For the BOMS strategy I did things a bit differently: it was first released on the Forums, on this BOMS Strategy thread and I figured there’s no need for an article that explains it in detail because, well, it’s simple. But it looks like this BOMS thingy is not as simple as I would have wanted it, so it’s time to explain it properly and go into some details that were not explained on the Forums. So, BOMS away!
What is The BOMS Strategy and How To Use It?
First of all, you should know that this is a trend following strategy and you will need additional trading skills to use it successfully, meaning that you can’t just match colours and make your way to millions.
Ok, let’s see what tools we need for this strategy: one piece Exponential Moving Average (EMA), period 34, Green; one piece EMA, period 89, Red and one piece Trader’s Dynamic Index (TDI) with default settings. You can read a full review of the TDI if you click this link but please keep in mind, we are not trading the TDI by itself. There are several ways to trade the TDI and the article I’ve linked explains some of them. This strategy explains another, so don’t mix the rules you will read in this article with the rules from the other article. Ok, speaking of trading rules, here’s a picture that will help me explain:
OK, now let’s see what we have here: this is a trend following strategy so we will only trade in the direction of the trend. To define the trend we look at the EMAs (point “1” on the chart above): Green above Red means uptrend so we will only take calls. Red above Green means downtrend so we will only take Puts.
Now look at point “2” on the pic: the Green line of the TDI has to touch the volatility bands of the TDI (Blue outer lines). In this case we are in an uptrend, so we are only looking for Calls and that means we need a touch of the lower volatility band.
Finally, at point “3” the Green TDI line crosses the Red TDI line, going upwards and that’s our signal to enter a Call. Here’s a Put example:
As you can see in the pic above, all the three rules are met: the EMAs show that the market is in a downtrend (Red above Green), the Green TDI line touches the upper volatility band and finally, the Green TDI line crosses the Red TDI line, doing down.
You may wonder why the Green line must touch the upper or lower volatility band before we can enter a trade. Well, the volatility bands are very similar to Bollinger Bands and usually, when price touches the upper band, it becomes overbought and the chances of it coming down increase. When it touches the lower band, it’s oversold and the chances of it going up increase. Basically, the strategy is looking for overbought and oversold levels but only in line with the trend (as identified by the EMAs). Here’s a summary of the rules:
Rules for PUT:
1. RED EMA above GREEN EMA
2. GREEN TDI line touches the UPPER Volatility Band
3. GREEN TDI line crosses DOWNWARDS the RED TDI line
Rules for CALL:
1. GREEN EMA above RED EMA
2. GREEN TDI line touches the LOWER Volatility Band
3. GREEN TDI line crosses UPWARDS the RED TDI line
BOMS Strategy Video Explainer
Why Does The BOMS Strategy Suck?
I already gave you a hint above about why it sucks: you cannot just match colours and expect to become a millionaire. In other words, you cannot simply follow the rules without taking into consideration other stuff that’s happening on your chart. Look at the big picture (the higher timeframe charts) to see if the pair is really in a trend and if that trend matches the direction of your EMAs. Look to see if price is making higher highs and higher lows or vice-versa, look for signs of exhaustion of a trend, etc. I know that all this means the Binary Options Made Simple strategy is not so simple anymore. Well, yea, I agree, but if you are not a complete newb, looking at the highs/lows and gauging the overall direction of the market is not complicated stuff. On the other hand, if you are very new to the whole trading thing, you can just use it “as is” and still get good results.
Why The BOMS Strategy Doesn’t Suck?
The signals it gives are less frequent than with other strategies and this means you will not overtrade and more importantly, I consider the signals are solid. By following the direction of the EMAs, you make sure you are always on the right side of a trend and by waiting for price to become overbought/oversold, you increase your chances of a profitable trade.
Wrapping It Up
Go test it! Never invest real money on a strategy you’ve just come across or because someone tells you it’s profitable. Notice that throughout this article I didn’t hype the strategy and I never told you that it will give you 50, 70 or 99% accuracy. That’s because people are different so the results they get from a strategy are different. For some tips on how to improve the accuracy, head over to the BOMS Thread that I’ve opened on the Forums. Ask, discuss and make it work for you!