Binary Options One Trade a Day

Scalping skill with EMA of 5 and 15 periods

In this article we are going to describe a strategy of scalping based on exponential moving averages of 5 and 15 periods. Since probably they know, the moving averages are probably the most used technical indicators, and they are used to determine tendencies on the market and to look for points of entry and exit. Likewise, many traders use them to operate with base in crossings (of a moving average with other one) or like resistencas/soportes.

What moving averages periods must we use? That depends on every trader, its personality and the strategy that he likes following. For example the one that likes more the short-term operations, the best thing is to use moving averages of 1, 5 and 10 minutes for example. For the one that likes operations in major term he can use moving averages of 30 minutes, 1 hour or of 1 day. Since in everything it depends on the tastes.

An interesting concept is to use the moving averages in different time frames to do a more finished analysis and to have a clearer panorama of the market. In fact, the strategy described in this article is a methodology that works under this approach being a scalping system used for traders that they like operating in instruments like the S&P 500. Because it is a question of a scalping skill, it needs that the trader is quite rapid to enter and to go out of the market.

In this strategy different time frames get together to make the analysis more finished and not to limit ourselves to only one graph and temporary frame like most of the strategies. In other words, the same moving averages are used in different time frames to confirm the signs.

Configuration of the system

This system can be proved in any instrument, including pairs of currencies and precious metals. To apply this skill the following thing deals:

• 1 graph of 1 minute.
  
• 1 graph of 15 minutes.
  

Half exponential (EMA) of 5 and 15 periods in every graph.

Rules of the strategy

To enter the market (signs of buy and sale) simply it is necessary to continue those signs in the graph of 1 minute that agree with the present tendency in the graph of 15 minutes.

For example, if there is an upward tendency in the graph of 15 minutes (its moving averages EMA of 5 and 15 cross to the rise or the closing of the candle takes place above of the EMA of 15 periods), the trader simply must continue the signs of buy that should be generated in the graph of 1 minute (like for example the upward crossing of the EMA of 5 and 15 minutes).

If the trader has enough capital or margin in its account, an idea to increase its profit is to add positions whenever a sign of buy / sale takes place until the tendency in the graph of 15 minutes finishes, that is to say when of signs of which a change of tendency is on the point of taking place. Nevertheless, this practice is risky, since it might leave the trader caught in a losing position if he adds too many additional positions on a market that is on the point of changing.

Exit of the positions

With regard to the exits, depending on the instrument, the trader can wait for a profit from 20 to 30 pips in every operation. In this case, it is recommended to take the profit before hoping that the moving averages should turn to cross between themselves (indicating a change of tendency), one of the rules that commonly have this type of strategies of crossings of averages. It is important to bear this in mind since sometimes the crossing is preceded of a strong movement in ours against, for which not always is convenient to hope that it should be takes place to close our position. It is better therefore to place a fixed stop loss and a target of capture of profit than to wait to that the averages crossing should take place in against, which we can run out of extracting in a bad position. Also, logically it is necessary to know in advance the volatile nature of the assets with which we are operating to know for what it is possible to wait using a skill as this one in term of movements and profit.

Finally, if it is used to operate with the S&P 500, it is important to note down that this skill must be used between 9:00 and 11:00 and between 15:00 and 17:30. On other markets, the trader will have to do the corresponding modifications.