Trading electronic contracts can be a quite profitable and exciting business if you have at hand a verified and proven strategy. Despite the fact that many people think that such trading is too risky because of the presence of “market noise” on lower time frames, getting a timely signal to buy a contract, your balance will always be in the black.
This article tells about the strategy which is built on the principle of 2 popular indicators: EMA and ADX. Taking into account the fact that the first refers to the trend, and the second is an oscillator, simultaneous signals from both will avoid false entry points and close the trade with a profit.
Both instruments are available in most trading terminals and in particular at the Olymp Trade broker. In order to install them on the chart, you just need to go to the “Indicators” menu and click on each of the expert advisors.
The essence of the work of EMA and ADX
Before proceeding to the analysis of the trading strategy for turbo options “Double Repenetration”, it is necessary to look at the algorithm of each of the tools.
EMA or “Exponential moving average” is one of the most popular indicators not only in trading electronic contracts, but also in other types of financial exchanges. Advisor refers to the trend and externally represents a line that moves next to the chart.
The advantage of an exponential moving average over a simple one is that its calculation formula can significantly reduce the delay as it focuses on new price indicators without taking into account the removal of the previous ones.
This tool is often used instead of a trend line. However, more popular among traders is the signal that comes at the intersection of 2 EMAs. This approach will be used in the strategy for turbo options. It’s simple: if the junior moving crosses the senior one from top to bottom, then there is a high probability of active sales or vice versa.
ADX is another popular advisor that is often used by professional traders when trading on financial markets. The instrument belongs to the oscillators and is a scale with 3 lines.
The ADX main line indicates the strength and prospect of continuation of the current trend. The higher it rises, the stronger the current trend is. However, to implement the “Double Repenetration” strategy, we will need 2 other lines: +DI and -DI. The first indicates the strength of buyers, and the second – sellers.
In this case, we are interested in their intersection which may indicate a change of mood of the players. If +DI has crossed with –DI and is on top, it is a signal to the beginning of purchases, and, conversely, sales.
How to use the strategy “Double Repenetration”?
Now is the “moment of truth.” Knowing how each of the indicators looks and works, you will be able to apply them in the strategy for turbo options. To do this, you should do the following:
- Set the minute time frame on the selected asset;
- Install 2 EMA with a period of: 14 and 21;
- Install ADX (do not change parameters).
Now when all the instruments are located in the trading area, it remains to wait for the “Double Repenetration” signal. So:
- The purchase of a CALL contract occurs when 14 EMA crosses 21 EMA from bottom to top, at the same time +DI crosses –DI in the same direction;
- The purchase of a PUT contract is necessary in the reverse situation when the junior moving crosses the senior in the lower direction and the same is done by the +DI line in the ADX window.
Please note that the work is carried out on turbo options, so the expiration period in this case is 1 minute.
Generally, the strategy of “Double Repenetration” can be used by both beginners and professionals. Due to the fact that trading takes place on the 1-minute time frame, signals can occur quite often. If desired, you can even use the principle of martingale.