Full Review of the Joseph Nemeth’s Strategy for Binary Options Trading
YouTube is great for fun, education and sometimes even for finding trading strategies. It’s true that you can find there hundreds of scammers, forex and binary options gurus, magic software, you name it. But every once in a while you can catch a real gem of a strategy like the one I am going to present today. Actually the strategy is only as good as the trader who uses it but let’s face it, if the strategy is bad, a good trader will not make it super profitable.
How to use Joseph Nemeth’s strategy
The strategy belongs to Joseph Nemeth and at the bottom of this article you will find a link  to his YouTube video but it’s an hour and a half long and contains a lot of Forex complicated talk so the alternative would be reading this article. So without any further ado I will jump right into explaining the rules of the strategy. First you should know that it’s a trend following strategy that uses multiple time frames. Most of you are by now familiar with multiple time frames so I guess it shouldn’t be a problem. To identify the Primary Direction we will look at a Daily or 4H chart with Heikin Ashi instead of regular candles. I recommend reading Heikin Ashi, the underrated secret from Japan if you want to learn more about this type of candlesticks. If the Heiken Ashi is up, the Primary Direction is up; otherwise it’s down. Once we’ve identified the Primary Direction we will move to a lower time frame to identify the Trend. For this purpose we will use a 20 period Exponential Moving Average on a 60 minute or 30 minute chart. If price is above the 20 EMA the Trend is up and if it’s below the 20 EMA the Trend is down. The Trend direction must match the Primary Direction. The last thing we have to do is to enter the trade and this will be accomplished on a 10 or 15 minute chart when a Heiken Ashi candle agrees with the Primary Direction and the Trend. The MACD or the CCI is used to confirm our trade. The original author doesn’t explain this into detail but from the video I could see that he is looking for the MACD to be moving up for a bullish trade and down for a bearish trade. He also mentioned that he likes Renko or Range bars more than normal candles but I never used this type of bars so I cannot say if they are better or worse than Heikin Ashi. Here’s how the system looks like:
Now let’s analyze those charts a bit. The one in the upper left corner is a four hour chart and it will give us the Primary Direction. The Heiken Ashi is clearly green (vertical line on chart) so our Primary Direction is up. The chart in the lower left corner is an hourly chart and it shows us the Trend. Candles are above the 20 period Exponential Moving average so the Trend is up, agreeing with the higher time frame. This means that on a 15 minute chart we will only look for Calls. As you see the Heiken Ashi on the last chart is green and the MACD is nicely spread apart, going up so this means we just found a good trade according to this strategy. Here’s a recap of the rules:
- Daily or four hour Heiken Ashi is Green (or whatever color you use for bullish candles).
- On an hourly or 30 minute chart price is above the 20 period Exponential Moving Average and its slope is angled upwards.
- On a 15 minute chart Heiken Ashi is Green and the MACD is going upwards.
- Daily or four hour Heiken Ashi is Red (or whatever color you use for bearish candles).
- On an hourly or 30 minute chart price is below the 20 period Exponential Moving Average and its slope is angled downwards.
- On a 15 minute chart Heiken Ashi is Red and the MACD is going downwards.
Why does this strategy Suck?
The first thing I can think of is that a newbie will find this strategy very complicated. Combining three time frames to get the sense of direction can be confusing if you are new to trading so I believe the strategy should be used only by traders who have a good grasp on the basics.
Why this strategy doesn’t Suck?
The strategy itself is not bad at all. I am using multiple time frames in my trading so I can tell you first hand that it helps. According to Joseph Nemeth the strategy is 75% accurate but keep in mind that it is a Forex strategy and the results for binary options might be different. That being said, I still consider it a very good strategy which keeps you out of ranging markets and on the right side of the trend.
The Conclusion: Should I use the Joseph Nemeth’s Strategy?
The answer depends a lot on your level of trading experience. If you are looking for your first binary options strategy, this is not it. I am not saying this because it’s a bad strategy – in fact I find it very good – but because it is too complicated for newbies. On top of that, this strategy needs some tweaks to make it suitable for binary options and I didn’t find them yet. If you think it’s worth it, join the forum and let’s tweak it together.