Trading on Binomo is a way to successful financial results, but this requires the right strategy. Some of the most in-demand strategies include the use of Bollinger Bands as the main indicator. For this strategy to work, though, other indicators should carry equal importance, and the appropriate time frames have to be used. Here are simple ways to maximize your trading on Binomo with Bollinger Bands.
- Why Bollinger Bands
A very popular technical indicator that is accepted among most traders is Bollinger Bands. Bollinger Bands consist of one center line, known as the moving average, and two outer lines that reflect the standard deviation of price. Bollinger Bands reduce the market volatility at the moment and whether the price is in the overbought or oversold condition. This is very useful to know when you will enter or leave the market.
- Setting Bollinger Bands
Period: 20, Deviation: 2 These are just the default settings and are already in place in the majority of traders’ charts. If they enter a period of 20, then it will return the average price of the last 20 candlesticks; if the deviation is 2, that means the upper and lower lines will spread apart from the middle line by two standard deviations.
After setting the Bollinger Bands, the way prices get twined around these mooring lines of the market boundary becomes interesting. Whenever price approaches or touches the upper line, this is a good signal that the market will reverse in a downward direction, i.e. overbought. On the other hand, when price approaches or touches the lower line, it is a good signal that the market may reverse up, i.e. oversold.
- Combine with Moving Average (MA) 10
Besides Bollinger Bands, I also use the Moving Average indicator with a period of 10 as additional support. Moving Average helps me find the direction of the short-term trend. You can combine MA 10 with Bollinger Bands to give you an even stronger signal about when it is the right time to enter or exit.
If the price moves above MA 10 and reaches up to the upper line of Bollinger Bands, this could be looked upon as a signal to sell. On the other hand, if the price is moving below MA 10 and comes close to touching the lower line of the Bollinger Bands, it would be interpreted as a buy signal.
- Keep Track of the Time Frame
One more important thing in trading is a time frame. The time frame you are to select will somehow affect the accuracy of the signals which will be given by the Bollinger Bands and other indicators. In most cases, for trading on Binomo, I am using a 1 minute to 5-minute time frame dependent upon my trading style at that particular time.
Of course, if you are one of the scalpers who like to trade within a short time, a 1-minute time frame would probably be more suitable. However, if you are more inclined to trade with deeper analysis and not hasty, the 5-minute time frame could be a better option. The key is to apply the same time frame so you might understand better the pattern of price movement.
- Not to Forget Risk Management
Trading is not just about looking for the right signal; it’s about how you manage risks. One key tip: never risk all of your money in one trade. I always limit the risk, usually not more than 2-5% of my total account balance in each trade.
Moreover, always use stop loss to reduce losses in case the market does not move according to your predictions. With good risk management, you’ll be able to save your capital while remaining cool-headed, even though the market doesn’t always move according to expectations.
- Combination with Other Indicators
Although the Bollinger Bands along with MA 10 already form a powerful combination, it doesn’t hurt to combine other indicators that will further strengthen your analysis. Other indicators you can use are the Relative Strength Index and the Stochastic Oscillator. The RSI will help you estimate the strength of price movements and whether the market is overbought or oversold, while the Stochastic Oscillator will give you additional entry and exit signals.
For example, when the RSI signals that the market is overbought, but the Bollinger Bands show that price is close to the upper line, this may end up being an extremely strong sell signal. Alternatively, if the RSI reflects an oversold market and the price is trending near the lower line of the Bollinger Bands, it can create a very strong buy signal.
- Keep consistent and disciplined.
It is all about being consistent and disciplined in trading. Find out what works for you, such as Bollinger Bands and MA 10, and stick to it. Do not change your strategies every minute due to continuous losses. Remember, loss is a part of the process of trading, and how you manage that really does.
Moreover, always practice with the discipline of risk management and do not get tempted to risk more money just because you want to make a big profit immediately. If one is consistent and disciplined, the results will be different in the long run.
Trading on Binomo with Bollinger Bands and other indicators can be very effective if one does it right. Combining Bollinger Bands with MA 10 and other indicators like the RSI will bring out much more accurate trading signals when used on a proper time frame. However, remember that in everything, with risk management above all, be consistent in implementing your strategy. The next approach will increase the probability of being successful while trading on Binomo.