Let's now discuss what are the four best indicators for binary trading, and how we can use them to formulate an exceptionally robust and strong binary trading strategy. Every binary options trading indicator out there can be classified into one of these five classes:
Price Action
Price action has got to be one of the most misunderstood and confused trading concepts here. Not only is it a binary trading indicator but also a valuable tool for both normal and binary options traders alike. Price action combines the use of graphic patterns, candlestick motifs, and support and resistance. While price action may not be the right trading indicator for beginners, having solid knowledge is essential for trading success.
Stochastic Oscillator
The name itself is quite intimidating. But Stochastic are some of the most powerful and unique statistical techniques available. So what is the stochastic oscillator anyway? Well, it's a technical indicator invented in 1950 by George Lane, a pioneering trader, author, and technical analyst. The Stochastic Oscillator compares the price of the stock closing at its price range over a period of days, with the idea that stocks tend to close near levels during bull markets, and close to their recent lows during bull markets. bear markets.
By looking at changes in a stock's stochastic, you can get an idea when a trend might be reversing. The Stochastic Oscillator is based on two lines: the fast percentage K and the slow percentage D. Percent K typically uses a 15, 10, O 5 day period, while Percent D uses the simple moving average percentage K over a period of three or five days.
Percentage K and Percentage D appear as lines below the stock chart, with the key points being when the two lines intersect. If the fast line pierces the slow upward line, this is a bullish move. If the reverse is true, then it is interpreted as bearish. Most charting software allows you to superimpose two stochastic ones: slow and fast. These are not to be confused with the fast K percentage and the slow D percentage. Both Slow Stochastic and Fast Stochastic both have K percentage and D percentage.
The main difference between slow and fast Stochastic oscillators is that Slow Stochastic use longer trading periods for percentage of K and percentage D. And as a result, Slow Stochastic have fewer crossings and may be too conservative. A Fast Stochastic, however, has more crossings and may be too aggressive.
Moving average
Many traders consider the moving average indicator to be one of the best trading indicators that are available out there. Its most appreciable feature is its flexibility, allowing binary options traders to modify certain aspects such as closing and opening periods, High / Low, and set different moving averages such as smoothed, linear weighted, exponential, and simple. Typically, traders use the Moving Average indicator to determine the price trend in the market. If prices are below the running average, this means that a downtrend is happening. On the other hand, if the prices are above the average value, then the prices are considered to be on an uptrend.
Pivot Points
Pivot points are a way of determining key support and resistance levels. Before computers and charts became a key tool traders use effectively, plan traders used calculations based on data from the previous day to determine key buy and sell levels for the current day. They are still used extensively today as they link to sustain resistance levels, which are extremely helpful in determining entry and exit points.
There are several types of pivot points that are calculated using previous market data. Most commonly, the previous day's Open, High, Low, and Close are used. The data from the previous session is used to calculate the main pivot point: the point at which the market is set to rotate around. Once this has been calculated, the main pivot point is then used to calculate the other pivot points.
The pivot points above the main pivot are labeled as significant wheel resistance R1, R2, and so on. pivot points that are below the main pin are the support pins labeled S1, S2, and so on. When trading using pivot points, the general rule is that if the price is trading above the daily pivot, the market is going up, and so our trend should be long. The main resistance levels are R1, R2, and R3.
However, all pivot points can be used as both support and resistance levels in some cases. For example, if the R1 rotation level breaks the resistance, it can then act as a potential support once the price moves back to it. If the price is trading below the daily pivot then our trend must be short. The main support levels are S1, S2, and S3.
If the S1 pivot level is broken the support, it can then act as resistance when the price retraces it again. We can also use pins as targets to take profits. Targeting the next pivot point can give the trader a consistent way of taking profits. For example, if we bought at everyday pivot, we could take rolling profits R1.
As with all support and resistance levels, there is strength in the numbers. The more pivot points we have lined up in a certain area on a chart, the higher probability a price is reacting to that area. So far, we have learned that pivot points can act as very strong support and resistance levels, and are calculated using the previous period's Open, High, Low, and Close. As with traditional support and resistance, once prices break through a pivot point that was acting as a support, it can then be used as resistance. And once prices break through a pivot point that acted as a resistance, it can be used as a support.
pivot points can be used as targets once trade has been placed. There is strength in numbers. The more pins that cluster in a chart, the stronger the support or resistance level will be.