WHAT ARE BINARY OPTIONS?
Before starting to trade, let's clarify what
binary options are. A binary option is a bet for the movement of the price for
a certain asset based on the suggestion of whether the price for a certain
asset will fall or rise for a specified amount with the expiration of this bet.
The answer in this situation has only two variants: yes or no. The main goal of
the trader is to make an accurate forecast for this movement. Then, there can
be two variants for the development of events: the loss of money (if the
forecast turned out to be incorrect) or payment (if the forecast was
successful). That’s why these options are called binary.
TOOLS FOR TRADING BINARY
OPTIONS
Trading instruments are equipment that helps to
make the right decisions. Remember that there is not a standard solution for
using trading instruments. However, if a trader owns different instruments,
then he will be able to determine the price behavior of the corresponding
assets with higher accuracy. The main trading tools are the economic calendar,
charts, and indicators.
Types of market analysis
There are two main types of market analysis:
technical and fundamental. The fundamental analysis describes the influence of
economic factors on the behavior of trading instruments. This type of work is
based on the analysis of fluctuations as a reaction to the financial news.
Technical analysis is based on the visual evaluation of the graphic figures of
the charts.
Instruments for
fundamental analysis
Economic calendar. The economic calendar shows the main
economical events (information from the state banks, decisions of the
economical departments) that may influence the market situation. Such an
instrument allows traders to monitor the market in real-time.
Market trends. Market trends display the
upcoming change of certain trends in different timeframes. The trader compares
the data of the trends with information from the calendar and creates the
forecast.
Instruments for
technical analysis
Online-chart. This is a graphical representation
of price movement. The main task of the trader is to analyze the graph and to
define the trend, reversal, and the point of breakdown. Identifying pivot points,
trends requires knowledge to work with live binary options charts.
Technical indicators. A technical indicator is
an instrument that makes certain calculations according to specified formulas.
Most often, indicators look like graphical constructions (lines, histograms)
that are automatically plotted on the chart.
Types of indicators
Trend indicators. These indicators are applied
to identify the trend or reversal and to define its power and direction.
Examples of indicators
Bollinger Bands (BB). This indicator reflects
the current fluctuations in the price of a stock, commodity, or currency.
Parabolic SAR. This indicator is used to
identify trend reversal points and place stop loss.
Oscillators. These indicators help to identify
the channel’s borders and the zones of the overbought/oversold.
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