Indicator trading technique: reactive market

Indicator trading technique: the reactive market is an effective strategy that will be useful for consideration not only for a beginner in the binary market, but also for an experienced trader.

The proposed "Reactive Market" system was created on the basis of the pattern of impulse quotation movement in situations where they are located in the overbought / oversold zone.

Accompanying these impulses, medium-term fluctuations in the direction of the trend occur, on which you can get quite a decent profit from binary trading.

Undoubtedly, the use of these zones for trading is a rather controversial issue among traders, however, after a series of experiments, a combination of indicators was obtained that are able to generate high-precision signals for profitable trading in these market areas.

Setting up an indicator strategy

This strategy was built on two simplest technical analyzers for binary trading - the Alligator and the RSI indicator. That is why a special need in this strategy will be a trading terminal, on which these indicators are present in the set. Can recommend FinMax broker platform.

So, on the chart of the underlying asset, we need to install the configured Alligator indicator by default, and the RSI indicator with the changed values of the construction parameters will help it, namely, for the level of the oversold zone - 30, and for the overbought zone - 70. After that, the markup of the trading chart should be as follows :

But first, let's look at the indicators themselves. As you know, the RSI indicator very accurately determines the direction of the trend and the zone where the asset is oversold or overbought. It is in such zones that trend reversals often occur. However, there are often exceptions.

When medium-term trends unfold, one can observe how the RSI MA stays in these zones for quite a long time, and the quotes themselves, at the same time, move quite impulsively.

The Alligator indicator is a classic tool for identifying new market trends, and in our case it will be used with its classic role as a trend indicator.

What is the essence of the strategy?

The reactive market is an indicator strategy, the essence of which is to receive a signal from indicators when the market is in or close to a critical zone - then you can make great money on changes in the direction of the trend or on the reactive movement of the market created by large volumes of contracts.

Options buy signals

UP option trading (CALL option):

1. Movement of the RSI indicator moving near the overbought level, or crossing this level by the indicator moving upwards

2. The crossing of the movings of the Alligator indicator upwards, which means a trend reversal

Trade option DOWN (put option):

1. Movement of the RSI indicator moving near the oversold level, or crossing this level by the indicator moving down

2. Crossing of the movings of the Alligator indicator down, which means a trend reversal

Why is the strategy effective?

The reason for the effectiveness of this pattern is that when the market changes the direction of the trend, then before the correction of quotes, it makes a rather long reactive movement.

This happens due to an increase in trading volumes on the market, and because of the so-called stops of other traders of the financial and currency market, which they set in overbought and oversold zones, making them a kind of fuel for quotation fluctuations at moments when medium-term trends are unfolding.

Using this trading technique, you can very dynamically increase your trading capital - weekly by 180% and more.

Expiration

The most appropriate expiration time would be 1 minute. Thus, almost 100% of trading profitability can be achieved.

Money management

And although the accuracy of the generated signals in this strategy is quite high, yet binary trading is never without high risks.

And in order to minimize them, it is necessary to conclude transactions of the lowest value, which, for example, offers - Broker FinMax, in $5. However, in the presence of more weighty capital, the size of each transaction can be increased to 3% of its volume.

Apply strategy ⇢