The Adaptive Parabolic binary options strategy is an effective example of combining technical indicators to create reliable trading signals . Despite the free distribution and use of basic indicators, the system shows high efficiency, especially on volatile currency pairs and cryptocurrencies .
We recommend that you read our review to the end to learn how to correctly combine signals from several technical indicators to create an effective binary options trading system.
Content:
- Characteristics
- Installation
- Overview and Settings
- Trading Rules for Adaptive Parabolic
- Specifics of Аpplication
- Conclusion
- Download Adaptive Parabolic
Characteristics of the Adaptive Parabolic Binary Options Strategy
- Terminal: MetaTrader 4
- Timeframe: M1
- Expiration: 3 candles
- Option Types: Call/Put
- Built-in indicators: AdaptiveParabolic Histo_v2.1.ex4, AdaptiveParabolic_v2.1.ex4, keltner_channels.ex4
- Trading instruments: currency pairs, commodities, cryptocurrencies, stocks
- Trading hours: 8:00 - 20:00 (GMT+2)
- Recommended brokers: Quotex, Pocket Option, Alpari, Binarium
Setting Up a Strategy for Binary Options Adaptive Parabolic
The Adaptive Parabolic strategy indicators are installed in the MetaTrader 4 platform as standard. To do this, you need to add them to the root folder of the terminal by selecting “File” in MT4 and then “Open data directory”. In the opened directory, you need to go to the “MQL4” folder and then to “Indicators”, then move all the files there. Templates are installed in the same way, but are placed in the “templates” folder. You can read the installation instructions in more detail in our video:
Review and Settings of the Strategy for Binary Options Adaptive Parabolic
The Adaptive Parabolic binary options strategy is based on three technical indicators, each of which plays a specific role in this system. The main indicator is AdaptiveParabolic_v2.1, which gave the name to the entire strategy.
The image above shows the signals of the AdaptiveParabolic indicator. The blue dot below the candle indicates the optimal moment to buy Call options, and the red dot above the candle indicates the optimal moment to buy Put options.
Additionally, the strategy uses three more indicators: keltner_channels, AdaptiveParabolic Histo and RSI. The last two are classic oscillators under the price chart. The Keltner Channel is a technical indicator whose width varies depending on price fluctuations measured by the ATR indicator.
Let us recall that ATR reflects the average range of price changes over a certain period. The higher the market volatility, the wider the channel, and vice versa - with low volatility, the channel becomes narrower. Understanding these features of the Keltner Channel will help you determine the best moments for trading or decide to suspend trading.
We recommend leaving the Keltner Channels indicator parameters by default. Adjusting the calculation period is possible if you are not satisfied with the number of trading signals generated by it.
The next indicator in the Adaptive Parabolic binary options strategy, very popular among traders, is the relative strength index (RSI) . With its help, binary options traders evaluate the strength of the trend and the probability of its change.
The Relative Strength Index is an oscillator, so its values range from 0 to 100. In this system, it is not used to assess oversold and overbought levels, but to confirm the trend. When the RSI is above 65 and rising, this confirms an uptrend. If the RSI falls below 35 and continues to decline, a bearish trend is forming in the market.
The last indicator in this strategy is the adaptive histogram Adaptive Parabolic Histo. It is located under the price chart and shows the trend direction: red bars of the histogram indicate a bearish trend, blue ones indicate a bullish trend.
This histogram has similar settings to the main Adaptive Parabolic indicator. The main ones are the block of main and adaptive parameters.
The Adaptive Parabolic indicator is similar in principle to the popular technical analysis tool described by Welles Wilder in his book "New Concepts in Technical Trading Systems". Binary options traders use it to identify trend reversal points, and Forex traders use it to set protective stop orders.
Visually, Adaptive Parabolic is represented by dots located below the price during an upward trend and above the price during a downward trend. The appearance of a new dot signals a change in trend and direction for opening a trade.
Trading Rules for Adaptive Parabolic
As practice shows, such trading systems demonstrate good results if their signals are consistent with the current market trend. Therefore, to increase the percentage of profitable transactions, we will add an exponential moving average with a period of 50 to the strategy.
To filter false signals, we will use a simple rule: buy Call options when the candle closes above EMA(50) and Put options when the candle closes below EMA(50). If you are not yet well versed in graphical analysis of financial markets and do not know what Japanese candlesticks are, we suggest that you read a selection of articles on our website:
- Graphical analysis of binary options
- How to Trade Chart Analysis Figures
- Japanese candlesticks - graphical analysis of charts online
- Live cryptocurrency chart online
- Live chart for binary options free online
Knowing how to read Japanese candlestick charts will help you understand stock market information more easily.
Opening a Call Option
- We are convinced that the trend is upward – the candle closed above EMA(50) and Keltner channels.
- A blue dot of the adaptive parabolic appeared.
- RSI(6) is above level 65.
- The histogram of the adaptive parabolic is blue.
- At the opening of the next candle we buy Call.
Opening a Put Option
- We are convinced that the trend is downward – the candle closed below EMA(50) and Keltner channels.
- A red dot of the adaptive parabolic appeared.
- RSI(6) is below level 35.
- Histogram of the adaptive parabolic in red.
- At the opening of the next candle we buy Put.
It is recommended to select the expiration time of 3 candles. Select the holding period of positions depending on the financial instrument and the results of testing on historical data.
Specifics of Using the Adaptive Parabolic Binary Options Strategy
The Adaptive Parabolic binary options strategy generates many signals, so the developers have provided an alert system that helps traders not to miss trades. This is especially important for scalpers trading on lower timeframes: M1 and M5.
If the trend filter described in the review does not suit you, we recommend using any indicator from the article "The Best Binary Options Trend Indicators".
Pros of the Adaptive Parabolic Strategy
The advantages of the trading strategy include its free nature and ease of use. The signals of the Adaptive Parabolic strategy do not repaint, which confirms its reliability. The system consists of several elements, each of which can be replaced if it does not work well with your asset. In the "Indicators" section of our website, you will find many reliable tools for both trend analysis and working in a flat.
Disadvantages of the Adaptive Parabolic Strategy
The disadvantages of the strategy include a small number of trading signals on higher timeframes. To compensate for this disadvantage, it is recommended to trade several assets simultaneously. Thanks to the alerts built into the system, you will not miss signals to open trades.
Conclusion
The Adaptive Parabolic binary options strategy is based on a popular method of technical analysis. The Parabolic indicator, which underlies it, generates signals when the trend direction changes. To increase the efficiency of this free system, a trading signal filter has been added, increasing the number of profitable transactions.
This universal indicator strategy can be used for trading binary options on any assets: currency pairs, cryptocurrencies, indices, stocks and commodity markets. Before using in real trading, be sure to practice on a demo account opened with a reliable broker. Do not forget about risk and capital management. We wish you successful trading!
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