The Pocket Option "Supertrend" binary options strategy uses one of the most popular indicators in modern technical analysis. Introduced in the early 2000s, this indicator quickly gained the trust and popularity of traders worldwide thanks to its simplicity and reliability. In this review, we'll explain how to effectively use this tool in binary options trading.
Content:
- Characteristics
- Installation
- Overview and settings
- Trading Rules for the Pocket Option "Supertrend" Strategy
- Specifics of application
- Conclusion
Characteristics of the Pocket Option Strategy for Binary Options
- Terminal: Webtrader Pocket Option
- Timeframe: M5
- Expiration: 3 candles
- Option Types: Call/Put
- Built-in indicators: Supertrend
- Trading instruments: currency pairs, commodities, cryptocurrencies, stocks
- Trading hours: 8:00 - 20:00 (GMT+2)
- Recommended brokers: Pocket Option
Installing the Pocket Option "Supertrend" Strategy for Binary Options
The Pocket Option "Supertrend" strategy indicator is installed in the standard way. To add it to a chart, open the main trading platform window, click the "Indicators" icon, and go to the selection menu. From the list that appears, select the desired instrument and configure its parameters.
Pocket Option "Supertrend" Binary Options Strategy Review and Settings
This strategy generates trading signals based on the indicator of the same name. Although the exact date of its introduction is unknown, traders began actively discussing Supertrend in the early 2000s. Many appreciated the simplicity and reliability of this tool as a trend indicator. It clearly displays the current price trend on the chart, making it easy for even novice traders to determine trading direction.
As you can see in the image above, when the trend changes from bearish to bullish, the indicator line turns green and drops below prices, with a "Buy" marker appearing at its beginning. The opposite occurs when the trend changes from bullish to bearish: the indicator line turns orange, rises above prices, and a "Sell" marker appears at its beginning.
The Supertrend indicator line can be used in various ways. If you're trading Forex, you can move a trailing stop-loss along it. Binary options traders use it as a trend indicator: if the line is green and below prices, the market is bullish, and you should only open Call options. If the line turns orange and moves above prices, sellers are driving the market, and you should consider buying Put options.
The Supertrend indicator has two main settings: the ATR period and the multiplier. To change these values, click the "Pencil" icon in the main window of the Pocket Option trading platform. This will open a window with the characteristics where you can specify new parameters for the instrument.
The "ATR Period" indicator determines the last number of candles used to calculate the average true range, which measures an asset's volatility. Based on this value, the Supertrend indicator estimates how far away from the price its line should be. The higher the volatility, the further away the line is drawn, and conversely, in periods of low activity, the Supertrend line is closer to the price.
The multiplier is the coefficient by which the ATR value is multiplied. It determines the indicator's sensitivity: the higher the multiplier, the less sensitive Supertrend becomes. This reduces the number of false signals, but increases the lag when the trend changes.
In the Pocket Option trading platform, you can set the maximum multiplier value to 5.
Trading Rules for the Pocket Option "Supertrend" Strategy
First, we determine the direction of the current trend, which we determine by the color and position of the indicator line. If the Supertrend line is green and located below the price, the trend is bullish, and we should prepare to open call options. If the indicator line is orange and located above the price, the market is bearish, and we should look for an entry point to open put options.
Next, you need to wait for the candlestick pattern to close above the previous maximum for Call options, and to close below the previous minimum for Put options.
This strategy generates many high-quality trading signals, but despite this, you should adhere to risk and capital management rules, which we discussed in detail in a selection of articles on this topic:
- Capital management. Money management principles.
- How to keep losses under control? Risk management.
- Psychology and trading discipline.
- Trader's diary as a tool for debugging trading strategies.
Opening a Call Option
- The Supertrend line is green – the market is in a bullish trend.
- The last candle closed above the previous one's high.
- At the opening of a new candle, we buy a Call option.
Opening a Put Option
- The Supertrend line is red – the market is in a bearish trend.
- The last candle closed below the previous one's low.
- At the opening of a new candle, we buy a Put option.
The expiration time should be set to three candles. However, you can experiment with other periods.
Specifics of Using the "Supertrend" Binary Options Strategy for Pocket Option
The main indicator of this trading strategy performs two functions simultaneously: it acts as a trend detector and a trailing stop-loss. This makes it easy to interpret its signals, which indicate the current market direction. A reversal signal occurs when the price crosses the Supertrend line, after which the indicator changes its color and position relative to the asset price.
Advantages of the Pocket Option "Supertrend" Strategy
The advantages of this system include the clarity and simplicity of its trading signals. Thanks to the built-in ATR, the Supertrend indicator takes market volatility into account and automatically adjusts to market changes. The system works on any asset and timeframe.
Cons of the Pocket Option "Supertrend" Strategy
The strategy's drawbacks include the generation of false signals during flat periods. During such periods, it often generates reversal signals due to the price constantly crossing the main indicator's boundaries, causing Supertrend to change color. For this reason, it is recommended to use it in conjunction with an oscillator, such as RSI, to filter out false signals.
Conclusion
The "Supertrend" binary options strategy on the Pocket Option platform is another successful trend-following system. Unlike classic moving averages, its main indicator includes a built-in volatility metric. Thanks to the ATR, the indicator is quite flexible and can automatically adjust to current market conditions, making the system's signals more reliable. When combined with the candlestick pattern described in this review, the success rate of binary options trading can be even higher.
Before trading this system with real funds, we recommend testing its signals on a demo account with the Pocket Option broker. Remember to manage your risks and capital carefully. Happy trading!
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