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There are a lot of trading strategies that traders use these days. Some strategies rely on certain indicators, candlestick patterns, moving averages, oscillators, and so on. While these things can indeed provide you with a better view of what’s happening on a chart, and the possible future of the market, you’ll have to make sure that you’re using the right combination of tools and indicators. Having too many indicators and tools on a chart creates too much noise and creates confusion that makes trading decisions inaccurate. When it comes to the right combination of tools and indicators, going with just a few makes charts much easier to read. Among the easy-to-read and interpret strategies today is the 5-minute trading strategy for Binary Options trading. It only makes use of two indicators on the chart – the RSI and the EMA.
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What is the 5-Minute Binary Options Strategy?
The 5-Minute Binary Options Strategy is a strategy used mostly by scalpers or day traders. This is for the reason that it makes use of a short frame. While it’s using a fast time frame, it also offers the fastest rate of return for successful trades. Although this strategy aims for positive results in the 5-minute time frame, it can also be used on lesser time frames such as 2-minute timeframe, or 1-minute timeframe.
This strategy uses the RSI14 as an oscillator and the EMA200 as a measuring indicator for the price. As an additional confirmation for the direction of the price, this strategy also incorporates the engulfing pattern. The strategy assumes that whenever a price is above the EMA200 with RSI that is close to 70, with a bullish engulfing candlestick pattern, the next direction would be upward. On the other hand, this strategy also assumes that whenever the price is below the EMA200, with RSI close to 30 while having a bearish engulfing candlestick pattern, the price is expected to move in a downward direction. Of course, there will also be other factors involved in this strategy such as the volatility of a stock, fundamentals, and other factors. Nevertheless, more and more traders are incorporating this strategy in the system due to its good win rate.
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How it works?
First of all, the time frame should be no more than 5 minutes. To set the time frame on Pocket Option, simply choose the candlestick pattern icon on the upper left corner of the trading dashboard – next to the asset code. Choose M5 for 5 minutes, M3 for 3 minutes, and so on. The time of expiration for every trade should also match the chosen time frame. To set the time for expiration for every trade, go to the right corner of the trading dashboard and set the time.
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