Hello everyone, I’ve been kind of quiet for a while now, but I’m ready to be a little more active in the forums again. I’ve been dabbling into the Spot world of trading currency here lately and paying attention to higher time frames. I will probably post some about Binary Options and Spot here and there as I notice good setups and trades.
I’ve been paying close attention to a thread over at Forex Factory called Trading Made Simple. It particularly caught my eye and I began to read the thousands of posts from day one up until now. It took a very long time but what I got was a good understanding of the method and I’ve made a slight modification to suit my personality. The core of the system is un-altered but I wanted to share and see if anyone wanted to try this with binaries. I know several traders that use this method successfully on the higher TF’s. The originator of the thread (Eric AKA BigE) was against using lower TF’s, but I believe this method can be used on lower TF’s with a few simple mods that I will explain. I hope that everyone who see’s this will try it out and see if it’s worth using with Binaries. I will attach the indicators in a following post.
The core indicators consist of the TDI (Traders Dynamic Index), Stochastics, and Heiken Ashi candles. Dean Malone developed the TDI, but with this method there are several things removed from the original indicator.
Entries: *When Green crosses Red on the TDI at the beginning of candle*
Long (Call): Green crosses red on the TDI and is heading up with a sharp angle (think of the face of a clock, if the angle is in the 12pm – 2pm position), and PA agrees on the first or second candle of the move, enter the trade.
Short (Put): Green crosses red on the TDI and is heading down with a sharp angle (think of the face of a clock, if the angle is in the 4pm-6pm position), and PA agrees on the first or second candle on the move, enter the trade.
Exits: *When the Green line goes flat, hooks over or no longer has a sharp angle*
Note: This only applies to Spot trading and not binaries since they have a fixed expiry.
Now what I explained above is basically the core method, and some discretion needs to be used which is why I mentioned PA (price action). For anyone new to this method, every single cross of the TDI will not result in a winning trade. You can use any form of price action you want whether its S/R levels, Fibonacci levels, candlestick patters, etc. The Stochastics are ONLY used for directional confirmation.
Now to integrate this with Binaries, I think that if you look at a higher TF such as 30M and see a setup, zoom in to the lower TF such as 5M and look for a setup in the same direction to enter the trade on a 30M expiry. My reasoning is if you get a strong move on a higher TF, it’s more likely to continue that direction for a few candles and by zooming in to a smaller TF, you can get a much better entry. Price action is waves inside of waves all the way up to the highest TF, so naturally if a higher TF shows a solid move then on the smaller TF you will have more obvious pullbacks that you can watch and wait for the continuation. The attached screenshots show where a Short (put) trade would have been taken. The entry is shown by a red vertical line on the 30M TF and when you zoom in to the 5M TF you will see you should probably wait until price starts to move again before you enter a Put.