicator. Here, in fact, everything is extremely simple:

• The CALL option must be bought when the line turns green and green the inscription “Higher” appears ;

• The PUT option is bought when the line becomes red and the red inscription “Lower” appears ;

The expiration period must be at least three bars. In other words, if you are trading on the M 30 timeframe, then the contract expiration will be 1.5 hours.

As you can see, even a beginner can apply Supertrend in practice. At the same time, the indicator gives fairly clear signals if you follow all the above recommendations. The average performance is 8 out of 10 profitable trades.

In addition, you can improve your trading efficiency by adhering to money management rules and using Martingale tactics. In fact, experienced traders insure their risks in this way.

The post The SuperTrend indicator: simple and perfect tool for a beginner appeared first on Pocket Option.

Accelerator Oscillator (AO) is a highly accurate and efficient technical analysis tool invented by Bill Williams. He is the author of other popular indicators including Alligator, Fractals and Awesome Oscillator.

Most trading platforms include the Acceleration Oscillator in the list of standard tools.

You can find it in the selection list offered by the Pocket Option broker for binary options.

Calculation of Accelerator Oscillator

As a matter of fact, outwardly AO is similar to its prototype – Awesome Oscillator.

The same histogram with red and green bars that are plotted above and below the zero level.

However, the main difference between these two oscillators is the calculation method. Thus, the AO is calculated by subtracting a simple moving average with a period of 5 from the Awesome Oscillator value.

Perhaps it looks very complicated, but it is not. Accelerator Oscillator is an automatic: you just need to enter the necessary parameters to visually display the histogram.

We stick to the classics: Bill Williams recommends using the values ​​5, 34, 5. They are set by default in the Pocket Option terminal.

How do I trade with the Acceleration Oscillator?

According to the creator of the instrument, the price is accelerating or slowing down at certain parts of the trend. For example, in the midst of a trend, the value of an instrument rises or falls actively, and before a reversal, the intensity, on the contrary, fades away.

The aforementioned slowdown can be seen by decreasing the size of the histogram bars, but the acceleration of the trend – by their growth. In this case, the location of the instrument relative to the zero level does not matter, but its color is, on the contrary, important.

Additionally, Williams recommends using the Accelerator Oscillator in conjunction with the Awesome Oscillator. Such collaboration is bearing tangible results. So:

• The CALL option is recommended when the histogram bars grow and are colored green on both oscillators. In addition, on the price chart, the close of the last candle should be higher than the previous one.

• A PUT option is purchased when both oscillators are colored red, the bars increase in size, and the closing price of the current candlestick is lower than the previous one.

The expiry must be specified in the amount of 3-4 bars. 

It is recommended to trade with this system on lower timeframes up to the minute.

Overall, like most of Bill Williams’ indicators, Accelerator Oscillator is a reliable tool. The EA works ahead of schedule, which significantly reduces the likelihood of entering a position at the end of the movement.

Traders use the trend indicator to discover short-term overbought or oversold conditions. When the value of the oscillator approaches the upper extreme value, technical analysts interpret that information to mean that the asset is overbought, and as it approaches the lower extreme, technicians consider the asset to be oversold.

The post How to better use Accelerator Oscillator? appeared first on Pocket Option.