The Cobra Trading Strategy for Binary Options
I was recently turned onto to Forextradingresources.com as a new source of potentially useful binary options trading strategies. The site is packed full of forex resources and contains numerous, and I mean numerous, trading strategies. On the home page they are broken into categories like Scalping techniques, trend following strategies, patterns and so on. Since I like trend following techniques that is the link I first followed and was surprised at how many strategies the site had listed. There are 139 trend following strategies on this website with names like Quadpips, Koala Forex System, the Boomerang and today’s choice, the Cobra.
What Is The Cobra Trading Strategy?
The Cobra strategy is one submitted by Joy22. This strategy is a trend following strategy and only takes signals that are in line with the trend in order to limit risk by capitalizing on market momentum. It is a short term trading system and utilizes trends occurring over the course of only a day or two. The system utilizes one hour charts and a 72 bar(hour) moving average to determine the current trend. If price is above the 72 hour moving average then the trend is up and bullish trades are made, if price is below then the trend is down and only bearish trades are made. Other indicators include a complicated set of simple and exponential moving averages and a 14 bar ADX applied to what is being called the “Typical Price”. “Typical Price” is the average of the high, low and close of each bar. The moving averages created a signal line that includes a buffer zone for added safety. Signals are only taken once price action moves beyond the buffer zone.
Click Here For More Info And A Download For The Cobra Strategy on ForexTradingResources
How Does The Cobra Work?
Well, once you get your system programmed correctly for this strategy it is pretty simple. Trades are only taken with the trend, the trend is set by the 72 hour moving average. When price is above the moving average and trending higher you wait for it to retreat to the signal line/buffer zone and then bounce back out. The signal occurs with the first candle that opens and closes out side of the buffer zone. The same is true in reverse for a bear signal. When price is in a downtrend wait for it to climb back to the signal line and bounce out of the “buffer zone”.
Why This System Does Not Suck
This system does not suck because it appears to work. Plus, it utilizes a combination of signals to determine trend and entry in a way that reduces risk and capitalizes on the day to day trends in the currency markets. Signals are clearly defined and easy to spot. It takes more than a simple touch or bounce from the signal line which is one thing I like. Too many strategies leave identifying the actual signal open to interpretation. Not with the this one. The use of high and low moving averages to create the buffer zone is a stroke of genius that I may add to my own analysis.
Why The Cobra System Sucks?
This system sucks for one major reason, you have to have a highly adaptable trading platform to use it. It takes a lot of programming to get all the special moving averages and “typical prices”. The average trader, and especially newbies, does not have access to this kind of trading system. I also want to point out that even though you are told to use an ADX applied to the typical price the strategy never tells you what to do with it.
My Last Words On The Cobra – BITES!
The Cobra looks like it is going to be a good system for short term binary options traders, provided you are experienced enough and have the right chart package to use it. The bad thing is that I think it is not accessible to new traders. I don’t know too many newbies who are willing to shell out dough for trading software when they can easily get started with free charting packages. Other than that my hat is off to Joy22, I think you have come up with a good strategy and one that I can endorse. The Cobra Strategy is an approved strategy for binary options.