Let me tell you, getting into electronic contract trading is like riding a wild bull—thrilling and potentially rewarding. My main focus? Figuring out where the price is going next and grabbing the right option to go with it.
But sometimes, my trade feels like it's on point, only for the market to throw a curveball just before expiration, hitting me with a big reversal. This usually happens when I dive in at the end of a rally or right in the middle of a trend change.
On the other hand, you’ve got those sharpshooters in the trading world. They jump in right at the beginning of a price move and rake in profits like champs.
So, what's their secret? It all starts with a solid, proven trading system. Let me introduce you to my “Three in One” trading strategy, a great tool that helps me not only figure out where the current movement is going but also measure its strength, which is key for making good trades.
Description of the strategy
This strategy’s based around three powerful indicators: Stochastic, RSI, and SMA (Simple Moving Average). Luckily for us, these tools come pre-loaded on the Pocket Option trading platform.
To check the strength of the current move and see if it’s close to ending, I look at two popular oscillators by checking their overbought and oversold levels. For the Stochastic oscillator, I watch the 0-20 and 80-100 ranges, while for RSI, I focus on the 0-30 and 70-100 levels. The important 50 level in RSI lets me know the strength of the ongoing move.
The Moving Averages in this strategy act as signal launchpads. I’m using two for this system, and the key is where they cross each other.
Setting up your workspace
When I'm using the “Three in One” strategy, here are the main points I stick to.
For asset selection, I target those with medium to high volatility. This strategy generally doesn't work well on flat charts. The best options are usually currency pairs or cryptocurrencies. I can work with timeframes from 60 seconds to 15 minutes—this depends on my trading mood and how often I'm placing trades.
I prefer using Japanese candlesticks or bar charts for my analysis.
Indicator Settings:
- Stochastic: Set it to 5; 5; 3.
- RSI: Stick with the default settings and a period of 14.
- Moving Averages: Set the first MA to a period of 5 and the second to 10.
And hey, I like to spice things up with different colors for the moving averages—it really helps make everything clear.
Trading with the “Three in One” strategy
Even with all these indicators in play, this system is simple and user-friendly.
When I'm looking at a CALL option, I check for these conditions:
- Stochastic bounces back up from the oversold zone.
- RSI breaks above the 50 level but hasn't reached 70 yet.
- The 5-period MA crosses the 10-period MA upwards.
Now, if I'm going for a PUT option, I keep these conditions in mind:
- Stochastic dips out of overbought territory.
- RSI falls below the 50 level but isn’t hitting the 30 level yet.
- The 5-period MA crosses the 10-period MA downwards.
The expiration time should match the duration of three bars’ formation.
When charting my trading path, the first signal I look for is that moving averages crossover. That’s a crucial moment. After that, I double-check with the oscillators to evaluate the movement's strength.
Looking back, this strategy boasts an impressive success rate, getting profits in over 90% of transactions. But keep in mind, for sealing a solid contract purchase, all those conditions need to align perfectly.
To sum it up, my “Three in One” strategy—thanks to its structured approach and focus on the interaction between moving averages and oscillators—offers a great option for traders aiming for consistent profits. While it’s not perfect, it provides a strong framework for enhancing my trading skills, and exploring comprehensive trading strategies with PocketOption broker platform can further refine these skills.
