Using Trend And Technical Indicators in Binary Option Trading

Technical indicators are a great way to up your binary option trades. There are there to help you and assist you while making choices, which asset to bet on and when. Many traders find it difficult to determine at which point to trade or whether to use certain asset or not. Technical indicators will help you do just that. They are easily linked with your trading platform and give you their calculates made to advise you when to bid or not to bid. In order to start using them you will have to get a full understanding and the meaning of them. You will also need to learn the signals they are sending and how to use them in the market. The result of carefully and correctly using these factors may increase your probability of correctly guessing the trades on the market, thus allowing you to earn a larger amount of money. Let’s first take a look on each of the indicators and what do they individually have to offer.

Trend following indicators

Following trend is a simple indicator. The only thing you have to do is to follow a certain trend in the market and trade in the direction it is going. Certain traders like to impose this trend strategies within their trades and incorporate them by following them and determining which option to choose, PUT or CALL.

The most popular indicator in this category is the Moving Average. It actually marks the average of a closing price of a set number for a certain time period. The common setting for a given time period within moving averages can be set at 10, 21, 50, 100 or 200 time periods. This works by combining the Moving Average with another indicator in order to find “crossovers.” Crossovers only happen between a long term Moving Average and a short term Moving Average.

So when a downside crossover occurs then you should most likely expect a bearish trend, this would mean that in order for you to be in the money you should choose the PUT option. But in the case of a upside crossover occurrence, where a bullish trend is expected, the opportunity for you to choose the CALL option is imminent.

Indicators to Confirm Trades

Indicators to confirm trades are greatly used with a combination of moving averages. A combination of moving averages can give you an idea when a trend will develop, while an indicator to confirm this trend will be very useful to in a way tell you that this trend is the real deal and that you should play on it. Also, an indicator to confirm a trade helps you to determine the health of a trade, you shall then know the momentum of the trade and is it likely to continue or will it reverse.

The most useful tool here would be the Moving Average Convergence Divergence. This respectively measures the difference between two moving averages and will help you foresee the price direction by plotting against a histogram. The Moving Average Convergence Divergence is a very useful tool with binary options trading and can be of immense help as well. Using it in a combination with other indicators may even prove to be as more useful. So for example, when at the same time we see at buy signal in the Moving Average Convergence Divergence while at the same time a bullish crossroad occurs within the Moving Average it would meant that that is an excellent time to play the CALL option. While on the other hand sell signal within the Moving Average Convergence Divergence combined with a bearish crossover within the Moving Average will prompt you to choose the PUT option.

Overbought and Oversold Indicators

The last technical support indicator that we are presenting is the overbought and oversold indicator tool. It is simple enough, the use of these tools is to give you an indication when the prices have risen too high or have been overbought, or if they are too cheap of have been oversold. Overbought conditions opportunities, when the prices are expected to decline, ask of you to choose the PUT option. On the other hand when oversold conditions opportunities present themselves or the price is expected to rise, it is time for you to choose the CALL option.

The most commonly used tool here would be the Relative Strength Index (RSI). For example, when a price of a certain asset becomes too expensive people are of course are more likely to sell that asset rather than buy it. This is an example of an overbought condition which will immediately prompt you to choose the PUT option. The other occurrence would of course be when the price of the asset becomes too cheap which will immediately result in people wanting to buy that asset, which means a bullish scenario for the asset. The CALL option is in this case the preferable choice.

Relative Strength Index which suggests bellow 30 should be regarded as oversold conditions, whereas readings above 70 suggest that an asset is overbought.

Conclusion

Indicator readings are a great helper for those who are having troubles deciding which direction to choose for a given asset. There are many types of technical indicators and all of them come with certain advantages and are sure to give you an edge or help you decide when you are in two minds. Experience traders often combine the two or more indicators together in order to get a clearer and certain picture of the market. This helps them a lot gives them a higher probability factor to accurately guess which direction the market is going to take. When trading in binary options indicators can prove to give great advice and will certainly improve your trading skills.