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Using Stochastics for Short and Long Term Trading

This Stochastic binary options strategy makes use of several different time-frames and as such can provide many different entry signals. This method requires you to analyze weekly, daily, and hourly charting periods. You can choose to use it with different time periods, but remember that the aim will be to study longer periods so as to predict the direction of movement within shorter periods. The entry signal must be identified within the longer periods before being sought out inside the shorter periods.
Using Stochastics
The first step will be to identify the long-term trend. This can be done by reviewing closing prices. Examine a charting period of at least one year alongside weekly candlesticks to uncover both the long-term trend and support and resistance levels. Short-term analysis should include the examination of daily closing prices. Make use of daily candlesticks along with a chart setting of no less than six months to spot short-term trends and support and resistance levels. For quick trades, use a chart with the 30-bar setting for assets that are being traded in high volume. Use the 60-bar setting when trade volume is low.

Entry signals are easy to identify when using this strategy. The first is going to appear in your long-term chart. If the price movement is upward, assume the market is bullish. If the movement is downward, assume the market is bearish. The signal is presented within a bullish market when the %K line moves over the Stochastic indicator line from below. The exact opposite is valid with a downward moving trend, where the signal appears when the %K line moves past the indicator line from above.

The long-range signal pairs with a monthly expiry. Only go into a monthly binary options position during the same week that the signal was produced. It may be possible to trade during the next week if the price has not moved substantially. The long-range signal does indicate that short-term trading (using the same prediction of direction) can be done. This signal continues to be legitimate so long as the %k remains above the Stochastic line and the asset price is moving upward within the long-term chart.

Once you have identified market conditions within the weekly chart, move on to a daily chart and look for the exact same signal. If the weekly signal is bearish, be looking for the same inside the daily chart. For the best results, only trade in line with the long-term trend. You may identify numerous short-term entry points while looking at the weekly chart. These can be taken if conditions remain bullish and the signals can be verified within the daily chart.

The advantage of using this strategy is the fact that it can produce a number of different entry points. The drawback would be that it may be too complex for novice traders and false signals are possible, even with triple verification. This is one binary options strategy that should definitely be practiced on paper or within a demo account before being applied in an actual platform.

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