Binary Options Indicators
There are hundreds of trading indicators. Many binary options traders are confused and do not know how to use them properly. You have to learn applying them to your trading. The indicators produce many signals and every trader has to pick the best one out of several. This article will discuss binary options indicators and provides the general information how to use them.
First, it is important to note that indicators are mostly used by technical traders. They can be applied to actual chart or it will be opened in a new window below the live chart. Not many binary options brokers offer wide range of indicators on their online platform. It is recommended to read article on trading platforms. This article provides different platforms. Choose the one, which fits your preferences. Almost every binary options trader use indicators for their trading. First, they are easy to use and second, they produce winning signals. However, it is important to practice and master them, before you apply them to your live trading. We share the simple indicators, which can be used to your trading today.
The most popular indicator is moving average. It shows the direction of the trend. This tool calculates the average of past bars and shows the directional line. It is possible to choose a different time period. For example, if you prefer 20, it means the indicator measures the last 20 bars to produce the line. This indicator can be used for trend following. You may prefer different time periods. It depends on your trading style. If you are a long-term trader, you may choose 50 or 100 period. Some traders develop a moving average crossover strategy to get market signals.
If you have no prior trading experience, you may find Bollinger Bands very useful. It is the combination of moving averages, which calculates the volatility of the market. Our team developed a Bollinger Band trading strategy based on this indicator.
Moreover, the overbought and oversold oscillators are widely used analyzing the market. The most popular tools are: Relative Strength Index (RSI), Stochastic Oscillator, Commodity Channel Index (CCI) and Moving Average Convergence Divergence (MACD). They are similar to each other and show overbought and oversold levels. If the price is in overbought area, it means the buyers are controlling the price, as they pushed the price up. In this case, mostly sellers step in and put the price down. In other words, when the line crosses the overbought zone, it is a good signal to sell the asset. Similar applied to oversold conditions.
There are volume indicators such as Accumulation/Distribution and On Balance Volume. They measure the traded volume, which gives the information about the market volatility. If there is a sudden increase of volume, it is expected that the market will make a strong move and big bars appear on the market. It mostly happens, when the fundamental news is published. However, if you trade only currencies, volume indicators would not be much help and better focus on other indicators explained above. The foreign exchange market is decentralized market and it is not possible to measure the overall traded volume on certain moments.