In binary options trading, you can either double your deposit or lose all your money in a matter of hours. For this reason, successful traders limit their trade sizes in order to minimise their risks in case of a change in the market trend. However, this cautious approach makes it hard to profit using only the simple, intuitive features available on the Quotex platform. To make a profit, all a trader needs is a chart and one indicator.
Before you start buying options, remember that you can reduce your trading risks by using the Quotex cancel loss trade promo code. This always allows you to cancel a loss trade of up to $10.
The Basic Tools
To understand how to make money with Quotex strategies, you need to know the basics of chart analysis and how the Alligator indicator works. Both approaches provide effective signals, and their combined strength increases when used together, as shown below.
Alligator is one of the more popular indicators. It is built on smoothed moving averages with the following periods:
- 5;
- 8;
- 13.
It works on the basis of a mathematical formula that first applies a smoothed moving average calculated using the SMA. The name comes from the shape formed on the trading terminal screen by three lines:
- Jaw;
- Teeth;
- Lips.
Market entry points are identified by the crossing of these lines. The moving average that forms the Jaw moves the slowest, while the Lips move the fastest. The core trading principle is this: you should trade when the Alligator starts to “hunt” — that is, when the lines change direction.
The screenshot above shows a signal to buy a Put contract. This is confirmed by the fact that the moving averages do not cross and are pointing downwards. To understand the specifics of such trades, however, you also need to consider the direction of the quotes. In this example, the price moves in favour of the trader who bought the Put option.
For this method to generate consistent income, it is worth using additional confirmation from the following:
- Relative Strength Index with a period of 14. It is also a good idea to remove all levels except for the 50 level. RSI shows how overbought or oversold the selected asset is — in other words, it visualises the real strength of the bears or the bulls and helps you identify likely reversal points.
- Stochastic Oscillator. Stochastic compares the closing price of the selected asset with its price range over a given period. The oscillator’s sensitivity can be adjusted depending on the chosen system, and traders often change the range it analyses. Stochastic is used to identify overbought and oversold conditions. To avoid errors, do not change the default settings provided by the Quotex platform.
The Stochastic oscillator in the trading window is displayed as two lines. One shows the %K value; the other is a three‑period simple moving average of the %K line (the %D).
When to Open Call and Put Trades
Trading under these conditions is best done on small timeframes (5–15 minutes), with a short expiration time — entered after the formation of the second or third candle. It makes sense to buy a Call contract when the Alligator has started to “hunt” and the other indicators point to an upward move. Such positions can be opened when the RSI crosses the 50 level and the fast Stochastic line crosses the slow one from bottom to top.
Put options should also be opened when the Alligator starts to “hunt”, but in this case the indicator should be pointing downwards. This signal is confirmed — and the trade can be entered — if the Relative Strength Index falls below the 50 level. At the same time, the fast Stochastic line should cross the slow one from top to bottom.
Conclusion
This trading method is considered easy to understand, since successful trading only requires three types of signals from Alligator, RSI, and Stochastic. The key is to analyse changes in the quotes. If the direction of the price and the Stochastic diverge, this may indicate a reversal.
Such situations often appear in a bear market, when the price reaches a new low. If at that moment the Stochastic shows a higher low than before, this may signal an imminent reversal — a sign that the bears have exhausted themselves.
RSI and Stochastic both indicate current momentum, but they are based on entirely different mathematical formulas. This is why the Relative Strength Index and the Stochastic Oscillator are often used together. Stochastic is built on the assumption that the closing price moves in the same direction as the underlying trend, so this approach is most effective in low-volatility conditions, when the price moves within a defined range.
The approach described here is a simplified version of trading with the Alligator indicator. To improve your results, it is best to use the various tools the Quotex platform offers in combination rather than in isolation.
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