Binary option trading allows traders to profit from price changes not only in currency pairs, but also in the stock of the well-known companies, stock market indexes, and so on. The principle of transactions is similar to the currency speculation: the trader sells the stock of some company in the hope that its price will fall or opens a long position in the hope that the stock value will rise.
The main difference in trading binary options is that the deals are short-term. When trading currency, the transactions are usually kept open for several hours to several days or even weeks (this is true for most of the traders). In the case of binary options, the lifetime of a profitable deal may be 15-20 minutes; Forex indicators for binary options will help determine the direction of instrument movement.
Option (or a contract that gives the buyer the right to buy at a certain time one or another asset at a specified price) may have a longer expiration date, up to a few hours, days or even weeks. But most traders prefer short-term binary options.
Notable Forex indicators for binary options
Strictly speaking, a division of Forex indicators into indicators for precious metals, currencies or binary options is not quite correct, because, in fact, any indicator is just a tool for the analysis, while it does not matter what will be a baseline data. Therefore, the same indicators can be applied to both the analysis of the foreign exchange market and binary options trading.
So standard mt4 indicators are quite suitable for binary options trading – such as Stochastic Oscillator, MACD, RSI, and so on. Indicators from the trend group and oscillators can also be recommended for use. It is pointless to use psychological indicators for such short-term trading. The fundamental factors are of great importance, so they can also be considered as Forex indicators for binary options.
We should also highlight the category of indicators with already selected settings for binary options trading. As a rule, they are a combination of several standard mt4 instruments, but with already selected parameters. These indicators serve as ready trading system – for example, FGM or Binary Cash indicator.
Peculiarities of binary options trading
Another important peculiarity of binary options trading is the process of making deals. As a rule, it is conducted in online mode, i.e. directly on the site of the DC. Some brokers provide the possibility to trade binary options using mt4, but they are not many.
Trading in the online mode significantly limits the analytical capabilities of the trader. While a variety of standard indicators can be used and any third-party software can be installed when making deals via mt4, online mode doesn’t provide this opportunity.
Existing trading terminals for options trading can’t compete with mt4 on the part of analytics either. Some traders try trading with the help of services providing trading signals, but it doesn’t lead to success, because they just follow the crowd.
To overcome this situation, Forex indicators for binary options can be used for analysis on any trading terminal and make deals in the online mode. But this method of trading is also not without its drawbacks. If every minute counts, even the slightest delay can prevent receiving profit.
Building indicator strategy for binary options trading
Despite the fact that binary option trading is rather intense, a trader needs to have an effective trading system to succeed. Otherwise, the deals will be random, which is unlikely to increase the deposit.
To create a trading system, a trader must solve several problems:
select appropriate indicators for Forex binary options;
perform an optimization of their parameters, that is, to pick up such a configuration in which they will be profitable. In general, the rules are also needed to support the open position, but it is not required for binary option trading. There are only two scenarios: either the deal is closed with a profit or not, so option trading has the second name of “all or nothing”.
Given the nature of trading, it is not recommended to use indicators that require a long-lasting analysis of their readings. Preference should be given to the familiar tools. For example, the oncoming change in trend can be indicated by a set of moving averages, Stochastic can supplement their readings, and you shouldn’t neglect candlestick combinations either.
Examples of making deals using the indicator strategy
We will review the indicator strategy as an example. The analysis will be carried out on the m15 timeframe in mt4. The direction of the trend would be indicated by a simple moving average MA150. The RSI and Stochastic Oscillator will also be used in the strategy. Parameter 3 and levels 20/80 should be set for RSI, and the default settings, overbought/oversold levels 30/70 – for Stochastic.
Work rules are simple: if the price is above the MA, and the Stochastic and the RSI are oversold, the uptrend is possible. If 10-15 minutes before the end of the expiration the fast Stochastic line crosses the slow one upwards, you can open a long position. The conditions are opposite for positions to sell.
It must be remembered that the profit when trading binary options is essential even with little price fluctuations. So minor price fluctuations in the medium-term trading are very important in option trading.
Forex indicators for binary options are the same indicators that are used for currency speculation, with the only difference being in the settings that are selected individually for each instrument. Their use does not release the trader from the decision-making, but will increase the efficiency of trading.Social button for Joomla