You will see this on SpotOption as well as the other major white label trading platforms which power most binary options websites, and you will see it on proprietary platforms as well.
When you are a newbie to trading, charts can seem really intimidating. In essence however, they are fairly simple. The complexity of analyzing them depends very much on what you choose to do with them.
In this article, I will teach you everything you need to know about customizing and understanding binary options charts so you can how profit is obtained in binary options smart and profitable trading studying the charts of binary options What Are Binary Options Charts?
Binary options charts show you what price has been doing over a certain specified time period.
Why are we bringing this up again? Well, the good news is that these building blocks of analysis can also be used when trading binary options! Fundamental Analysis Trading the News One way to make use of fundamental analysis would be to go with a trade-the-news strategy. The spike in volatility tends to lead to fast moves which can send price rocketing higher or plunging lower.
You can also see the open, high, low, and close for each specific candle if you have your chart set to show candles—more on that shortly. Charts allow you to visualize the movement of price. Furthermore, if you are using sophisticated charting software which your broker may or may not provideyou can add indicators and draw lines to help you interpret that movement and make predictions about the future. These tools are incredibly valuable—so use them.
You have a couple of options when it comes to locating charts to use.
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Use the charts provided by your broker Download software see the next section If you want to use the charts your broker provides, you should find them on the trade page. Just select the asset you want to trade, and the relevant chart should open. If plenty of useful tools and indicators are offered and the chart is clear and updates in real-time, you can feel free to use it. If however your broker does not offer advanced charting tools or the charts lag behind, I strongly suggest downloading charts.
- Without charts, there would be no analysis of assets for trading opportunities, and without analysis….
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At that point, you should turn to some other charting software. Here are some recommendations: Free Stock Charts. If you are trading stocks, I recommend this as your solution.
It is totally free, and actually, you do not have to download anything at all—it runs right in your web browser.
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MetaTrader 4. For currency pairs, I cannot recommend MT4 highly enough. You do have to download it and it takes a few steps to get it set up, but once you do, you will be amazed by how feature-rich this totally free program is.
And what is super awesome is that you can set audio alerts, so you can step away from your computer and be notified if any of them are triggered. Actually, I recommend downloading a program like MT4 no matter what, even if your broker provides usable charts.
The reason is that MT4 is great for backtesting, since it has a lot of historical price data loaded in.
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Setting Up Your Charts Once you have a chart open, you are going to want a few steps to get it set up the way you want: Select the right timeframe. If you are taking second trades, obviously the hourly or daily chart for an asset is of no use to you.
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The opposite is true as well; if your trades span several days, something like the 4-hour chart is going to serve you well, but not the 5-minute or 1-minute charts. On the 1-minute chart, each candlestick represents 1 minute of time. On the 4-hour chart, each candlestick is 4 hours of time, binars trading with the trend 60 seconds so on.
Choose a format you find easy to read. Examples include line charts, bar charts, and candlestick charts.
If you use bars or candlesticks, I strongly recommend coloring the bullish ones green and the bearish ones red. Zoom in or out as you need in order to get a clear view of what is going on. That is pretty much it. I recommend doing some extra research on these settings.
In particular, if you do not understand what bars and candlesticks represent with the open, high, low, and close, educate yourself on that, because it is going to really help you out. In fact, you can get started by reading my Guide to Candlesticks. Trend lines and Visualization Tools You Can Use on Binary Options Charts Now that your charts are set up, you are ready to start learning about the trend lines and visualization tools you can use to see what is going on with price.
I am not going to get overly in-depth on this as that is outside the scope of an introductory guide.
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The goal is just to get you started discovering how to trade with charts. Here are some common charting tools you can use: Simple horizontal lines. These are useful for denoting pivot points which you identify around areas of support and resistance. Trend lines. These are lines which you can draw at any angle.
They allow you to visualize support and resistance in a different way. You can also use them to visualize channels. Fibonacci levels. This is a tool you can use to draw Fibonacci levels on your charts.
Once again, these help you to identify areas of support and resistance.
- Why using the binary options chart is so important for trading Before you start trading binary options, digital options, CFD, ETF or forex, you need to use the technical analysis tool.
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- Because of this, analysing and interpreting binary options charts is extremely important to the success of any trader, as it will be hard to be profitable without knowing the ins and outs of chart reading and technical analysis.
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You may sometimes wish to type notes on your charts. One thing that is really important to grasp when you are studying price charts is that you are not trying to predict the future. What you should be focusing on is trying to understand what price is doing right now. This is the key to making accurate predictions about what is likely to happen next.
It also helps you to see when a trade which you are in now no longer is justified, which tells you when it is time to exit early.
Since using these types of more in depth charts may be new to you, here is a brief guide on how to get the most out of our free binary options charts.
Adding Indicators to Your Charts Along with the basic drawing tools mentioned above, you can add numerous different types of technical indicators to your binary options charts. You can use these to conduct analysis and look for trade setups. Here are some examples: Bollinger bands: This is a common indicator which is used to measure volatility.
The volatility is represented through the expansion and contraction of the bands. Ichimoku: When you put this indicator on your charts, you will see a sort of cloud shape accompanied by five lines. It can be used to visualize market trends, support and resistance.
It helps you spot new trends as they are just starting to form. Look for an expansion in the histogram and a crossover in the moving averages.
Also look for situations where the histogram is moving in the opposite direction from price, which is a sign of an upcoming reversal. Momentum: If you see momentum slowing down, that may mean that price is about to reverse.
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Moving averages: Very likely, the first indicator you ever put on your chart and learn how to use will be a moving average. When you put moving averages on your chart, you see a smoothed-out version of studying the charts of binary options movement, which helps to make the trend clear.
Parabolic SAR: This is a very distinctive-looking indicator where you see dots above or below the candlesticks.
Binary Options Charts Chart Properties Even though a chart can significantly simplify the data we have and present it a way thats to follow and comprehend, its still important to know what we are actually looking at when we have a chart in front of us.
If the dots are over top, studying the charts of binary options are telling you to sell. If on the other hand they are underneath, they are telling you to buy. Anytime the oscillator is over 80, it tells you that it is time to sell.