There are many different types of indicators out there. It can take a lot of time and research to go through them all and pinpoint the best indicators for binary options trading. Even then, you are probably going to have to test them out to see if they are right for you.
Fortunately, there is a bit of a shortcut to this process. This is because there are some trading indicators that traders rely upon more than others. This is for several reasons including the fact that they have been proven to be reliable time and time again. If you want some insight into the indicators that you should be using, keep reading about: Pinpointing the Best Indicators for Binary Options Trading
1) Moving Average Indicator
If you are new to binary options or are looking to keep things simple, you are going to be quite enamored with the moving average indicator. It is particularly useful for the trader that follows the price trends of the market. A moving average is based on past prices.
The moving average can do two things for you. It can help you identify the direction in which the price of an asset is moving in. It can also aid you in figuring out the support and resistance levels as well.
For instance, if the price is moving above a particular moving average, then you can assume that it is trending upwards. By taking the slope of the moving average into consideration, you will be able to determine if this trend is strong or weak.
2) Pivot Points Indicator
Pivot points indicator provide an advantage because they can be used to figure out what the general trend is over varying time frames. The ‘points’ that you get are based off the prices from the previous day.
You get seven price levels and they are established on the opening price, closing price, high price, and low price of the day. The pivot point is that the median point from this data. This mid line has three support lines drawn above it and three resistance lines drawn below it. If the price fails to reach the first of either of the lines, it is typically indicative of a trend reversal. Conversely, if it reaches the outermost lines of either the support or resistance, it denotes a continuation in the trend.
3) Stochastic Oscillator
The Stochastic oscillator is an indication of the momentum for a particular asset. It can be utilized by looking at the closing price of the asset. You will then need to compare this price with the range of prices over a set period of time.
The concept behind this indicator is as follows. It accepts that if a market trend is in an ascension period, the closing prices will continue to be on the higher levels. However, if the trend is moving downwards, the asset will close out at a continually low price. It can also inform you of when a trend may be about to reverse as it is able to identify overbought or oversold conditions.
4) Bollinger Bands
Bollinger Bands are two bands that are plotted two standard deviations away from a simple moving average. Now, standard deviation is used to determine volatility and as a result, the bands move according to whether there are periods of low or high volatility. Widening of the bands are an indicator of volatile times while contraction means lower volatility. Bollinger Bands are also great for determining breakout events. As most of the events take place between the bands, anything that occurs outside of it is an unusual event.
This is the start that you need to pinpoint the best indicators for binary options trading. Once you are aware of the most commonly used ones, you give yourself an advantage in analyzing the markets, its conditions, and its trends.