With-trend trading vs. Counter-trend trading for Binary Options

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Contents

Набор Индикатор Trend Trading 4.5

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Stalker

Metatrader Indicator (MT4/MT5)

Trend Trading – это индикатор, предназначенный для получения максимальной прибыли от трендов, происходящих на рынке, путем определения времени отката и прорыва. Он находит торговые возможности, анализируя, что делает цена во время установленных тенденций.

  • Торгуйте на финансовых рынках с уверенностью и эффективностью
  • Прибыль от устоявшихся тенденций без проволочек
  • Признать прибыльные откаты, прорывы и ранние развороты
  • Индикатор анализирует собственное качество и производительность
  • Включает многосимвольный и многокадровый сканер
  • Сканер сканирует все инструменты в Market Watch
  • Он реализует панель мониторинга с несколькими таймфреймами
  • Индикаторы не перекрашиваются
  • Он реализует электронные / звуковые / визуальные оповещения

Установленные тренды предлагают десятки торговых возможностей, но большинство трендовых индикаторов полностью ими пренебрегают!
Индикатор Trend Trading отображает в среднем 10 различных сделок за тренд.

  • (1) изменение бычьего тренда
  • (1) медвежье изменение тренда
  • (2) откат в направлении тренда
  • (3) прорыв в направлении тренда
  • — это коррекция во время нисходящего тренда
  • — это коррекция во время восходящего тренда
  • Синие Бары – бычий суб-тренд
  • Красные слитки – медвежий суб-тренд

Индикатор Trend Trading является идеальным инструментом для последователей тренда, потому что он отслеживает не только тренд, но и все, что происходит во время тренда, что позволяет ему предлагать гораздо больше торговых возможностей, чем другие индикаторы.

Краткое введение

  • Установленные тренды предлагают десятки торговых возможностей, но большинство трендовых торговых индикаторов полностью их игнорируют и оставляют трейдера совершенно не информированным о том, что делает рынок во время тренда!
  • Индикатор среднего тренда информирует только об изменениях тренда, но этого просто недостаточно для достижения исключительной прибыли.

Индикатор Trend Trading отображает в 20 раз больше сделок, чем индикатор среднего тренда, потому что он обращает внимание на то, что известно как время рынка. Он отображает не только текущую рыночную тенденцию, но также откаты, пробои внутренних баров и коррекции . Это позволяет вам рассчитывать на тренд сразу после того, как произошел откат, безопасно пирамидально позиционируя позиции, используя прорывы внутренних баров, а также находить потенциальные развороты, известные как коррекции.

Рекомендации для начинающих трейдеров

  • Индикатор Pz Trend Trading имеет бесконечные возможности, но начинающим трейдерам следует сосредоточиться на самых простых торговых настройках, а именно: (2) откатах и (3) прорывах внутренних баров, поскольку они рассчитываются с учетом преобладающего направления тренда и недавнего движения цены. Более 85% откатов и прорывов прибыльны, а некоторые из них превращаются в действительно длинные прибыльные сделки.

Рекомендации для начинающих трейдеров

  • Индикатор Trend Trading имеет бесконечные возможности, но начинающим трейдерам следует сосредоточиться на самых простых торговых настройках, а именно: (2) откатах и (3) прорывах внутренних баров, поскольку они рассчитываются с учетом преобладающего направления тренда и недавнего движения цены. Более 85% откатов и прорывов прибыльны, а некоторые из них превращаются в действительно длинные прибыльные сделки.
  • Начинающим трейдерам также следует избегать попыток выйти из сделки в наилучшей возможной точке и сократить управление позицией до простого трейлинг-стопа с использованием основной линии индикатора. Это устраняет место для беспокойства или ошибочных суждений и позволяет получать прибыль. Начинающие трейдеры должны придерживаться этой стратегии управления позициями, пока они не смогут удобно расположить позиции.
  • Начинающие трейдеры должны торговать ежедневными и еженедельными графиками, чтобы избежать резких колебаний волатильности или платить возмутительные брокерские комиссионные по сравнению с потенциальной прибылью своих сделок. Рынок во многом похож на видеоигру, которая имеет разные уровни. Начинающие трейдеры не должны торговать на графиках H4, пока они не станут постоянно прибыльными на графиках D1 и W1.

Понимание торговых настроек

  • Рынок развивается и вращается вокруг разных стадий, имея в виду только одну цель: гонка вверх или вниз с как можно меньшим количеством участников. Рынок всегда будет восстанавливаться и пытаться остановить вас, проверяя вашу выносливость и дисциплину снова и снова. Цена в конечном итоге непредсказуема.
  • Вот почему вам нужны разные торговые настройки: чтобы правильно реагировать на то, что делает рынок.
  • Ключом к прибыльной торговле является адаптивность. Изучив четыре торговые настройки, вы сможете торговать на любом рынке на любой стадии, не оставаясь в стороне, пока рынок сильно движется.
  • Следующий график иллюстрирует все торговые настройки и различные рыночные этапы, на которых они происходят.

Изменения тренда

  • Смена тренда происходит, когда рынок меняет свое направление.
  • Изменения тренда отображаются на графике с помощью цветных кружков с номером один на нем.
  • Синий (1) сигнализирует о начале восходящего тренда, а красный (1) сигнализирует о начале нисходящего тренда.
  • Изменения тренда не являются результатом оценки недавнего ценового действия, что означает, что у торговой настройки нет времени.
  • Если вы используете этот индикатор правильно, к моменту смены тренда вы уже будете на рынке (см. Исправления ниже).

Откаты

  • Когда тренд находится в движении, рынок колеблется вверх и вниз, поскольку выигрышные руки приносят прибыль, и другие участники рынка попадают на рынок.
  • Откат – это откат во время тренда, который представляет собой хорошую возможность покупки, обычно вызванную тем, что крупные игроки получают прибыль и продают свои акции. Е
  • Если рынок возобновит рост после отката, индикатор отобразит оранжевый график (2) на графике.
  • Откаты – это очень хорошие торговые возможности, но они могут не иметь места при очень сильных тенденциях.

Прорывы внутри бара (ов)

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  • Внутренний столбец – это столбец (или ряд столбцов), который полностью находится в пределах диапазона предыдущего столбца, известного как исходный столбец.
  • Прорыв внутреннего бара (или баров) представляет собой наиболее прибыльную торговую установку во время установленных трендов, потому что отношение риска к прибыли чрезвычайно велико: это точка входа с высокой вероятностью, которая обеспечивает трейдерам хорошее соотношение риска к прибыли, так как обычно оно требует меньшие стоп-лоссы, чем другие настройки.
  • Индикатор построит график (3), когда произойдет прорыв внутреннего бара (или баров), и это отличная возможность сесть на тренд или безопасно построить свои позиции.

Trend indicators for profitable trading in options

Among all the tools to help you trade on the binary options market and Forex trend indicators allow to make most orders without loss, based on the received signals.

If trading in the trend direction, most of the trades will close in profit than in loss. This rule is verified by years of practice, on all assets.

In this article we will discuss the concept of trend and how it is applied to markets of binary options. Also give analysis of the most famous trend indicators for binary options market.

Trend indicator Scalper MA

How to identify a trend and use them effectively in trading

The main problem with most traders is that they, not being able to determine the trend in the market, open trades. And then wonder why the deposit is merged.

Note that trading in binary options is based on the same principles as Forex.

Binary Options strategies work the same way as Forex. Apart from profitable trading tactics is important not to forget about the rules of money management, as well as the likely risks.

No need to think that binary options is a game where you must guess the direction of movement of the asset. You should not trade for all the money you have.

In order for deals to be closed with money in most of the cases, you need to properly conduct fundamental and technical analysis of current market.

Quotes are moving in the market at first glance chaotic, but this is the only way, it seems. In fact, price makes the same figures of technical analysis. This allows you to look at history, where in the future it may move the price.

If you look at the chart of any currency pair, it is immediately obvious where the price is moving up or down or is on sideways. The price movement up and down is called ascending and descending trend or like some traders call— trend.

So, the market may have three-state rates:

  • downtrend (bearish) – price movement for a long time is down;
  • uptrend (bullish) – price movement for a long period of time is up;
  • sideways or flat (the price is moving within a border up and down).

Upward and downward trend

Description of the indicator

So, we gradually came to the question of determining the trend using the indicator. If to trade, not knowing what trend is in the market – the deposit is doomed to sink.

The first thing you need to do to profitably trade with binary options is to open a trading terminal Meta Trader 4. Then, choose a currency pair where you will enter into potentially profitable deals.

For example, select the currency pair GBP/USD.

Further we are interested in the installation of trend indicator for profitable trading in options. To manage this is very simple.

Turn on the indicator MA

Go to indicators, then “Trend”, then we need to choose the indicator called Moving Average.

Below are two screenshots with the settings of slow and fast MA:

The correct settings of slow MA

Next we need to choose the trend indicator MA, however, set a period of 5.

The correct settings quick MA

For determining of the trend in the market it is enough to set the two moving averages MA (Moving Average):

  • one with a period of 5;
  • the second with a period of 20.

Fast and slow MA

Here is how two moving averages set on the chart look.

The larger the timeframe, the more precise indicator of trend.

Confirmation of the downtrend

If the fast MA crosses slow one down and two candles closed below the two MA, this means that the market has the downtrend.

Example of downtrend

Example of downtrend

Confirmation of the uptrend

In the case where the fast turquoise line crosses the slow (red) from the bottom up, and two candles closed above the two MA, then we can say that this is certainty the uptrend.

Example of uptrend

The important aspects of trading by trend with binary options

The main thing to remember, you should never trade against the tendency, that is, trend.
If you see that on the D1 chart there is the uptrend, all transactions need only to be opened on the CALL, not PUT. Even when it seems that the trend here is about to unfold.

If you at the same decide to trade on the timeframe M5-M15, be careful, as due to market noise, you can quickly lose your deposit.

Downward (bearish) trend, has always been more powerful, but however, it is short-term, what can not be said about the upward (bullish) trend.

It is easy to confuse a downtrend correction. The price, which goes slightly in the opposite direction from the main trend is called corrective movement.

The trend can be considered valid only when after crossing the slow moving average MA by fast MA second consecutive candle opens in the direction of the trend.

Always remember these rules, and the trade will be profitable.

Analysis of key trend indicators

In fact, the trend indicators for binary options are developed in different interpretations and types. Let us analyze the most popular indicators, showing a trend in the market. This will help to determine for yourself the best indicator for trading binary options.

Below we will present analysis of the best (by our view) indicators of the trend for BO and Forex market, namely:

  1. Scalper MA.
  2. Stepma.
  3. MTF Candles.
  4. 4 ma strength.
  5. Bbands stop.
  6. OsMA.

Description of Scalper MA indicator

An example Scalper MA indicator on the chart

Trend Scalper MA indicator is used by many scalpers in the Forex market. Hence its name. However, it is also applicable in the options market.

This indicator can be considered as a complete trading strategy. As it shows the trend of price movement in one direction or another. Based on this you can buy the options of PUT and CALL. The presence of a dial indicator Scalper MA further simplifies the process of determining the direction of the price. As you could understand, blue line of this indicator suggests that the trend is bullish, the red indicate a bearish trend.

To increase the signal quality, it is recommended to enter immediately after the signal, and after 7 candles after the arrow appears, up or down. Expiration: 5-6 candles.

Visually it looks this way:

PUT signal by Scalper MA indicator

The advantages of Scalper MA trading indicator

This trend indicator has a number of advantages:

  • accurately shows the trend in the market;
  • has sound alert after the appearance of the red and blue arrows, so the trader do not have to constantly stare at the monitor;
  • it is not redrawn, it shows the direction of the current price.

Disadvantages of Scalper MA indicator

As with all Forex indicators Scalper MA also has its drawbacks. Among the disadvantages of working with it should be noted:

  • a lot of false signals during flat;
  • after a long signal candle a long pullback is possible, but not the fact.

Description of Stepma indicator

Stepma indicator on the chart

This indicator excellently monitors the trend. Indicator Stepma is applicable absolutely to any asset. It is better to trade with the timeframe of H1 and above. It is easy to understand its signals: if the price is under the indicator line, then trend is bearish, and while the price is above the indicator line – the trend is bullish.

The advantages of trading with Stepma indicator

  • The indicator is easy to use;
  • it is not redrawn;
  • shows a clear trend.

Disadvantages of trading with Stepma indicator

  • The long-bodied candles that change the trend, sometimes, can dramatically roll back in the opposite direction.

Description of MTF Candles indicator

MTF Candles indicator on the chart

This trend indicator shows the trader the true trend by its bands. Blue bar indicates a bullish trend, the white – bearish trend.

Advantages of MTF Candles indicator

  • Demonstrates the current trend;
  • it is not redrawn;

Disadvantages of MTF Candles indicator

  • Ineffective on flat areas.

Descripton of 4 MA Strength indicator

4 MA Strength indicator on the chart

If the bars of the histogram are directed upwards and turned green, in this case, the market has obvious trend, if the columns of the indicator look down and stained a crimson color, then the market is flat. The strength of the trend can be understood by the height of the bars of the histogram. The bigger they are, the stronger the trend.

Advantages of 4 MA Strength indicator

  • Accurately shows whether the market has trend;
  • detects the flat.

Disadvantages of 4 MA Strength indicator

  • Not showing what trend the market has (an upward or downward).

Description of Bbands stop indicator

Bbands stop indicator on the chart

Two-tone dots indicate bullish and bearish trend. The indicator Bbands stop can be considered a modification of the standard indicator Bollinger Bands. It is present in each MT 4 terminal. If green – market has trend. The appearance of orange dots indicates flat.

Advantages of Bbands stop

  • Indicates the presence of a clear trend;
  • shows flat price movement;
  • doesn’t draw values.

Disadvantages of Bbands stop

  • Does not demonstrate what the market trend is (bullish or bearish);

Description of OsMA indicator

OsMA indicator on the chart

Standard OsMA indicator represents the histogram of the columns located in the basement of the terminal. Best signals for this trend indicator can better be seen on higher timeframes. If the histogram bar is below zero, this means that the market has the downward trend. Conversely, upstream from the zero column indicator indicates an upward trend.

Advantages of OsMA indicator

  • It is not redrawn;
  • shows rising bullish and bearish trend;
  • no lag.

Disadvantages of OsMA indicator

  • A lot of false signals on flat market, especially in narrow range.

Summary. It is not easy to know your power.

So, we have considered different trend indicators for binary options. Some of them are worse and some better. It all depends on the preferences of the trader. Also we have considered the pros and cons of trend indicators for the binary options market that will allow the trader to identify which of them should be applied in trading.

Trend Trading vs Mean Reversion Trading — Which is better?

You often hear traders quarreling about trend trading vs mean reversion trading. I’m going to help settle the dispute. The two trading styles are often pitted against each other, with no consideration of finer details. Read on for those finer details.

In order to understand what strategies can be used in each, let us have a detailed look into the key differences in markets.

What is a trend?

Many people broadly consider a trending market to be one with which the market structure has higher highs and higher lows (and vice versa). This can also be defined by the use of trend lines, though these may not be helpful depending on which candlestick chart you use.

A statistic which is often thrown around — ‘markets trend around 30% of the time’. As far as we are concerned, this statistic has no basis in reality. I have never seen proof of the claim and believe it to be extremely difficult to measure. It is a decent enough guideline, but must be taken with a pinch of salt.

What are the characteristics of a trend trading strategy?

Longer hold time — trend trading usually requires the trade to play out over a relatively longer time. This is due to the nature of a trend, building value in a single direction.

Higher reward-risk ratio — often the trader will make multiples of gain for every unit of risk taken. An old adage is to ‘ride the trend’. If you believe a market is uni-directional, you should be trying to capture the bulk of the move and let your winners run.

Lower winrate — by virtue of having a larger average payoff on your trades, your winrate will decrease. The inverse relationship between reward-risk and winrate means that trend followers will often have less than 40% wins. Some trend followers have an even lower winrate, yet still turn a profit.

Mean-reverting markets:

What is a range?

I would define a range as being an area of price consolidation, with relatively clear upper and lower boundaries. Visually, a range will look much like a ‘box’, a rectangle will be able to be drawn around it.

If we’re going off of the conventional wisdom, markets range for 70% of the time. This may mean that there is more opportunity in the mean reversion trading space.

What are the characteristics of a mean reversion trading strategy?

Shorter hold time — due to the ‘snap back’ nature of mean reversion trades. Mean reversion traders often like to take advantage of short-term corrections back towards the mean.

Lower reward-risk ratio — prices stepping out of line from their mean usually won’t offer a huge number of ticks to be captured. This is in contrast to trend trading.

Higher winrate — due to the inverse relationship with reward-risk. This means that mean reversion traders will often have much higher winrates than trend traders, upwards of 60% for the most part.

Trend trading strategy

A commonly used trend trading strategy is the breakout. A simplified example of this would be watching a range for breakouts and getting on board when the new trend starts. This strategy was used by Nicolas Darvas, which he details in his book ‘How I Made $2,000,000 in the Stock Market’. Ignoring the very ‘instagram trader’ title, there are some very useful lessons on trend following.

Darvas would often enter on a stop order as we break the current trading range. As price breaks the top of the ‘box’, as Darvas called them, the trend follower can enter the market and assume a long position. This is just one way to get on board these market moves.

A more cautious trend follower could get on board at the close of the breakout candle. This could protect against a ‘false breakout’ or ‘false start’ to the trend.

Ideal market type for trend trading

A tricky question. It depends entirely on where and when you want to get into the trade. As discussed previously, some trend traders opt to get in as the trend is starting. On the other hand, many traders will wait for a more mature trend and enter the market later.

Most trend traders will want to see a clear directional move for as long as possible. This is the nature of trend trading — direction. This is often defined by moving averages having a slope to them, trendlines facing a particular direction, higher highs and lows, or a simple visual check.

The clear direction enables many trend trades to put their stop-losses beneath swing lows, or at an ATR measurement below the high water mark or a trendline.

Advantages of trend trading

Firstly, attempting to enter a trend at the start of the move means that you’re not going to miss any of the trend. You are getting in as the trend starts, especially if you use the trend trading strategy I outlined. This is useful as it guarantees you’ll be involved in at least the first portion of a trend move.

The other advantage to getting in at the start is exactly that: you’re in at the very start. Trends can last for years and you bought at the bottom, that is great! This should enable you to get the majority of the trend.

Trend traders often boast that their entries don’t need to be pinpoint precise. They are quite right in this respect. Trend trading doesn’t always require the perfect entry, you know where the trend is headed after all. Your entry has less importance than how you manage the trade to capture the most upside.

You can also afford to be less precise because your winners will be multiple times bigger than your losers. The art of trend trading makes this a requirement. If your average winner is four times that of your average losers, trend trading gives you 4 chances to be wrong for every winner. Of course this is just to break even, but the point holds true.

Disadvantages of trend trading

If using the simple strategy outlined by Darvas and myself in this article, you may find yourself at the mercy of ‘false breaks’. This is when you enter on a breakout, but price quickly dips back into the consolidation. Trend traders want to avoid this. It’s akin to a false start in a race, wasted energy and wasted capital. However, some traders have creative ways to counter false breaks.

Although not an essential when trading with the trend, some trend traders can be sloppy with their entries into the market. Sometimes trend entries can be improved upon heavily. Instead of entering on the breakout, why not wait for a pullback? Why not try to enter before the breakout even occurs? These can be things to think about if a trend trader is seeing a lot of drawdown on their entry.

My main qualm with trend trading is the low winrate. Trading with high reward-to-risk can be useful, but the low winrate that comes with it can wreak havoc on an equity curve. Lower winrates come with higher drawdown, this is mathematical fact. What this drawdown can do is make variance incredibly high. Missing a handful of trades can make or break a trend trading system. In addition to this, the psychological hurdle of seeing 10 losers in a row is incredibly large. This is without mentioning the difficulty in forward-projecting results. With a higher winrate trading strategy, you have a much better idea of what to expect in the future.

Mean reversion trading strategy

Range trading strategy can be slightly more difficult to design than trend trading. Mean reversion trading strategies usually involve selling into up moves and buying into down moves. This is in order to take advantage of an overreaction and assumes that price will return to it’s longer term average.

One such strategy is the SFP. Without going into too much detail, this strategy requires a ‘peek’ above or below swing points. You then assume a position for reversion to the mean.

Ideal market type

Mean reversion trades often require price consolidation, at least so that you can determine the mean price effectively. Rangebound markets are the most suited, due to there being a clear range. We then expect price to reject the boundaries of the the range and reverse towards the centre.

Since there is a broad array of mean reversion trading strategies, the market types suitable can be broad.

Advantages of mean reversion trading

Going off of the ‘markets range 70% of the time’ rule, we would potentially get more opportunities with a mean reversion trading strategy. The amount of time spent in a ranging state will mean more reversion to the mean, an advantage over trend trading.

All things considered, mean reversion trades also have a lower average hold time than their trend trading alternatives. The reduced time in market could act as a safeguard against external shocks. Mean reversion strategies have a lower average hold time than trend trading due to the in-and-out nature of snaps back to the mean. These trades aim to take a small chunk of the correction back to average value.

Mean reversion trading strategies usually benefit from shorter drawdown periods. Higher winrates are arguably the main benefit of mean reversion trading. These give you the ability to have shorter drawdown periods and go through longer winning streaks. Reducing drawdown gives a huge advantage due to your psychology not being affected, you can predict future returns better and missed trades aren’t as damaging to your bottom line.

Disadvantages of mean reversion trading

Missed trades can be a huge factor in determining the success of mean reversion trading strategy. The more precise nature of entering market for a return to the mean can cause you to miss fills. If entering on limit orders, price will not always stretch far enough for you to get on board.

Another disadvantage to mean reversion trading is actually determining the mean. Is it a visual representation? A moving average? Which period moving average? These factors must be taken into consideration in order to construct a trading strategy effectively.

Finally, not all traders are comfortable with a small pay-off ratio on their trades. Most mean reversion trading strategies have near equal average winners and average losers. Often you will find that your average winning trade is smaller than your average losing trade! Due to conventional thoughts such as ‘always trade with a 2:1 reward-risk ratio’, traders often reject strategies with a lower average payoff. This is despite the inverse relationship between average R and winrate which almost guarantees that your win percentage will increase.

A combination of trend trading and mean reversion trading?

While the two styles are relatively distinct in their own right, you may be able to combine the two for even great effect. Let’s take a look at a simple example strategy:

  • Use a 200MA as a trend filter (above the moving average is an uptrend)
  • Enter long (on next day open) when the 2-day Cumulative RSI value is less than 33
  • Exit (on next day open) when 2-day RSI is above 20

Using this very simple strategy yields very impressive results in the S&P500. You could think of this strategy as both trend trading and mean reversion trading. We must be above a long-term average, signalling an uptrend. However, we buy the market on aggressive downwards moves within the trend. We do this to capitalise on mean reversion within a trend. Here is the equity curve for this particular strategy:

This strategy has an approx 80% win rate, akin to many mean reversion strategies. However, it also has average winners just over half the size of it’s average loser. This is simply an example of how both trends and mean reversion can be used in tandem to create trading strategies.

Wrapping up

Personally, I prefer to mix the two trading styles. However, I lean towards mean reversion more than trend trading. Finding a way to combine both is a genuine solution, if you find yourself on a particular side of the argument. Avoiding dogmatic thought such as ‘the trend is your friend’ and staying flexible will never hinder you when crafting strategies.

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