Binary options are a financial market tool that allows traders to make a profit by predicting the direction of the asset price movement. However, for successful trading it is important to have a clear strategy. One such strategy is the “Treasure Box”, based on the use of two key indicators: Envelope and Momentum. These tools help determine the optimal entry and exit points, thereby increasing the chances of successful transactions.
Some basics of the Treasure Box strategy
The name of the strategy is since the system helps to “close” the asset in certain limits, as if it is inside a box. The Envelope indicators create a kind of channel in which the price moves, and Momentum allows you to determine the strength of the trend and its direction. Together, these advisors help the trader understand exactly when it is worth making deals, and when it is better to refrain from trading.
How to set up a trading terminal?
Envelope indicator is a pair of moving averages (usually SMA – simple moving averages) located above and below the current price by a fixed percentage deviation. These lines create the boundaries of the channel within which the price moves. In standard settings, the moving average is taken with a period of 20, and the deviation is set within the range from 0.5% to 2% depending on the volatility of the asset.
Momentum is an oscillator that measures the rate of change of an asset’s price. It helps determine how strongly the market is moving in a certain direction. The standard period for this indicator is usually set at 14, but it can be adjusted individually depending on the asset type and market conditions.
As for the rest of the settings, you need a candlestick chart, a highly volatile asset, and a time frame of 1 to 5 minutes.
How does the Treasure Box strategy work?
After you installed and configured the indicators on the workspace selected the specified parameters, you need to understand the rules of trading according to this system. In fact, they are quite simple.
CALL: signal to buy a call option
- The price touches or breaks the lower boundary of the Envelope channel, which indicates that the asset may be oversold.
- Momentum indicator confirms the signal by rising to the 100 level and above from bottom to top, which indicates the presence of an uptrend.
PUT: signal to buy put option
- The price reaches or crosses the upper boundary of the Envelope channel, which indicates that the asset is overbought.
- Momentum should fall below 100, which indicates the beginning of a downward movement.
Although the “Treasure Box” strategy offers highly accurate signals, it does not guarantee 100% successful trades. Like any other trading system, it is exposed to market risks and may generate false signals during sharp trend reversals or significant news events.
To reduce risks, it is recommended to invest no more than 2–5% of your deposit in a single trade and to practice using a demo account before transitioning to live trading.
The “Box” Binary Options Strategy, which is based on the Envelope and Momentum indicators, is an effective tool for traders seeking a simple and easy-to-understand trading system. It helps accurately identify optimal entry points and minimizes unnecessary risks.