«3 EMA + Stochastic»: 5 minute strategy for binary options

Thinking how to make money on binary options, beginners primarily look at short-term deals with the expiration of 1-3 minutes. Everyone wants to get a quick profit, but do not forget “free cheese only in a mousetrap”. It is much more profitable to be patient and work with longer options with an expiration of 5 minutes or more, as in the “3 EMA + Stochastic” strategy.

Strategy characteristics

Type:

Trend.

Timeframe:

Any in the range M1-M5. In our case, M1 is used, but with an increasing period of analysis, the accuracy of the signal an increasing.

Trading asset:

Any currency pair. The main requirement is a fixed (2-3 points) spread and no hidden fees.

Trading time:

All Forex trading sessions.

Percentage premium option:

Not less than 70-75%.

Used indicators

We follow the basic principle of technical analysis "trading binary signals confirmation should be carried out by indicators with different calculation algorithms."  The strategy uses two indicators:

  • Three exponentials (EMA) moving averages with periods 14,50 and 30. Trend indicators by which we determine the opening point of the option. The strategy is not intended for trading during flat periods. We trade only if the range is between at least 15-25 points!
  • Stochastic − the oscillator will assess the current balance between buyers and sellers: the predictor above level 80 − the end of the uptrend (overbought), below 20 − the end of the downward (oversold).

After installing the tools, the terminal's working window looks like this:

 

Binary options signals:

  • CALL-option. Parabolic SAR below the price, AO green and up. Stochastic is above zero levels or in the overbought area.
  • PUT option. Parabolic SAR is higher than the price, AO is red and down. Stochastic RSI also goes down to oversold.

Open a trade on the next candle after binary options trading signals. Time of expiration of options has to be not less than 5-7 minutes even if as a working timeframe it is chosen of minute, as in our video.

Recommendations about use … 

  • Even on the minute timeframe, Stochastic rarely goes into the extreme zones and you can miss a lot of good deals. If price and Stochastic start moving in one direction − you can open an option!
  • Experienced traders on higher timeframes can open trades using only Stochastic to monitor the "market pulse", but this approach is more suitable for the stock market, where the trends are calmer. But in a dynamic Forex market, there is always a risk of a rapid reversal of even a long-term trend, so take into account the data of other technical tools and live trading signals;
  • During the publication of important fundamental news and statistics, we do not open options 30 minutes before the news and 30 minutes after the publication; cautious traders can close current deals. To control the events, we use the economic calendar included in the all popular binary trading platform!
  • Even though you can trade throughout the day, the most profitable results were obtained in the second half of the US session (from 16:00 UTC) and the end of the Asian session (until 06:00 UTC);
  • It is necessary to take into account not only the volatility of the trading instrument as a whole but also the average values for Forex trading sessions. For example, pairs with the Euro are the most dynamic in the European session, which means that the chart is the most informative. On the Asian side, volumes fall sharply and auto binary signals stop working.

Intraday strategy «3 EMA + Stochastic » represents a rather reliable system of a conservative scalping for trade in the stable market. Parameters of trade tools can be changed according to the current volatility. Once again, we remind you that most profitable free binary options signals will only be on trend areas, during the flat periods we remain out of the market!

Automatic trading according to the «3 EMA + Stochastic» strategy is possible: several versions of binary option bot can be found on the network, but, like on any scalping system, it is better to trade manually using this scheme. This will allow you to more effectively tune the system to market changes, and the multicurrency properties of the strategy guarantee you a stable profit every day.