Full Review of The Raphael Simple Strategy for Binary Options
The Raphael Simple Strategy is one that may have real potential. I may even be able to endorse it except for one thing. The author has not presented his case in a way that the average reader can understand. I think what allows me to see into the strategy is my experience with writing/editing and also with the type of trading he is doing.
The problem is that the Raphael is not a native English speaker. This becomes evident upon reading the body of the text. Early on, grammatical errors only point to a bad writer. Later, the one continuous run on sentence that is the body of his argument is compelling once deciphered but impossible for any but an experienced trader to understand.
There are also no charts, tables or diagrams to visually support the strategy. We are all technical traders here and charts are what we do. One chart with a few arrows would go long way to broaching the gap between his words and his meaning. I believe I know what the goal is and I have opted to attempt a translation.
Once Again Folks, The Raphael Simple Strategy!
This strategy is an ultra-short term trading system that comes close to scalping. It is a disciplined approach to short term trading and one that I think has real potential for significant gains. It is based on a 3 time frame view of the markets and attempts to capitalize on short term market reversals. Traders are instructed to use charts of 1 hour closing bars to determine trend and then narrow their focus down from there. The next step narrows down to charts of 15 minute bars. This step is called the confirmation but I think that is a misnomer. The first chart is for trend and the second chart is projecting the next support/resistance and potential areas for price reversal. The last charts are 5 minute bars and this is the chart where entries and exits are determined.
The strategy relies on RSI and Stochastic for trend determination and again I assume with the “confirmation” of reversals. The only parameters he gives for the indicators though is that RSI should be below or above 50 when the markets are trending down or up respectively and that Stochastic should be in line with that. I think a little more should be said about this however. These indicators are great for short term trading and could possibly be making a number of different signals. If these two indicators are indicating strength and in agreement with each other then the Raphael Simple Strategy is inappropriate. The RSI should confirm the trend by moving lower or higher with the markets with successive peaks/troughs AND be above or below the signal line. Stochastic should support the trend but rolling over and/or diverging from that trend. Stronger signals will come when these indicators are both diverging from the hourly trend.
So, with the RSI and Stochastic both diverging from trend on the hourly charts you can drill down to the 15 minute charts, AFTER you draw your support and resistance lines. It may even be wise to go out to a daily chart to draw these lines. Once you have your support/resistance lines drawn you can go down to the 15 minute charts. Analyze these again and draw any lines that look relevant. As price approaches support/resistance watch for signs of weakness and market reversal. The author says that “the more I noticed more candles at that point the more I see how strong I can believe that trade”. I think what he means is that if price stops at the expected line, and candles confirm reversal, you can now narrow the focus to 5 minute charts and look for an entry.
Using the 5 minute charts look for the next available Stochastic buy signal to get. Then you can “ride it until it becomes overbought or oversold again”. This is about the easiest thing to understand out of the whole piece. After you determine trend on the hourly charts and confirm a market reversal on the 15 minute charts you can then use stochastic to determine entry points on the 5 minute charts. Any dip/peak in stochastic will be an entry, depending on market direction. Until it becomes overbought… or diverges from price.
Why This Strategy Sucks
The Raphael Simple Strategy sucks because it is very poorly written, makes almost no sense and does little to enhance the on line trading community. That’s it. I have to ultimately grade this one on its quality as a published work and not on it’s content. The purpose of these forums, articles and strategies is to progress the education and experience of us all and this does neither. I would like to see websites like forex-strategies-revealed.com to do a little screening and prevent items like this from getting published. I guess that’s why Google developed the Panda and Penguin updates.
Why This Strategy Doesn’t Suck
My apologies to you, Raphael, for being so hard on your post. It seems as though you do have a good knowledge of trading. I think this strategy is sound and comes with a hairsbreadth of my own trading systems.
My Last Word On The Raphael Simple Strategy
Once decoded the Raphael Simple Strategy is one that works. The only negative is that you have to be well versed in trading to decipher the text. Once a trader knows enough about trading to understand what Raphael is saying it won’t matter, they will be able to devise this strategy on their own.
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