Introduction to Binary Options Technical Trading
Binary options are often said to be an easy way of making money, where all you have to do is to choose a direction and begin trading. However there are a few things that you need to take into account before jumping into the trading world. Without understanding the basics of technical trading you can easily get lost in the marketing world and fall into a slump.
In this article there are some easy explanations of basic Binary Options Technical Trading concepts that you need to get your head around. Keep reading to learn them all!
Chart patterns is a big part of Binary Options Technical Trading
All technical trading is based around understanding chart patterns. Put simply charts provide a visual representation of an assets activity over a particular period of time i.e. any ups and downs. Every asset moves differently and experts of the trading world learn to watch this movement and identify patterns over time.
These patterns are likely to repeat themselves and this is when they are taken advantage of by avid traders to make a winning profit or predict the assets next direction of movement. For example a Double Top pattern usually triggers a move down and a Double Bottom pattern usually indicates a move up, so when this pattern emerges it’s a good chance the asset will move north.
Assets move in key trends
A technical analysis is a way of traders working out the current trend state of the asset i.e. is the asset exhibiting an upward or downward trend? The common rules that a chart is part of an uptrend if Higher Highs and Higher Lows are produced and a downtrend is present if Lower Lows and Lower Highs are demonstrated.
This rule is not the “be all and end all”, so if you are starting out in trading and are getting excited about a new trend you’ve spotted don’t make any quick decisions. Identify any retracements, weaknesses, strengths as well as signs of exhaustion.
Take into account support and resistance
Support and resistance are two aspects of technical trading that you must get your head around. For example, a price rising then falling, failing to surpass it then it this level is known as Resistance. The opposite is for Support i.e. a level that has prevented prices from falling in the past hence traders become optimistic and expect a rise after an encounter with support.
Important technical indicators
These are rather complex but equally important in the trading business. These include Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), Stochastic Oscillator and Moving Averages. They are used to indicate and identify patterns and trends in assets, they are incredible useful in identifying the direction of movement of an asset. However one cannot completely rely on indicators and use a combination of techniques and tools to succeed in the trading business.
There is a lot that goes into successful trading and these are just the basics. Just remember that one tool or strategy won’t work for every asset, rather a combination leads to a higher rates of successful Binary Options Technical Trading.