The number of strategies and indicators for the binary options market is off the charts, but, unfortunately, most of them were created for the Forex market. Some can be freely applied to any market, but most often they are not universal.
We found an indicator that was created specifically for binary options. This is the PPA indicator. It is based on the well-known and time-tested strategy of Alexander Elder. With the help of this indicator, the chances of a positive outcome increase significantly, so let's find out how to use it in trading.
General information
Those who trade binary options need to predict as accurately as possible the movement of the currency pair or asset they are trading. There are different expiration periods, ranging from minute to daily. The most popular options are Call/Put, where the trader needs to predict where the price will be relative to the entry point.
The PPA indicator copes with this task much better than others, because It contains the principle of identifying short-term impulses. Therefore, it is better to use it on time frames H1 and lower in the forex market and M5-M6 in the options market.
The strategy on which this indicator is based will soon turn 34 years old. The indicator was created almost immediately after the appearance of binary options, and over time it was refined and improved, adding various functionality.
Characteristics of the strategy
- Terminal: MetaTrader 4 .
- Time frame: M1-H1.
- Options expiration: M5-M6.
- Option type: Call/Put.
- Indicator: PPA.
- Trading instruments: All currency pairs.
- Trading time: Any time of day.
- Recommended brokers: Quotex , PocketOption , Binarium .
Instructions for installing indicators in MetaTrader 4:
The main idea of the PPA indicator
The PPA indicator is based on an idea developed by trader Alexander Elder. Its essence is that small time ranges depend on large time ranges. When working with a trend, we always monitor the large time frame, and then look at the small timeframe and make a decision. This theory is also true because the Forex market is dominated by large players who work according to the trend. It is they who create short impulse movements. And the PPA indicator helps us track such impulses.
After much research, it was determined that the maximum opportunity for movement occurs when all time frames go in the same direction.
Installing and configuring the PPA indicator
The indicator is installed as standard in the MT4 terminal. After adding the indicator to the terminal, drag it onto the chart of the working currency pair or double-click on it. The settings menu will open:
Configurable parameters are located on the tab – Input parameters. You can customize everything to your liking, namely colors, line thickness and the time frames you need. We advise you not to include monthly, weekly and daily, because... they can confuse you.
Rules for trading using the PPA indicator
Do not forget that it is better to choose an expiration time from 5 to 6 minutes. You need to open the “Call” option when all the candles in the bottom of the chart turn green.
You can also use more aggressive entries when a rollback occurs on the M1 time frame (red candle).
You need to open the “Below” (Put) option when all the candles in the basement of the chart turn red.
In the same way, you can make aggressive entries if there is a rollback to M1 (green candle).
Trading examples
For examples, we chose the familiar pairs EUR/USD and USD/CHF.
Consider opening a Call option (Higher).
In the picture we see how the price of the USD/CHF pair rose above its local minimum, and all the candles in the basement of the chart turned green. This is our signal to enter a position and open a Call option.
By choosing an expiration time of 5 or 6 minutes, we would make money on binary options after a small impulse movement.
Consider opening a Put option (Below).
In this example, you can see how the price of the EUR/USD pair began to flatten and dropped below its local maximum. All the candles in the bottom of the chart turned red, and this was a signal that you could enter a trade to open a Put option.
By choosing an expiration time of 5 or 6 minutes, you can see that again both options would work in profit. But this time the movement was calmer than in the previous example.
Money management
This type of trading can be classified as scalping, because We use the M1 time frame. Accordingly, during the day a large number of transactions can be made, quite a few of which can be unprofitable.
Don’t forget the basic rules of risk management, namely, risk no more than 3% of your capital on each trade.
Conclusion
This strategy has the simplest possible trading rules, so it can be used not only by experienced traders, but also by beginners.
However, beginners may have trouble making a large number of trades due to the M1 time frame. There is only one piece of advice - just switch to a larger TF, for example M15. On such a time frame, the number of transactions will be reduced by an order of magnitude.
You can also familiarize yourself with the original strategy of Alexander Elder on our website to improve your trading skills.
Download PPA indicator
Can't figure out how this strategy or indicator works? Write about it in the comments to this article, and also subscribe to our YouTube channel WinOptionSignals , where we will definitely answer all your questions in the video.
See also:
How to trade binary options in MetaTreder4
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