The Keltner Channel is an one of the most effective trend indicators. It is actively used for trading as in Forex as well as in the binary options market. Although it is visually similar to Bollinger’s, there is a significant difference between these two. And each of them has its own trading strategy. Firstly, the Keltner channel is an indicator, which is calculated by the closing price, max and min (then the like bands of Bollinger are plotted by deviation). Secondly, in the case of Keltner’s , the “95% rule” does not work, which Bollinger and says that 95% in price is within the upper and lower limits of the indicator.
What is the Keltner channel used for?
The Keltner Channel indicator performs several functions:
1. it can be used to determine the current trend. It displays market trends well and shows how strong buyers and sellers.
2. All three indicator lines (cm. picture below) often act as dynamic support and resistance levels. The Keltner Channel is similar to Bollinger and Moving Average.
3. It is used to trade binary options in all situations – in a trend movement as well as in flute. Almost every strategy based on the Keltner indicator does not give 70-80% reliable signals. The percentage of false signals often does not exceed 20-30%, which is for a trend indicator.
How to use the Keltner Channel when trading on a trend?
The strategy of trading by trend is quite simple. If the market for binary options Finmax has a steady trend (upward or downward), the price can often break through the upper or lower limit of the channel. Have only one of the candlesticks closes behind the Keltner channel, can to buy the option in the direction of the main trend. The figure below shows the trading on the trend. Like visible, the signals in points 1, 2, 3, 4 and 6 and after the closing of one candle below the border of the channel was one candle that closed below the previous one. In these cases, buying the binary options “Below” would have made the trader profit. And only in one of the six cases (at point 5) the signal was false, and after the price broke through the Keltner channel, it returned to its limits again.
Please note that the correct setting of the indicator is important for successful trading. A lower number of false signals is observed in the standard settings:
PeriodMA = 20;
PeriodATR = 10.
Also moreover, the trading strategy of the Keltner indicator in the trend movement will be more effective if you correctly calculate the expiration of binary options. Setting up of the expiry should be done so that it corresponds to interval (i.e. so that the option’s expires when the next candle closes).
Pequomerendations to a trader
If your trading strategy gives bad results and the number of losing trades started to exceed the number of profitable ones, make sure that such rules are followed:
1. For trading, you should choose medium and large. The Keltner channel works much better in intervals from H1 and above. False signals often appear on timeframes
2. The signals should be filtered with the help of other indicators. Use other indicators (trend indicators, oscillators, etc.) to confirm the mojo signals.
3. Trading should be carried out according to currency pair with low or medium volatility.
Stick to these simple rules and your trading strategy will bring you a good profit and provide a stable income from trading in the binary options market.