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The 3 moving averages strategy

One of the many strategies used in binary options trading is the 3 moving averages technique. It is a quite effective method to apply when trading, with real profitable outcomes. Even if it has a structure a bit complex, it is actually easy to implement, once you try it and see how it works. Like other strategies, this one also involves a high level of risk. That is why, it is recommended that first you get an idea about it using a demo account, which protects you against risks you do not want to take. You could find here a list of trusted brokers wich are offering a demo account.

How to use

Let’s see how the strategy works in practice and what you have to do in order to take advantage of it to the full extent.

Firstly, you need to set the graph of the chosen asset with a 60 seconds timeframe. Then, you have to add some financial indicators, in order to help you analyze the movements of the asset. There are three indicators necessary to be displayed on the chart, namely the 20 simple moving average (usually represented by a green line, with all brokers), the displaced moving average 5, -2 (a blue line) and the displaced moving average 10, -5 (a light blue line).

Afterwards, you have to wait for the blue line to cross the green one. Then, the light blue average needs to move closer to the blue line, similarly like crossing the green one in the same specific point the blue line does. If these two conditions are met, you have to make the following investments:

  • If the blue line crosses the green moving average, right from the bottom to the top, you invest in a 2 minutes high option. You enter the trade exactly after the candlestick that took part in the crossing is closed.
  • If the blue line crosses the green moving average, right from the top to the bottom, you invest in a 2 minutes low option. You enter the trade exactly after the candlestick that took part in the crossing is closed.

This basically resumes the perfect conditions needed when entering the trade, by starting with a downward investment, followed by an upward one, as this strategy implies. But you should also be
aware that sometime the moving average can be very dynamic and thus, they can mislead you into wrongly predicting. For example, you may notice an intersection of the lines now, and the next moment
it would disappear all of the sudden, in the following candlesticks. Just like the market, the moving averages are unpredictable, so even if they generally do not experience large movement, things can sometimes change out of the nowhere.

As a conclusion, this strategy can be very profitable, when it is correctly used (Even the broker is important so we recommend Anyoption for this). For that to happen, you have to benefit of an
advanced knowledge on trading, especially when it comes to analyzing and interpreting the financial indicators that are needed. So, beginners are not advised to try it. On the contrary, they should and gain more experience, so that they find it easy to invest, by making use of this strategy.