There are simply a lot of traders who want to join in on the binary options bandwagon thinking that they can win huge money in just a few seconds. While there may be some truth to this, it is important to know that there are also risks. As a trader, you should have known by now that trading involves risks – and the bigger the money at stake, the bigger the risks involved. Furthermore, trading can only be as easy if you’re familiar with your tools, techniques, and strategies. One strategy that has been used by many binary options traders is the 1-minute trading strategy using the EMA and ADX indicators. If you want to know more about this strategy and want to master it, here’s what you should know.
How it works
The 1-minute strategy using the EMA and ADX indicators suggest that possible entry or openings occur when the trend is confirmed through the ADX indicator, the price intersects the EMA, there is a strong candle signal that follows the same trend as the ADX indicator, and the current candle shows more strength than the previous candle before it. For us to understand this strategy, let’s first look at its components.
The Exponential Moving Average or EMA functions the same as the Simple Moving average or SMA and measures the direction of the trend over a specified time frame. However, unlike the SMA which emphasizes the average price data, the EMA gives more weight to the current price data. With this emphasis, the moving average line of the EMA will be much closer to the candles than the SMA line. For this particular strategy, we’ll be using EMA28 with 28 as a given period. It is indeed possible to use other periods or time frames for the EMA however a period of 28 has been proven to be more accurate by many traders who have experienced using this strategy.
To set up the EMA indicator, simply go to the indicators tab on the upper left corner of the Pocket Option trading dashboard and look up the moving average indicator. After which, choose EMA as the moving average type, and set up a period of ‘28’.
The ADX or Average Directional Movement Index helps measure or gauge the strength of a particular trend. It is calculated by averaging the expanding price values in the chart. As it measures the strength of the trend, it also provides a positive as well as the negative direction of the market through the DMI or Directional Movement Index. While the ADX line shows the trend of the market, the intersecting DMIs confirm the trend and also show possible entry and exit points in the chart.
To add the ADX indicator on the chart, do the same first step as the EMA and choose ADX from the list of available indicators. The default settings for the ADX would be 14. However, for this strategy, we’ll be using 5 so make sure to change those.
Using the 1-minute strategy with EMA and ADX on actual charts
Now to better understand this strategy, let’s check out a few examples. These examples are based on actual or real-time trades on Pocket Option.
Opening buy positions
Before anything else, make sure that you are trading at a 1-minute time frame and 1 minute expiration time. This strategy works on fast-moving candles and it is important that you also set your timers that match the strategy to be able to react accordingly.
After which make sure that the market is on an uptrend. You can verify its trend by looking at the ADX indicator. If the ADX line is above both the DMI- and DMI+ lines, the trend is an uptrend. In addition, the DMI+ line should be above the DMI- line to show an uptrend market.
Ideal entry or opening positions would be at the crossing of the DMI- and DMI+ lines. Also, the current candle should be intersecting or crossing the EMA28. The image shows the ideal entry point for the particular chart.
One thing to note here is that the intersecting candles did not happen at the exact time that the DMI- and DMI+ crossed. It is important to wait for a signal from the candle before opening positions.
Opening sell positions
The same process goes for selling positions. The first is to ensure that the market is moving at a downtrend by checking if the ADX line is above both the DMI- and DMI+. Next is to check if the DMI- is above the DMI+ which in the sample image is confirmed.
Next is to check for a possible entry point at the crossing of the DMI- and the DMI+. Then lastly, is to check if the candle has broken through the EMA28 line.
From the 2 examples, the ideal exit positions would be when the DMI- and DMI+ crossed.
Our final thoughts
The 1-minute strategy with the ADX and EMA28 indicators can only prove to be very effective if all the requirements are met. Furthermore, a trader should have a keen understanding of candlestick patterns as this would have an impact on the fourth condition. Although this strategy may seem very straightforward and basic, some candles give off strong signals. Taking time to consider the candles and patterns on the chart for ideal entry and exit points would prove to be beneficial for you as a trader. Before actually using this strategy, take time to memorize and remember the common candlestick patterns as well as their signals to reduce risks in trading.
If you’re looking to master this strategy and test it on actual charts, it is best to practice without having to spend real money. To do this, simply create a demo account at Pocket Option to trade real-time without using real funds.
If this strategy helped you become a better trader, do let others know as well. We’ll be glad to hear your thoughts as well through the comment box below.
Enjoy and Good luck!
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