Dynamic Zone RSI Strategy

Dynamic Zone RSI Strategy Some of the feedback I have been getting on my recently posted ‘RSI Strategy’ has been great, but some people have been having problems working out the best moment to enter the trade. I can understand that may be difficult to work out, there is no specific moment, it’s all about your own good judgement. Of course if can reverse out on you and keep heading in the same direction it was – That’s the problem with any reversal strategy. In this post, I reveal to you a new binary options strategy that is working even better for me than the RSI Strategy… In fact it builds on and around that same reversal strategy. There are a few more indicators you need to cross-check and confirm with, but I have been having great success with it all week. Have a read below and please let me have your feedback on it. There’s even an excellent video to watch. Dynamic Zone RSI Strategy Folks, this dynamic zone RSI strategy is excellent. I’m so pleased with it that I was eager to try and help others to see how this can help them with their trading. The system as it currently stands as of writing this post today, is that it uses three to four indicators for confirmation of signal of impending retrace/reversal. I say three to four because the fourth indicator can often be too ‘strict’ and pull you out of too many trades if you wait for it to come in line with the others for every trade… More about that later. Let’s have a closer look at this method and don’t forget to watch the video! Indicator #1 – Bollinger Bands The first confirmation for your signal is when a candle finishes over the outer boundary of a Bollinger Band. It can be the upper or lower band with settings of period = 20, shift = 0, deviations = 2 (apply to ‘Close’). Note that the candle must finish over the outer band for it to be a confirmed signal for this first indicator. A wick or shadow appearing over the outer band with the candlestick body finishing inside does not count. Once you see that you have confirmation here, proceed to check against indicator #2 Indicator #2 – RSI (10) The second point of confirmation is in the window below the main chart. It’s a simple RSI line with the period set to ten (10). There are two horizontal lines drawn on this window at the 70 and 30 points. When the RSI climbs to where it breaks the 70 line, the asset is thought to be overbought for the market at this point. The strength is such that it confirms positive for a signal for retrace and to take the next candle in a ‘PUT’ (DOWN) direction in the existing timeframe period only (and once it also confirms with the other indicators). Similarly, if the RSI drops to below the 30 horizontal line – Once you can clearly see that it has broken it (not tipping or touching it), the asset is thought to be oversold for the market at this point. Again, the strength is such that it confirms positive for a signal for retrace and to take the next candle in a ‘CALL’ (UP) direction for the existing timeframe period only (and once it also confirms with the other indicators). 1

Tip: Be patient, try not to take the signal too early. If in doubt, wait for the next candle – If it then retraces without you taking the trade because you were cautious – So what? There will be others – Let it go and find another signal. Indicator #3 – Dynamic Zone RSI (5) This is the cat among the pigeons indicator… The secret weapon of this strategy, the ‘Coke’ ingredient if you like. It’s been custom-coded specifically to work best with shorter time frames for binary options trading use. It’s simply amazing and incredibly accurate – Although for best results, you need to ensure the other indicators have been confirmed and are in line too. For a confirmed signal on this indicator, we are looking for the green RSI (5) line to finish either above the upper horizontal band (purple on my template) for overbought; or for the green RSI (5) line to finish below the lower horizontal band (orange on my template) for oversold. Try to look for a little ‘black space’ between the RSI green line and either the upper or lower bands. If it’s touching it, it doesn’t really count. It’s up to you how much risk you want to take, remember these are guidelines. Note that the values for both the upper and lower bands are constantly changing as this is a custom indicator. [Word to the wise that there are alternative variant Dynamic Zone RSI custom indicators out there on the internet, so be sure to get hold of the specific one I give you. I have compared it to other similar named indicators and the one I have and use has values set specifically for Binary Options short term] trading. Indicator #4 (optional) – Stochastics Oscillator (5, 3, 3) This last indicator has only just been introduced into my trading. It is best to use for confirmation of signal in addition to the other candles where there is lower volatility in the market and the candlesticks are not as large. For a confirmed signal on this indicator – Essentially what you are looking to see here, is for both Moving Average lines (dotted red and blue on my template) to move below a horizontal line set to twenty (20) for oversold, or both MAs to rise above the 80 horizontal line for overbought. If positive confirmation of a signal from this indicator is also in line with the above indicators then, provided the price is not moving in a straight line (consolidating), you will have an excellent signal to take in the opposite direction. Putting it all together Look at the image shown here. This displays a 5-minute timeframe for USD/JPY on 11th March 2013 at 01:10 hours. Let us follow the blue (bullish) rise all the way to the signal candle. What is the signal candle? The signal candle is where all the indicators come into line and confirm each other. The strategy would suggest that the next candle after the signal candle, or very soon after, there will be a retrace. That’s when we make the trade. Anyway, let’s go through it step by step:

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Dynamic Zone RSI Strategy in Play The first blue candle does not even meet the criteria of indicator #1 (Bollinger Bands), in that the candle finishes below the outer Bollinger Band – Therefore, this candle is definitely not a signal candle. The subsequent second blue candle breaks, rises above and (most importantly) the body of this candle finishes above the upper Bollinger Band. This indicates to us that it now meets the criteria for indicator #1. So as this candle is forming and starting to finish, we follow the gridline vertically down to test against indicator #2 RSI (10) and others. You can see quite clearly that the blue RSI (10) line has not broken the upper (70) horizontal line. So it does not pass this test. Nor does it break into the ‘Dynamic Zone’ for indicator #3. The green line has not broken the upper purple band line. So blue candlestick #2 is not a signal candle. The subsequent third blue candle continues to rise higher above the upper Bollinger Band. It also finishes above it. Again, we follow our vertical gridline from this candle downward and we can see that it touches but does not break the upper (70) horizontal line. Coincidentally, neither does the green RSI (5) break the upper purple band – Although it is touching it – This is not a signal. This candlestick is also rejected. The fourth blue candlestick in the series rises higher still. Looking at indicator #2, we see that for the first time, the RSI line is clearly above the horizontal line at 70. This indicator now confirms the signal. We look further down and can see that the green RSI (5) line has broken and is now clearly above the upper purple band. This indicator also confirms the signal. In most instances, this should be enough to say that the next candle in this series will retrace and start to go down. This asset can be thought of as ‘oversold’ – It should retrace on one of the next candles. If we chose to take this as the signal candle, we would lose our first trade, because as we can see, there is a fifth blue candle that rises further still. 3

5. The fifth blue candlestick in this series continues to meet the criteria of both indicators 1, 2 and 3 with even greater ferocity. However, up until now, it has failed to meet the criteria expected of it by indicator #4 – The stochastic indicator. As we can see, it is only now that both the red and blue MAs have risen above the horizontal line at 80. If you waited it out until this point for all indicators to be in line, congratulations – You would be rewarded by the retracement on the following candle.

A Martingale Approach So what size trades should you place? For some who know for sure that a retracement is about to happen, such as in this strategy, they will adopt a Martingale approach. For more about Martingale, please see my relevant post here – I talk about this approach already on my blog. I’m not a great fan of Martingale personally – It can go very wrong very fast if you don’t know what you’re doing. However, I say this candidly – If you are set on Martingale for this, be prepared to go up tosix levels with this strategy. Although on average, this strategy works out favorably 60% of the time with the first candle, which rises to 80% with the second and over 90% if you stay with it to the third bite at the cherry after the signal candle… I have seen rare occasions where it has taken up to six candles after the signal candle, to get to any retracement. This explains why I am not eager to play out Martingale to its bitter end. I seek a happy medium. I play a limited Martingale approach. There are many ways to do this, but what I suggest is to play half your normal stake for the first candle, your normal stake for the second and double it once for the third. That seems to work nicely for me. It’s rare to take over three tries after the signal candle – But in a low volatility market or where the price is consolidating or flat-lining or just kept there by the large market makers – You’re in dangerous territory. You should try to avoid these periods. If in doubt – Stay OUT! You will get plenty of signals with this strategy across many assets and which are valid across multiple time-frames. Exercise common sense and good human judgement. If it looks like the price is flat-lining or consolidating, think twice before entering the trade. Similarly, if the market is very quiet – This strategy does not work as well and suitable retracements can take longer. Alternative Timing of Trade As an alternative method, some people prefer to wait for an established actual retracement before jumping in. This can be riskier since you are taking a trade whilst the candle has already covered some margin of retracement. So the price you open a trade will be significantly less favorable than it would have been had you taken it at the top. This can backfire on you of course if it decides it does not want to retrace so much. What to look out for if you want to try this, is a move on the Dynamic Zone RSI indicator, where the green line had been flying above the purple or below the orange bands, but then makes a sharp move (denoted by a sharp angle) and push back over into the central zone between the bands. Once it crosses back over the band, or just before, is the alternative signal to place the trade.

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Using Historical Data When testing a new strategy, if it’s possible, it’s always best review and test it on historical data. That is, looking back over time on your MT4 platform for a given asset on a given timeframe, and checking how successful the strategy has been in the past. Now although not all signal indicators allow you to cross check against historical data, I’m please to say that you are able to do with this, fortunately. I would suggest opening up your platform – Once you have all the indicators in place as directed, simply open an asset, say GBD/USD and scroll back in time on any time frame. Check out the reversals that cross the Bollinger Bands on the top window and cross-check them against the signals provided in the lower windows as shown above and on the video. This will give you a great feel for where the system works and where it doesn’t work out. Remember, like every strategy, there will be times where it won’t work out. But it helps for you to see where it does work nearly every time and where it falls over. Reviewing many of these will help you to spot the clear winners against the unsure ones and will enable to you place appropriate trade sizes on those trades. The Video on Dynamic Zone RSI Strategy Reading about a strategy is one thing, but a lot of people prefer something more visual and a friendly voice explaining how it all works. So I put together a video for you guys too. Go to the page and have a look. I recommend opening it up to full screen (icon bottom right of video window). It’s FLASH I’m afraid, so you won’t be able to watch it on a Mac or iPad. Anyway, here’s the link: Dynamic Zone RSI Strategy – The Video I hope you guys do well with this strategy. Practice makes perfect – I made a lot of mistakes in the beginning because I wasn’t being patient enough and making the trade too early – Take your time, be disciplined and patient and you will be rewarded for it. After a week or two, you will get better and learn the good ones from the bad by seeing the same setups time and time again. I always recommend you practice on a demo account first before trying it out with live capital (although I’m not good at taking my own advice!). And remember – if this strategy makes you a decent trader earning a nice revenue, consider coming back here and donating a few quid to the guy who showed you! Good luck in your trading and be prosperous! (Any questions, tips or experiences using this strategy, please comment below and I will try to respond quickly).

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46 comments Jon Tancock / March 11, 2013 Excellent intro to the strategy. Only comment would be that all 4 indicators on one chart can make the chart a bit „over-busy‟, but with a degree of familiarity and decent volume in the market, the Stoch is not so crucial (it may be better to avoid times of low volume / volatility for BO trades in any case). I am trialing the strategy with both M5 and M15 timeframes for short ( fresh start. The beauty of it is, that you would even see it clearly when the next candle after your first one which might be OTM will go into a retracement “for sure”. I wonder if any of you guys could sum it up by saying “only trade this one with major pairs when stocks are open for e.g. london/new york.” And don‟t forget to stick to a strategy to make your results compareable.

DR M RAMESH KAMATH / December 24, 2013 Superb strategy. I have never won these many trades in my life.It succeeds 60-70% of times on first time, 80-90% the second time and almost 100% the third time. If you manage your money properly you can double your account within a single day or a few days for sure. I trade the M5 charts as I am using marketsworld.com and it works beautifully. Thanks a lot. I am very excited about binary options trading now. Earlier I thought they are scamming me as I was losing most of the trades.But I now realised that I was not taking the trades correctly. Now I am using your strategy and am winning most of the trades with very few OTM trades. Three Cheers!!!

priyanka / January 11, 2014 Dear Dr M Ramesh Kamath, I was wondering if I could just clarify with you; when you trade 5 min candle charts, what expiry time do you use? Also when you talk about the first, second and third time percentages, are you using a martingale strategy? Thank you so much in advance!

DR M RAMESH KAMATH /April 14, 2014 I just thought I would share some ideas which i have started using with this strategy and is working quite well. 1. I take the M30 time frame. 2. I use marketsworld.com because you can place small trades and take it big as you win more trades. They have the lowest $1 trades and I would like to explain it. 3. I take a position when all the indicators are showing entry signal and I take the third candle of Bollinger band which closes above the upper/lower line. I place the first trade with say $1.If it works fine.Else I take the $2 after the fourth candle and 90% of the times it works.If not I take the last $ 6 ( 2* 3) which covers the losses in the last two trades. It works almost 99% of times. With M5 there are more misses.

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If I miss on the third chance then I accept the loss and repeat the process on another asset class. You could try the same with larger amounts if you have more risk appetite. ( 5/10/15; 10/20/60…). It works but try it on M30 or higher frames only. Suggestions are welcome

admin / February 23, 2014 You‟re welcome Ramesh! If you figure out any tips to improve on the strategy, please come back and post them here! On 5min charts the expiry is usually one I can find on a broker that allows it. Marketsworld do short expiries… What I will say is that it does make a difference what broker you use as there is a huge variety on what expiries are on offer. If you find that a platform is being too stingy on acceptable expiry times, try a different broker – There are lots of good ones to choose from. I personally recommend Stockpair now. Regarding Martingale – I do continue to use MG, but I only ever use it now with a one or two-step loss. Then I revert back to a normal trade. I‟m going to write a new post on Martingales very soon sharing what I have learnt over the last 12 months. Watch out for it! But basically, depending on the market conditions – I often do a one-step MG following a loss (meaning I double up on my next trade just the once following a single loss, then go back to a normal-size trade) – Or do a two-step limited MG (Meaning I double up once following a loss, but my third trade is a „not-for-profit‟ recovery MG which recovers back the losses from the previous two losses, but doesn‟t look for profit)…

mayte / January 8, 2014 hi where can i find the indicator dynamic zone rsi?

admin / February 23, 2014 As I mentioned already in the comments above yours, the link to all the indicators I use for this are underneath the video. The link to the video is in the post above.

Priyanka / January 10, 2014 Hi everyone, I kind of stumbled upon this website really unexpectedly. . . I was google searching an indicator! Anyway, I have not tried this strategy yet, but it has given me hope. I‟ll try it as soon as possible because I was literally contemplating closing my binary options account and never looking at the stuff again! I had nowhere to learn anything that actually workeed. . . so I ended up trying crazy risky strategies that won me a lot of money, then lost me a lot of money, etc etc, always „testing‟ on my real account because I couldn‟t find somewhere to open a demo account. Anyway, I was wondering if I was the only idiot who went out and brought binary option strategies, because I‟ve brought one, and I was wondering if any of you guys wanted to check it out and let me know if you like it or not? I would try it myself, but it‟s just a little too complicated for me to understand exactly what to do, when I‟m reading the manual. I get the jist of it, but if someone else could check it out too, then that would be wonderful Of course, it‟s a paid for strategy but I‟ll just upload/send it for free instead of re-selling. . . I don‟t even know if it‟s really worth anything or not to be fair Can I upload it in a ZIP file somewhere on this site? What should I do? Thanks in advance. . . Regards,Priyanka x

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admin / February 23, 2014 Hi Priyanka – Glad we could give you hope! Money/profit can be made from binary options – Most do fail, but if you persevere, control your emotions, use good money management and find a strategy that works consistently for you, money can be made. I am living proof of that! See my recent post! Don‟t waste your money on most of the crap out there. A lot of people try to profit from people wanting to learn strategies. My site is completely free and I‟ll never charge. Most of the good stuff is free anyway. I have reviewed a lot of the stuff people charge for and most of it is utter rubbish. Time and experience are what is required most to become profitable at BO. I remember being warned about this and that myself when I first started, but I still eventually went through it all and found out myself the hard way… It‟s part of the process. Wise up, do everything in moderation, including your trade sizes until you start seeing consistent profit from your strategies. Remember the market changes all the time. So a strategy that worked last week or last month, might not work under current market conditions. That is where a lot of people fail. You have to be aware that strategies you find out to work for a few hours, days, weeks or even months will not work all the time. Learn to adapt, learn to intelligently look at the market and see if your strategy is workable today – If it isn‟t – Stay OUT… Do some family time! Market will be there tomorrow and next week! Discipline. Discipline. Discipline!

Jordi Stulen / March 17, 2014 I think this is probably the best advise you can have for this strategy. Last week i increased my balance by 40% (made $1400 from my $1000 deposit), using a 3 steps max. martingale approach 50/1 win/loss. But like today today, everything is consolidating, hardly any long candles, no volatility, slow outbreaks and trends. Leave your computer alone and go do something else because you will find yourself sitting at your screen losing trade after trade. When market condition are right, this strategy is your very best friend. Thank you for sharing this strategy! Its a holy grail sometimes.

Florian Grünwald / January 10, 2014 I codet this strategy and backtested it. My Indicator does not respect if there was any news. With the best configuration I hade barely 60% Success for the Year 2013. Playing with any value of every indicator

admin / February 23, 2014 Back-testing is very valuable and this strategy can be back tested of course – But remember that the strategy will not work in all market conditions. Try to stay out of news and as I mentioned in the video, times of very low volatility. The strategy still has a high success rate, but you have to apply it intelligently. By the way, 60% ITM (In The Money) is still profitable. Any ITM score over 58% is profitable (with a win payout of 70% or above)… The trouble with coding this for auto-trading and back testing every single incidence is that it will account for every eventuality – And you wouldn‟t enter into every eventuality. The human touch is what makes it work, not a robotic approach.

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Hey I want to try out this system but the Dynamic Zone RSI doesn‟t load very well. I mean the green line loads but the 2 boundaries do not. I have tried many thing to get it to work but no luck. Any suggestions? PS I just got a new computer with windows 7 just for trading. This is what I tried it on.

admin / February 23, 2014 Hmm… It works for me and hundreds of others who have tried it also… I wonder if it‟s your configuration. You do know you can add those boundaries manually? It‟s fairly easy to do… Let me know if you still can‟t make it work.

Jordi / March 1, 2014 Hii Admin, i have also added the Dynamic Zone RSI, and i also onely got the green line visible without the boundries. Do you might have any suggestions for me to?

Lafayette / February 20, 2014 Never mind. I downloaded the IBFX version for MT4. I see the lines now. Will start trading with a demo account. Thank you my friend for your post and effort to help others. I love this site.

admin / February 23, 2014 Awesome! Let me know how it goes. I will be adding more to this site shortly, I have several months added experience to share.

Q Wong / March 9, 2014 hi im new to this and your info is super im trying to set up my mt4 to start with binary option trading i copied/downloaded your dynamic zone rsi strategy but i get an error a improper enumerator cannot be used Dynamic Zone RSI.mq4 line55 colum41 can you please help me to solve this problem kind rgds wong

Andy M / April 16, 2014 Like a few others here, I just found this site recently and think it is excellent. What I have found with this strategy is that if I apply it to a Gold chart with a 1 minute timeframe, my trading results are SPECTACULAR! I am looking at other pairs and times of day to trade, but for now, here is what I am doing: 1. Bring up a GOLD chart (XAU/USD) 2. Choose 1 minute time frame 3. Apply the DZ indicators (RSI 10, DZ RSI from this site, Stochastic 5, 3, 3) 4. For now, I am trading 0800-1000 Eastern Time only 5. I apply the rules for trading VERY STRICTLY and I‟m sure that this is what accounts for the terrific results. A candle MUST close outside of the upper (or lower) Bollinger Band, RSI MUST break the 70 (or 30) line, DZ RSI MUST break upper (or lower) line ANNNNDD the Stoch MUST have BOTH lines break the 80 (or 20) line. If even one of these indicators is not correct, I do NOT take the trade. Allowing all indicators to be in alignment filters out SO many trades that would have lost, it‟s spooky! IMPORTANT: when an

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indicator needs to break a line, I mean it has CROSSED it; if it touches a line but doesn‟t actually cross over it, even if the other indicators say OK, NO TRADE. Example: the fast line of the Stoch has crossed the 80 line and the slow line is ON the 80 line and all other indicators say yes….this is a NO TRADE as BOTH Stoch lines need to break the 80 line. It would be very close but that one little element will keep you out of several bad trades. Yes, several times that trade will work out anyway but the information is saying NO, so for best results, don‟t trade; either you are an Investor or you are a Gambler. One other thing I do that has proven to be VERY successful is a very minor martingale. If my first trade fails, I trade the very next candle for triple my usual trade amount, which gives me a very nice profit. Over 5 weeks and 45 trades, this has only failed twice and been successful 18 times! And each of these trades = 1.5 times the usual profit! (all other trades were outright winners). These two losses are, in fact, the only losses suffered. So, one total loss is equivelant to (1 regular trade + 1 triple trade)= 4 regular trades. I had two of these so: equivelant of 8 regular trades. 45 total trades – 8 losses = 37 winning trades. 18 of these were worth 1.5 regular trades so the real equivelant is 0 loss. Happy! Trading the 1 minute chart as above gives me 2-3 trades per day (sometimes 1, sometimes 4)and I trade the 1 minute expiry options. When I add another pair I will have all the trade opportunities I could ever want. Let me know what you all think and cheers to making money!

Chris Panteli / May 25, 2014 Firstly, thank you so very much for such an excellent resource. Could you please explain what expiry time we should use on a 5m chart. I have 24option account, so if i am using this strategy on 5minute chart, when i enter the trade after seeing the signals of all the indicators, do I enter a 5minute expiry??? Please help Thank you And please please please post the updated version of your strategy.

admin / May 25, 2014 Hi Chris – The strategy works pretty well on many timeframes. If you are following a 5M chart, then the signals explained above apply to a 5M trade expiry. If you are following on a 15M chart and spot the signals, then any signal candle would apply to an expiry of 15M. The updated version of this strategy is when the indications add up to a signal, you then do something extra before taking a trade… You switch over to a 1M chart to wait for the best time to enter the trade. However, I never tested that properly before I switched strategies completely, hence I never felt comfortable passing on the info until I had a chance to test it thoroughly myself. Perhaps I will someday soon!

chris / May 26, 2014 Thanks for such a quick reply. And thank you very much for the info, it really helps. What strategy are you using now?? Are you making a full time living out of options? How much weekly?? Can you help us all out and teach your new strategy, or direct us to material that explains the logic behind your new material! Thanks again

admin / May 26, 2014 I think I wrote a post about this recently (see the more recent ones in May 2014). I do make a living from BO now, although I haven‟t quite dropped my film/video producing career yet! I trade 60-second options almost exclusively now as I have mastered a technique that provides at a consistent profitable rate. The strategy is

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not an easy one, the only indicators I use are Bollinger bands, but only as a guide (not used to identify a signal). I watch price action and trade off gut feeling. I must stress that this has only become possible by staring at charts and studying price action for an exceptional period of time. I still have bad days and weeks, of course – But over time, my profitable periods far outweigh my unprofitable ones… Which is where you need to be to draw a consistent profit from BO. There is a technique of sorts that could be copied through one-to-one tuition, but I haven‟t considered this as I‟m still perfecting the technique and making enough money on my own without the need to teach. The trouble is, even with tuition, you still need the experience to be able to react properly when the time comes – Especially with 60-sec. If I were you, I would stick to longer time frames. To profit with 60-sec long term, you really need to know what you‟re doing. As long as you choose a broker that doesn‟t „cheat‟ with the price action, you should be able to profit eventually yourself… 24Option isn‟t too bad, but I haven‟t used them since being a novice. 24Option are probably the biggest and best funded binary options broker, so you should never have any problems with withdrawals. Steer clear of anything that uses the Spot option back office (which is the majority of brokers out there). Spot cheat on the price and there‟s a bunch of other stuff they do that makes them particularly unattractive. I still recommend Stockpair, I haven‟t found a broker better than them yet and I‟ve tried over a dozen. I don‟t like Banc de Binary either. The new strategy still adopts the reversal technique you see in Dynamic Zone RSI, and still waits for price to become weighted oversold or overbought before trading the reversal. It‟s just that I don‟t use RSI indicators, or Stochastics or anything like that anymore. Pure price action.

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