Revolt Strategy for Binary Options Trading
Trading binary options can be likened to an endless battle between two warring groups. As one group rises, so the other group is waiting for its time to push back and recapture the territory.
In the late 1970s, Welles Wilder, a mechanical engineer became interested in trading. He he developed some of the most important technical indicators and analysis tools in use today.
One of these is the ADX, or the Average Directional Index which illustrates the strength of trends in the markets by monitoring and analysing buyer and seller activity. The result is a chart that gives the trader an indication of buyer and seller activity as well as prevailing market direction.
The ADX is made up of three lines: the Plus Directional Indicator (+D1), the Minus Directional Indicator (-D1) and the Average Directional Indicator (ADX).
The ADX measures trend strength without giving the direction of the trend.
By combining the three indicators, -D1, +D1 and the ADX, traders can see the direction and the strength of the market trend.
What Is “The Revolt”
Now back to our battle. When the buyers are rallying and making new highs, the +D1 line will rise and the -D1 line will fall. When the market starts to turn, the lines will alter their directions as the sellers make new lows.
The Revolt uses these indicators to define the point when a trend is about to turn — that point where the buyers run out of energy and the sellers start to dominate the market and vice versa.
How the Revolt Strategy Works
The system works across all time frames, but there is a bit of a lag between the ADX indicating the impending turn around and the candles actually registering the movement. If you are working in the 5 minute frame, the move will probably hit the candles after about an hour, maybe two. The Daily time frame will manifest in a month or two.
If you take a look at the ADX indicator on your chart, you will see that it is graded from 40 through 30, 20 and 10.
When looking for strength and weakness in buyers and sellers, the weaker party will be trending towards 10. When, lets say, the sellers (D1) fall below 10, they are in a very weak position. If the buyers are in a weak position, then the +D1 line will be dropping towards 10.
With The Revolt strategy, the time to enter a buy trade is when the +D1 line has fallen below the 10 line. The time to enter a sell trade is when the D1 indicator is below the 10 line.
The indication on the ADX that one of the D1 lines is below the 10 line will be confirmed on the Stochastic Oscillator. What we are waiting for to confirm our trade entry signal is a crossover in the 80+ region. When this confirmation is in place a Revolt is imminent.
Why this Strategy Sucks
Being supported by several indicators, the Revolt strategy is pretty sound, but there are situations where it just doesn’t work. It works best when markets are ranging. If markets are trending, then the weakness of one or other party being below the 10 line could be a fake signal and must be treated with caution.
Why This System Does Not Suck
The system is strong because it is based on two indicators and is simple. Trades are placed when the markets have become oversold or overbought and the signals are usually very clear. By staying up to date with market intelligence and knowing the commodities or securities you are trading, the Revolt strategy will serve you well.
Last Words on the Revolt — Yay for the Revolution!
The Revolt is a binary options manifestation of history showing us that revolutions are bound to happen. Those in power will always be ousted by those not in power.
The Revolt strategy can be applied to any time frame. Carefully and intelligently used it provides a steady path to trading success and profit.