Moving average strategy on Deriv: SMA, EMA and the bots

A moving average is the average price of the last few ticks, worked out again on every new tick. A moving average strategy on Deriv reads one of three things from it: which side of the average the price is on, whether a fast average sits above a slow one, or which way the average itself is moving. Then it buys a contract in that direction. BinaryTick has free bots that trade on moving averages across Rise / Fall, Higher / Lower, Reset Call / Reset Put, Asians and more, with every period on the card or in Bot Builder.

SMA and EMA, worked through

There are two kinds of moving average, and the bots use both.

A simple moving average, or SMA, adds up the last few ticks and divides by how many there are. Every tick in the window counts the same.

An exponential moving average, or EMA, gives the newest tick the most weight. Each new tick moves the EMA part of the way towards it: 2 ÷ (period + 1) of the gap. On a 5-tick EMA that is a third.

Here are real Volatility 100 ticks: 672.59, 672.83, 672.67, 672.47 and 672.35. Both averages start at their mean, 672.58. Then the price jumps to 672.93.

• The 5-tick SMA drops the oldest tick, 672.59, and adds 672.93. The new average is 672.65, up 0.07.
• The 5-tick EMA moves a third of the way from 672.58 towards 672.93. The new average is 672.70, up 0.12.

The EMA moved further towards the new price. That is the trade-off between them: an EMA reacts sooner to a move, and an SMA is steadier when the price is jumping about.

The period matters more than the type. A 5-tick average follows the price closely. A 50-tick average moves slowly and shows the longer direction.

How often averages cross

Most moving average strategies trade on a cross: the price crossing its average, or a fast average crossing a slow one. Shorter averages cross far more often. In 940 Volatility 100 ticks that we pulled:

A crossing on its own happens often, even when the market is going nowhere. Many of the bots below add a condition for that reason: a gap between the averages, a third average that has to agree, or a check from another indicator.

The moving average bots on BinaryTick

Every bot below is free, explains its rule under How it works on its card, and lists its settings under Settings. SMA Trend and SMA Reversion keep the length of their average in their blocks rather than on the card; the settings section below shows how to change it.

Bots that read where the price sits against an average.

• SMA Trend is a Rise / Fall bot on Volatility 75 (1s). It buys Rise while the last tick is at or above the 20-tick SMA, and Fall while it is below, on a 5 tick contract. It has a side on every tick, so it trades as often as its contracts allow.
• SMA Reversion does the opposite on Volatility 50, with a 50-tick SMA. Below the average it buys Rise, above it Fall, betting the price returns to the average.

Bots that compare a fast average with a slow one.

• Slow Ladder trades Rise / Fall on Volatility 100. It buys Rise while a 10-tick SMA sits above a 30-tick SMA, and Fall while it sits below. Its staking is its own: after a loss the stake grows by about 7% instead of doubling.
• Reset Rider trades Reset Call / Reset Put on the same idea, with an 8-tick EMA against a 25-tick SMA. Reset Call moves its barrier halfway through a trade that is behind, which helps an entry made early.
• Equal Momentum trades Rise Equal / Fall Equal, where finishing level with the entry also pays. It needs a 10-tick SMA at least 0.05 above a 30-tick SMA, with the newest tick above the fast one, for Rise Equal, and the mirror image for Fall Equal.
• Higher / Lower Trend trades Higher / Lower and only buys Higher, with the barrier 0.2 above the entry. It needs a 6-tick SMA above a 20-tick SMA by at least 1.5 times the average tick move of the last 20 ticks. It is in the Longer scans group.

A bot that stacks three averages.

• EMA Ribbon trades Rise / Fall on Volatility 75 with 5, 13 and 34 tick EMAs. When the fast one is above the middle one and the middle one above the slow one, every length agrees and it buys Rise on a 3 tick contract. The reverse order buys Fall. Any other order is skipped. On Volatility 75, the averages were stacked one way or the other on 749 of 940 ticks we pulled, so it still trades often.

Bots that use an average as one check among several.

• Triple Confirmation Trend trades Rise / Fall on Volatility 100 (1s). It needs a 5-tick SMA above a 30-tick SMA by at least 0.02%, RSI above 50 and the price higher than it was a few ticks earlier, all at once, for Rise. Fall needs all three the other way.
• Asian Trend trades Asians on the slope of a 15-tick SMA: when the average rises by at least 0.02 in a tick it buys Asian Up, and when it falls that far, Asian Down.
• Several other bots use an EMA as a trend check before they act on their main signal, among them MACD Cross Sniper and Trend Run. The MACD strategy guide covers MACD, which is itself built from two EMAs.

The settings that matter

Fast and slow periods. On the bots that compare two averages, the periods are on the card: Fast average period and Slow average period on Slow Ladder and Reset Rider, Fast average and Slow average on Higher / Lower Trend, and Fast SMA period and Slow SMA period on Triple Confirmation Trend. Shorter periods cross more often, as the table above shows, so the bot changes direction more often. Keep the slow period above the fast one.

Fast average, Middle average and Slow average. On EMA Ribbon, 5, 13 and 34 ticks. Closer periods line up more often, so it trades more. Wider ones line up only in a steadier move.

The fixed averages. SMA Trend's 20 ticks and SMA Reversion's 50 ticks are set in the bots' blocks rather than on the card. Open either one with Edit in Bot Builder to change them.

Separation. Equal Momentum's Separation (0.05) and Higher / Lower Trend's Separation ratio (1.5) set how far apart the averages must be before a cross counts. A smaller gap trades more. Equal Momentum's gap is in price, so retune it if you move the bot to a market with much larger or smaller prices.

Stake, limits and staking. Every bot here ships with a 1 USD stake and a 10 USD take profit and stop loss. Most also ship with a 2.1x martingale, a 5 USD max stake and a stop after 4 losses in a row. Two differ:

• Higher / Lower Trend uses a 1.5x martingale and a 4 USD max stake, and stops after 6 losses in a row.
• Slow Ladder has no martingale. It grows the stake by its Step multiplier of 1.07 after each loss, up to a 4 USD max stake, and stops after 20 losses in a row.

Untick Use martingale for a flat stake, or on Slow Ladder set Step multiplier to 1. The martingale guide explains the ladder, and the stop loss and take profit guide every limit.

Building your own moving average bot

Open any of these bots with Edit in Bot Builder to see the averages it uses. The Simple Moving Average and Exponential Moving Average blocks each take a list of ticks and a period. You can change the periods, compare the price with an average, or compare two averages, then pick the contract to buy, all with blocks and no code. The Bot Builder guide walks through the editor.

Run one now

Open SMA Trend and run it on your demo balance first. Its rule is the easiest to follow on the chart: price above the 20-tick average buys Rise, below it buys Fall. Then try EMA Ribbon, which only trades when all three of its averages agree, and compare how the two trade.