It is common mistake to trade without any strategy to optimize their earnings. The truth of the matter is that, you can further elevate your earnings if only you will strategize in trading. If you really want to achieve long term success and get to explore the markets, you need to learn how to trade using daily charts.
So-called Thomas strategy was created in 2017 by a group of traders specializing in options trading. Its main advantages is simplicit since it is based only on one indicator DeM. The DeMarker indicator compares the most recent maximum and minimum prices to the previous period’s equivalent price to measure the demand of the underlying asset. From this comparison, it aims to assess the directional trend of the market. Initially the probability of a positive outcome of the strategy is 70%. Later the system underwent a simple revision to increase the aforementioned figure to 95%.
More About the Strategy
As we said, Thomas trading strategy is simple: use the DeMarker on the candlestick chart and trade when the overbought and oversold levels cross. The indicator generates clear signals.
To improve the probability of success, the improvement was introduced: the DeMarker was combined with EMA. You can find both tools at the Pocket Option trading platform.
How to set up the indicators?
You need to set up the chart and indicators for trading options according Thomas strategy. Choose a Japanese candlestick chart with a period of 5 minutes or more. Smaller period will result in too much market noise. Leave default settings (period 14) for DeMarker and set a period of 100 for the EMA (“exponential” type of EMA).
How to trade contracts using Thomas strategy?
Now you can start trading. Even with an additional indicator, the strategy is still simple to execute. The algorithm of actions is as follows:
- CALL when the candles are above the EMA and the signal line of the oscillator leaves the oversold zone.
- PUT when the chart is below the Moving Average and DeMarker leaves the overbought zone.
Set the expiration period from 3 to 5 bars.
In conclusion, although DeM is advertised as a method to time trend reversals, in several cases, large price movements that followed a signal maintained the direction of the existing trend. Remember, the DeM indicator should not be used by itself and may be more effective in combination with other technical indicators to confirm or refute the signals that it generates.