Contents:As you already know, trending strategies are always considered the best tools for market participants. In a continuation of the with-trend trading series, we would like to introduce to you Momentum Eldera – a trend-following strategy composed of two popular indicators Exponential Moving Average and Momentum. You will learn in this article how to use it to trade binary options effectively.
What is Momentum Eldera Strategy
A trending strategy is considered comprehensive when it includes at least one lagging and one leading indicator. The Momentum Eldera has satisfied this requirement. Exponential Moving Average is a very popular lagging indicator in the trading world, having the function to highlight market trends and detect potential trading opportunities. Momentum, meanwhile, is also a famous leading beacon with the main responsibility to measure the market’s strength, helping traders reaffirm the possibility of the detected signals. The Momentum Eldera is the product combined with these proficient indicators.
What makes this technical strategy favorable is that it could work on a variety of currency pairs, including major ones such as USDJPY, USDCAD, GBPUSD, EURUSD...
The 1-hour chart is where the Momentum Eldera shows its highest effectivity, and this means the strategy is highly suitable for intraday traders and swing traders.
Below is the detailed setting of the strategy:
- Exponential Moving Average (built-in in MT4) is set with the period of 19 days and applied to close;
- Momentum is established with the period of 18 days in addition to a 100 level, also applied to close.
Let’s take a look at some examples to see how this technical strategy works.
How to use the Momentum Eldera in binary options trading
All the needed indicators are available in Finmax’s advanced trading platform, so it will take less than 30 seconds to establish the whole strategy.
A call occasion is defined when the following conditions are satisfied:
- Price crosses above the 19-day Exponential Moving Average;
- The Momentum’s line turns above the 100 threshold.
Conversely, a put signal is ascertained when the following requirements are met:
- Price crosses below the 19-day Exponential Moving Average;
- The Momentum’s line turns below the 100 threshold.
There are some important rules when trading with this strategy:
- You can open multiple orders, but please pay attention to the correlation of the trading currency pairs. If you open multiple orders on the ones that have positive
correlation (for example, EUR/USD and GBP/USD), you are multiplying the risk;
- A signal is confirmed valid only after the candle of confirmation is fully closed;
- The order’s expiration should be set in five hours;
- The maximum risk for each transaction shouldn’t be more than 2% of your total balance.
If you like this strategy, you might also be interested in this MACD RSI Strategy
Pros and cons
- Simple, flexible, and easy-to-use;
- Generates high-probability signals by a good filter;
- Requires no custom indicators;
- Enables you to catch big trends.
- Requires a high level of patience;
- Necessitates you to monitor the trading platform to seek opportunities;
The Momentum Eldera is one of the most profitable with-trend strategies that we have ever seen before. If your trading approach is intraday or swing, we believe this strategy could have a very firm stand in your strategy collection. However, since there’s nothing called Holy Grail in the trading world, money and psychology managing methods must always be applied when you trade with any technical systems.