The Barbarian Arrow binary options strategy uses the time-tested principle of trading on a trend after a rollback, which is determined by the exit of prices beyond the boundaries of the overbought and oversold zones outlined by its regression channel. Read our review to find out how to set it up correctly and use additional moving averages to reduce the number of losing trades in binary options trading.
Content:
- Characteristics
- Installation
- Overview and settings
- Barbarian Arrow Trading Rules
- Specifics of application
- Conclusion
- Download Barbarian Arrow
Characteristics of the Strategy for Binary Options
- Terminal: MetaTrader 4
- Timeframe: M15
- Expiration: 3 candles
- Option Types: Call/Put
- Indicators: BarbarianArrowIndicator.ex4, HolyChannel.ex4, HRcandle.ex4, SMA(1), EMA(1)
- Trading instruments: currency pairs , commodities, cryptocurrencies , stocks
- Trading hours: 8:00 - 21:00 Moscow time
- Recommended brokers: Quotex , Pocket Option , Alpari , Binarium
Setting Up a Strategy for Binary Options Barbarian Arrow
Barbarian Arrow strategy indicators are installed in the Metatrader 4 platform as standard. To do this, you need to add them to the root folder of the terminal by selecting “File” in MT4 and then “Open data directory”. In the opened directory, you need to go to the “MQL4” folder and then to “Indicators”, then move all the files there. Templates are installed in the same way, but are placed in the “templates” folder. You can read the installation instructions in more detail in our video:
Review and Settings of the Strategy for Binary Options Barbarian Arrow
The Barbarian Arrow binary options strategy consists of three custom indicators and two moving averages. Its highlight is the regression channel calculated by the HolyChannel indicator. With its help, it is quite easy to determine what state the market is in: bullish trend , bearish trend or flat .
The most sensitive parameter for the regression channel is "Regression Degree". Its value will determine its slope: the higher this value, the more flexible the channel becomes. However, it should be borne in mind that with high values of "Regression Degree" the risk of overfitting the model increases significantly. This means that the regression channel constructed in this way will describe historical data too accurately, but may work poorly in real market conditions.
In our experience, it is optimal to leave this parameter at the default value of 2. This way, the channel will react quickly enough to price changes and will not be too closely adjusted to historical data.
The next tool in this system is HRcandle. Despite its simplicity, this is a very useful indicator that counts down the time until the current candle closes. It has few settings: you can specify the angle in which the timer will be displayed, its size and exact coordinates.
Signals for opening positions are generated by BarbarianArrow, a classic indicator in the form of arrows. Green arrows indicate the possibility of buying Call options, and red ones signal a potentially profitable purchase of Put options.
The remaining two indicators are simple and exponential moving averages applied to closing and median prices respectively. They are designed to confirm the signals of the arrow indicator.
Barbarian Arrow Trading Rules
Now it's time to figure out how to apply this trading system in practice. Since the Barbarian Arrow strategy is aimed at following the trend, beginners should have a good understanding of how to correctly identify it. We have covered this in detail in a selection of articles on our website:
- How does a trend work in the markets?
- Identifying and using bullish and bearish trends.
- Market phase changes .
- How to identify a flat market?
The principle of trading according to this system is quite simple: trades are opened in the direction of the regression channel in the overbought and oversold zones, highlighted in black. If the channel is directed upwards, we wait for a green arrow to appear under the candle in the oversold zone. If the channel is directed downwards, the red arrow above the candle in the overbought zone will signal the need to open a Put option.
It should be especially emphasized that overbought and oversold zones are considered to be all areas above and below the black bands of the regression channel, respectively. Conservative traders can additionally wait for confirmation of the signal from the intersection of moving averages after the corresponding arrow appears.
However, in this review we will not adhere to this rule: only an aggressive approach and lightning-fast decisions will form the basis of our strategy. Those who share this principle may not wait for the candle to close, but open a deal immediately after the corresponding arrow appears. Do not worry, the BarbarianArrow indicator is reliable and does not redraw its signals.
Opening a Call Option
- We make sure that the trend is upward – the channel is directed upwards
- Candle in oversold zone and green arrow appeared
- At the opening of the next candle we buy Call
Opening a Put Option
- We make sure that the trend is downward – the channel is directed downwards
- The candle is in the overbought zone and a red arrow appears
- At the opening of the next candle we buy Put
It is recommended to select the expiration time of 3 candles. Select the holding period of positions depending on the financial instrument and the results of testing on historical data.
Specifics of Using the Barbarian Arrow Binary Options Strategy
The Barbarian Arrow strategy provides fairly high-quality signals that do not require additional filtering. However, in our experience, the best results can be achieved in the case of a clearly expressed trend, when the regression channel has a slope. By adhering to such a simple rule, you can significantly reduce the number of unprofitable transactions.
Pros of the Barbarian Arrow Strategy
The advantages of this system include its simplicity, reliability, and the unambiguity of the signals given, understandable even to beginners. All that needs to be done is to select an asset with a clearly expressed trend and open trades based on the signals of the BarbarianArrow arrow indicator after prices go beyond the boundaries of the overbought and oversold zones. Conservative traders can wait for the intersection of moving averages, and more aggressive ones open positions without even waiting for the candle on which the trading signal appeared to close.
Cons of the Barbarian Arrow Strategy
In case of decreasing volatility, the system may generate false signals. In such a situation, it will be useful to experiment with different values of the Regression Degree parameter to find a more suitable regression channel flexibility coefficient for the current market situation. However, remember that overfitting the regression channel to historical data is unacceptable. In this case, it will perfectly match past prices, but work poorly on real market data.
Conclusion
The BarbarianArrow binary options strategy is simple, but very effective, especially during long-term trends. To increase the reliability of the signals generated, the trading strategy includes moving averages, the intersection of which can serve as an additional filter, cutting off potentially unprofitable transactions.
An additional advantage of this system is that it is free. However, before using it in practice, we recommend practicing on a demo account opened with an honest broker . Open trades, observing the rules of risk and capital management. We wish everyone successful trading!
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