Spring is a complex trading strategy based on three indicators popular among traders: Stochastic, CCI and Bollinger Bands. All of the aforementioned advisors are available at the Pocket Option broker. The strategy relies on three advisors and it is good for beginning and experienced traders.
Springs provide the swing trader with good opportunities. First, they can provide a stop loss, which should be placed just below or above the extreme of the day the spring or upthrust occurred. They can also create a target, since the stock is likely to test the opposite end of the trading range.
How Spring Strategy works?
What a wonderful telling name for the trading strategy! Imagine as price is rushing in the desired direction there is a compressed spring under it. The advantages of the “Spring” include:
- Versatility. It can be used on all timeframes without exception. It is suitable for both long-term trading and for working with turbo options.
- Availability. You need three advisors widely offered by trading platforms.
- Accuracy. The strategy allows you to purchase an electronic contract at the most favorable price.
- Flexibility. Depending on the asset, adjust the settings of the indicator parameters.
How to set up your trading chart?
Before you start trading options using the “Spring” strategy, you need to configure the parameters in the following way.
Start with the Stochastic. It displays the overbought and oversold levels of the market. We recommend the following parameters: 5; 3; 3 for trading on lower timeframes and 14; 5; 3 for long-term expirations.
Commodity Channel Index (CCI) is an advisor indicating the deviation of the price from its average value. You need it to evaluate the current state of the market. We recommend setting of 14 bars regardless of the timeframe, however, you can always change the settings based on the volatility of the selected asset.
Bollindger Bands is the main signal indicator. The recommended parameters are 20 and 2.
Use Japanese candlesticks as a chart with any timeframe.
How to trade binary options with the “Spring” strategy?
Congratulations! You completed all the necessary settings: it is time to look for signals to buy electronic contracts.
- CALL when the candlestick closes below the lower Bollinger band, the CCI is between -100 and -300, and the Stochastic indicates that the market is oversold.
- PUT when there is a break of the upper boundary of Bollindger Bands. At the same time, CCI should be between 100 and 200 levels, and Stochastic should indicate that the market is overbought.
The expiration period should not be less than the time of formation of two candles.
As results has shown, the “Spring” strategy is capable of providing up to 80% of profitable trades. Ultimately, it’s up to you to decide which the best trading strategy is. Some important factors to consider include your personality type, lifestyle and available resources. Happy trading!