Cobra Trading Strategy
The Cobra Trading Strategy for Binary Options
This is one of the safer strategies. It is based on several indicators and takes advantage of market momentum, which reduces the risk.
Considered a short term strategy, the Cobra uses trends happening over a one day period and sometimes a two day period. It is based on the 1 hour charts and uses a 72 candle moving average to identify the current trend in the market.
A bullish trend is identified when the price is above the 72 hour MA. Conversely, a bearish trend is running when the price is below the line.
Other indicators used by this strategy are simple and exponential MAs and a 14 bar ADX. These are applied to the Typical Price which is calculated by averaging the high, low and close of each candle.
The MAs create a signal line which has a buffer zone. Trades are only made when the price is out of the buffer zone and moving in the trending direction.
How Does The Cobra Work?
The strategy takes some setting up, but after that it is easy to use. For bullish trades, wait for the price to be above the 72 bar Moving Average and going with the trend. When it returns to the line, bounces off it and out of the buffer zone the conditions for a trade are setting up. The signal is generated with the first candle to open and close outside the buffer zone.
The converse is true for a bearish market. Wait for the price to reach the 72MA and drop back out of the buffer zone. Once the first candle to open and close outside the buffer has formed, open your trade.
Why this System is a good choice?
The Cobra is a good strategy because it relies on a host of indicators and signals to identify the trend. It then uses several markers to signal a trade â€“ not just one action of the price. These factors, particularly the use of the buffer zone, all go to managing the risk in binary options trading. To make it easier, the signals are clear.
There are some aspects of the Cobra strategy that are not quite clear. The instructions say you must apply an ADX to the typical price, but it is never stated why this is done or what to do with the result once you have it.
For the beginner, the system may be out of reach as it takes a very flexible trading platform and detailed programming to set up the MAs and the typical prices.
My Last Words on the Cobra â€“ BITES!
Although beginners may not have access to the Cobra, it promises to be a great system for traders preferring short term binary option trades. It will take experience and a chart package flexible enough to accommodate the set up for you to get the benefit of the strategy.