Binary Option Trading using the ADX and EMA Cross System
This system is based on two indicators only and offers consistent profits. It is called the ADX and EMA Cross System and it is an uncomplicated system suitable even for amateur traders. This system on reflection appears suitable for binary option trading as well. The system is based on an average directional movement index (ADX) set on period 14 and having the EMA’s set at two periods (3 and 10). It is important to have an idea of ADX to give you some perspective, but there is no need to go in depth with your studies of it.
The cross system strategy is fairly simple and it is best if you use indicators that are easy to read. Set your EMA 3 and your +DI to a single colour and your EMA 10 and -DI to a second colour. This allows you to see exactly where one colour crosses the other. Say you set the first 2 to red and the second 2 to green, when green crosses red from underneath, it is possibly a call opportunity and when the opposite happens, it is a put signal. Check both your ADX and your EMAs for the cross to be sure the signal is valid. This strategy has been used successfully for trading using daily charts and works well with currency pairs and stocks. Check your candlestick patterns to ensure they have closed before you confirm your signals.
When the ADX turns bullish and is confirmed by the moving average crossover becoming bullish as well, this will indicate a call signal. Make sure the current candle has closed and that the EMA and ADX lines are fixed where you would want them to be. The opposite works exactly the same. The ADX will become bearish and the moving average crossover will do the same, this is then a Put signal. Wait for candle closure to double check the lines of the EMA and ADX are fixed in the right direction before acting on the signal. Due to this being a forex strategy, there is no information on expiries. While Arsalan suggests working on the basis of daily charts, it may be possible to try the strategy on M30 and above when working on binaries.
Pros and Cons of using the ADX and EMA Cross System
This strategy appears to work quite well and the ADX is a reliable, strong indicator to work with. When using the colour matching system, it is easy for even an amateur to use the system. This specific strategy has been tried and tested by its creator and has made profits consistently. When used on time frames that are higher, the signals are even more reliable.
The charts are neat and tidy and there aren’t any unusual or complicated rules to take in to account when working with the system. Watching toe two colours and noting their cross over points is enough to help you have a profitable strategy. If you are prepared to put in some effort, this strategy could work for you too. Perhaps do a test run at a higher time frame (perhaps daily to start) until you get used to the system. Thereafter you could perhaps look at lower time frames such as the M30.
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