Category Archives: stochastic

Investoo Signals

Investoo Signals Good For NADEX Traders

Investoo.com is a website with a vast library of educational trading videos, indicators and signal systems good for a variety of trading styles. The service is based in England and registered with the FCS, number 82888880. A simple registration will get you access to the introductory level training videos while a one time uprage of $100 will get you the full package. Included are over 300 hours of videos, organized into several courses targeting forex, binary options and CFD’s as well as technical aspects such as candle sticks and strategy. Also included are 3 indicators for MT4 based on PSAR, MACD and Stochastic and all capable of generating signal alerts.

NADEX Binary Options Signals

The goal of the website is to teach beginners how to trade, but they go far beyond that. Traders of any level can learn something from the videos and the indicator signals are a valuable trading tool. They produce easy to follow entry and exit signals that go hand in hand with the video lessons.

The Investoo.com indicators are suitable for trading NADEX binary options. They are MT4 indicator plug-ins based on three standard indicators; Parabolic Stop and Reverse, MACD and what they call the binary options indicator but is really stochastic. The indicators track prices and generate signals as they meet preset criteria, when used along with strategy and confirming/coincident indicators they perform pretty well. The caveat, and the website does not sugar coat it, is that false signals do occur, they offer no guarantees of wild success.
Investoo Video Courses
This is where the videos come in handy, they teach different methods of picking the good signals and weeding out false signals to help ensure win rates better than break even. At least a basic understanding of trend along with the use of support and resistance levels is what I suggest.

In order to use them with NADEX you will have to also need to use MT4, if you don’t have it it is an easy download as well. Once you download the indicators adjust to the time frame you like, the indicator will appear at the bottom and signals will generate in real time. In order to use them to their fullest potential strategy is a must, simply following them blindly will not produce good results. Expiry should be chosen based on the time frame of chart you are using. I suggest at minimum 30 minute candle sticks, I prefer one hour and one day for my trading.


Vist Investo.Com Now For Binary Options Signals

NADEX Binary Options Strategies

Why NADEX Is Best For US Traders

walking the dog

Stochastic Trend Following Strategy

Stochastics is one of my top indicators. It is useful for making several different types of technical analysis, the one I am going to discuss today is trend following signals.  Trend following signals are one of the best types of signals that this indicator gives and one that can be highly profitable for binary traders.  I prefer to trade trend following signals because they are more reliable. This may sound redundant as most trading educators will tell you that “the trend is your friend and you should trade with your friend”. Well, it is and it is true. The power of the trend is without equal in trading.

What Is Stochastic

Stochastic is a unique indicator in that it assumes that the shorter term movements of an asset are random and cannot be predicted.  It is based on random walk theory and Brownian motion. Whereas the short term fluctuations are random, over time those random movements can be plotted in a way that predicts overall direction. It’s like this; Imagine a man walking a dog, the dog may pull the man side to side as it moves on the leash but the man controls the over all direction the two are moving in. In this analogy the dog is the short term random day to day movement of the market where the man represents the longer term trend. No matter how strong the day to day gyrations of the market (the dog) pull against the trend (the man), the trend still leads the market higher.

  • Stochastic oscillator uses two lines, %K and %D. The %K line is calculated and then smoothed with a moving average to produce the %D line. Signals can be taken in a variety of ways including crossovers, convergences and divergences. Click here for more on using stochastic to trade binary options.

stochastic dog and man

What Is The Trend?

The trend is the general direction of the market. It will either be up, down or sideways.  Sometimes an asset will trend strongly, that is it will visibly move higher on your charts. Sometimes it will trend weakly, becoming visible as different technical analysis techniques are applied. I will describe two methods of determining trend that can be used with this strategy. First will be the visual method, for the second I will tell you how to use stochastic and time frame to determine trend.

Visual Trend Determination – Visual trend determination can be done with the naked eye. Two things that make it easier is experience and a strong trend. Otherwise you will need to use trend lines. Trend lines connect consecutive peaks and troughs on an asset chart. A series of higher peaks and troughs equals an uptrend, a series of lower peaks and troughs a downtrend.  If the peaks and troughs do not trend higher or lower then the trend is said to be sideways or range bound.  Stochastic trend following signals work better in an up or downtrend but can also be used in a sideways market.

Using Stochastic To Find Trend – Stochastic can be used to find or to confirm trends. Stochastic confirms a trend when it is making higher peaks along with an asset that is making higher peaks, or lower peaks as the case may be.  If stochastic is confirming a trend you can take a signal whenever stochastic is pointing in the direction of the trend. This is what I mean; if you have a visual up trend and stochastic is confirming it you can take a signal whenever stochastic makes a new trough and then points up.

  • A series of higher peaks and troughs, or lower peaks and troughs, indicates trend the same as they would if presented on the price chart itself. Notice on the right hand chart below how the %D line makes a series of higher troughs coincident with the asset.
Using stochastic to find trend.

Using stochastic to find trend.

Using Time Frames For Trend – You can also use different time frames to determine trends with stochastic.  To do this you will need to use two different time frame charts, I like to use the weekly/daily or daily/hourly combination depending on the asset. Weekly/daily works well with stocks and indices while I prefer the shorter time frame for currency and commodities. This is how it works; stochastic on the longer term chart sets trend, stochastic on the shorter term chart gives the signal. If, on the weekly chart, stochastic is pointing up then you would trade bullish signals on the daily charts. Or if using the daily/hourly combo the stochastic on the daily would set trend while signals would come from the hourly chart.

  • Match stochastic in different time frames to determine trend. If stochastic is pointing or trending up in a longer time frame then bullish stochastic signals can be taken in a shorter time frame. Look at the chart above. On the left hand side, weekly data, the asset formed a bottom between November-February with a bullish stochastic crossover setting the trend. On the right hand side, daily data, bullish signals are taken for short term trades.

Stochastic Trend Following Signals

Weak Signal/Strong Signal – This technique will give off at least three signals that I regularly follow. The weak signal, the strong signal and the continuation signal. The weak signal is always the first one you will see. It takes a lot of practice to be able to capture this signal and profit consistently but the good news is, it is almost always followed by the strong signal. The weak signal is when the indicator first changes direction to return to the underlying trend.  This signal usually takes longer to develop into profits so I use longer expiry with this one. A signal on the daily charts may take 1-3 weeks to move into the money whereas a signal on the hourly charts may take a few days or a week. For the daily signal, use a one month expiry, for the hourly use one week.

usd-jpy strong stochastic signal

The Strong Signal – The strong signal comes after the weak signal, in fact, there is no strong signal without the weak signal. This is good news because if you did not catch the weak signal you can still get in with the strong one. The strong signal occurs after the market moves on the weak signal, retests support and then moves higher again. This causes a comparable dip/retest on the indicator as shown in the picture below.  Strong signals usually develop into profitability much faster so I use a much shorter expiry. For signals on the daily charts one week is usually perfect while on the hourly charts end of day or end of tomorrow works very well.

strong stochastic signal

  • The strong signal always happens after the weak signal. The strong signal confirms support and is usually accompanied by a coincident signal in the asset. Look at the chart above. At point 1 the weak signal is given. At point 2 the strong signal is given, notice how at point 2A the asset is making a similar confirmation of support and then moves higher.

The Continuation Signal – Once the asset is trending on the strong signal it is time to look out for possible continuation signals. This will be a dip or ripple in the stochastic indicator similar to the strong signal but occurring after the move has begun.  It could also occur after a near term pullback. Look at the chart above.  After the strong signal has fired the asset moves higher until it reaches over bought status. The asset keeps trending higher but the %D crosses below and then back above the %K line forming a continuation signal.

  • Once the strong signal has been given and the asset is moving higher any time that the %D dips or crosses below the %K line and then points back up can be considered a continuation signal. If both lines are pointing in the same direction (up in an uptrend, down in a downtrend) the signal is stronger than if not. Look at the chart above. At point 3 the asset has dipped below the %D and then crossed back above creating a continuation signal.

Support and Resistance With Stochastic

Support and resistance are great additions to this strategy. For one, if your signal is developing while the asset is testing or confirming either support or resistance it is a much strong signal than if not. For another, if your signal fires and there is a resistance level close by it may adversely affect your trade. Knowing where these areas are in relation to the asset price and stochastic is a really good way to weed out false signals and potentially bad trades.

  • I use support and resistance with stochastic to create strong signals. I draw my own lines and also use the Fibonacci Tool available with most charting packages. If my stochastic signal forms and confirms a support or resistance it is a stronger signal than if it forms on its own. Likewise, it takes more than an asset to reach or even bounce off a support or resistance line to create a strong signal.  If you look back at all of the charts I have presented here today you will notice that each of the strong signals was confirming support of some kind. Support could be a moving average, support line, trend line, Fibonacci, Bollinger Band or many many other forms of technical analysis.

I have another article about using support and resistance in trading. It is a great addition to this technique and one I highly recommend.

This binary options strategy works

Okane’s 15-30 Minute Strategy

A Binary Options Strategy That Works

“With no knowledge of trading I spent months studying, I read everything that I could find and tested various indicators and strategies. Finally I’ve put together everything that I’ve learned into a strategy that if followed correctly should keep you profitable. It’s important to see the whole picture and remind
yourself of what you are trying to achieve with the strategy you are currently using.

As a newbie this is difficult, suddenly you no longer know what you are looking for and you are simply lost! That’s when you start losing. So keep in mind what you are looking for when you are analyzing your charts. Hopefully with my strategy getting confirmations and spotting a possible trade is simplified. And that is the whole point!”

≈ Okane ≈

Mr. Okane is one my fellow traders over at Communitraders. He first described this strategy for trading 15-30 minute binary options in a forum post that has become on of my favorite on the site. The strategy is based on the RSI indicator, uses two time frames and is trend following.  Originally intended for taking signals on charts of 5 minute candle sticks I think it can also be used with success in longer time frames as well. Okane is trading CySEC style digital options but this strategy will also work well with Nadex and 0-100 options. This is how it works.

The Trading Tools

  • Chart Time Frames – This strategy uses two different chart time frames; 15 minute and 5 minute. The longer term is for determining trends and setting trade direction, the shorter term is for pin pointing entry.
  • Moving averages – This strategy uses three moving averages to help determine the trend. The moving averages are used on the longer term 15 minute chart and are the 50 bar, 21 bar and 5 bar Exponential Moving Averages. 
  • Support and Resistance – This strategy uses support and resistance lines. Lines should be drawn any where and in any time frame that they appear to be important. This tool is not restricted to the 15 and 5 minute charts. Okane uses a support and resistance tool that automatically seeks out potential areas. You could also use Fibonacci Retracements.
  • RSI(4) – This strategy uses RSI (Relative Strenght Index) to pin point entry. It is a fast RSI, set to 4 bars, and is only used to produce signals that follow the underlying trend as set on the 15 minute chart. Signals are only taken on the 5 minute charts.
  • Candlesticks – This strategy uses candle stick charts in both time frame. The candlesticks are used to help identify trends and entry points.
  • Stochastic – This strategy uses stochastic as a coincident indicator. Okane uses it to help determine underlying trend and to confirm his entries and exits.

The Strategy

For this strategy you will start with charts of 15 minute candlesticks. Of course, I recommend using a chart of daily or at least hourly candlesticks first to draw some support and resistance lines first. Once that is done begin with the 15 minute charts, if the current price is near one of the support/resistance lines it could be a negating factor for any signals you get in that direction. Use the moving averages to determine the trend in this time frame. If the shorter term averages are above the longer term 50 bar moving average then the trend is up, if they are below it then the trend is down. Also look for higher highs/higher lows in the case of an up trend and lower highs/lower lows in the case of a down trend.  It is best if both conditions are met as Okane does not recommend using this strategy in a sideways trending market.

Chart of 15 minute candlesticks

Chart of 15 minute candlesticks

Once you have identified a clear trend it is time to wait for the signal set up. The set up begins when the RSI reaches over bought or over sold levels. In the original posting a bearish example is given but this strategy works equally well in both directions. So, assuming a down trend, wait for the RSI to reach over bought. This will happen when the asset price bounces higher before resuming the current trend. Once RSI reaches over bought levels it is time to move down to the 5 minute charts to pin point an entry.

On the 5 minute chart you will need to wait for a confirming signal. This can be a variety of things but will be a signal continuing the underlying trend on the longer term 15 minute chart. Let’s look at the buy signal in the example below. Just prior to the signal the chart is bullish but prices are extended, waiting for a pull back is recommended. Once prices pull back to the moving averages a series of candlesticks confirms support and signals an entry. Once an entry is confirmed binary options with 15 to 30 minutes of expiry are used.

Chart of 5 minute candlesticks

Chart of 5 minute candlesticks

Before entering a trade you need to take support/resistance into consideration. If the asset’s price is close to S/R and your signal is in the same direction you may need to await a break through before opening a position. If the asset prices have already broken through S/R or are in between two S/R levels then trend following signals have a high rate of success. Stochastic is also used at this point. A trade may be indicated by RSI

Some Words Of Caution

This strategy is based on very short term charts. Even though currency pairs are very active in these time frames it is still harder to predict than longer time frames like hourly or daily movements.  You have to be really quick to catch some of the trades. News events can also have a big impact on this strategy and should be avoided until you get a handle on using it. In addition, Bogdan (one of the other Pros at BOTS.com) advises using a longer RSI than the (4) suggested in order to smooth out the line and help reduce false signals. Okane himself will caution you to use stochastic as a coincident indicator when timing entries. RSI may be signalling you to open a position but if stochastic says the move is already played out then you should stay away. An example would be is RSI indicated buying a call position but stochastic was already overbought.

Bonuses To Using Okane’s Strategy

  • Currency pairs with like denominations can also produce similar trades. For example, if a trade on the USD/JPY is working then a trade on the EUR/JPY may work as well. Likewise, if a trade on the USD/JPY is working then the opposite trade may also work on the EUR/USD. In order to take advantage of this you will need to be extra quick.
  • This strategy relies on two time frames to confirm signal. This helps to weed out false signals and even more importantly, pin point the right entry. It really sucks to take a good signal only to get in at the wrong time and have a potentially great trade lose.
  • This strategy has the approval and support of the trading community at BOTS.com and Communitraders.com.

Click here for the full story at CommuniTraders!

Binary Option Updates!

I apologize for the delay in adding this to the page. Okane has been updating his progress and trading account regularly on Communitraders forums but also has been keeping an update on his Google+ page. To check in for the latest results click here.