Binomo traders use a number of indicators to come up with a winning trading strategy. The Relative Strength Index (RSI), the Simple Moving Average (SMA), and the Moving Average of Convergence and Divergence (MACD) are three ones that will be discussed in this article. We’ll be talking about what they are, why they are helpful, and how to apply them.
How to set up the indicators?
To add SMA, MACD, or RSI to the chart on Binomo, follow these simple steps:
- Log into your Binomo account.
- Choose the asset you want to trade.
- Click the “Trading tools” icon in the left menu of the website.
- Activate each indicator by clicking on it.
- Leave the tool with its default settings.
- Click “Apply” to complete the setup.
All active indicators will appear at the very top of the list. To remove them, press the trash bin icon.
Strategy with RSI, SMA, and MACD
The Relative Strength Index (RSI) indicates whether a market can be considered to be oversold or overbought using recent price levels over periods. It can thus be used to forecast reversal points.
The Moving Average of Convergence and Divergence (MACD) and The Simple Moving Average (SMA) can be used to confirm the signals of RSI. SMA is a lagging, trend-following indicator, showing whether the price is above or below the average rate for specific periods. MACD shows the strength of the trend as well as its direction.
Note! The market is volatile, so even the correct setting of all indicators on the Binomo chart does not guarantee that your trading strategy will be winning.
For the RSI, a midline level of 50 can be used. Levels above 50 mean the market is bullish, while an RSI below 50 means it is bearish.
The SMA and MACD are applied in conjunction with the RSI to confirm its signals. You need to check whether the price bars form under or above the SMA. For instance, if they form under the line, it is a signal to buy. The MACD shows two different colored stripes, and their intersection is the time you should open the corresponding trade.
How to use signals?
So what is the best strategy for trading on Binomo with the three discussed indicators? Each trader should develop it independently; however, there are several signals with which you can make a correct forecast.
To open a UP trade, you should wait for the subsequent conditions:
- The RSI line should move from below 50 to above 50.
- The price bars should form above the SMA line.
- The two lines of the MACD should intersect under the 0 line.
Having identified the above, trade UP till the next candlestick forms.
On the other hand, the demands for a DOWN trade are the opposite:
- The RSI midline of 50 should be crossed from above (the RSI should fall from above 50 to below 50).
- The price bars should develop under the SMA line.
- The two MACD lines should intersect with one another over the 0 lines.
Revealing these signals, you can open a sell position.
The signals generated by indicators can be really functional. However, keep in mind that trading them on Binomo is not the best or 100% winning strategy. All signals have weaknesses; for example, the RSI and MACD may intersect at different times. Only practice can help reduce the risk of losing funds. Therefore, we recommend testing every new strategy on a risk-free demo account.