When trading Binary Options, I always use a candlestick chart when plotting price. A simple line or bar graph won't provide enough data to know when to enter a trade. Candlesticks show the movement of price over a given period of time. The color of the candlestick tells you whether price went up or down during that time period. In the most common color system, green and clear means price went up. Red and filled in means price went down over that time interval. White and black are also used as colors but have the same purpose. Example below.
Now for how to use them. There's certain candlesticks you want to be on the look out for when trading binary options.. Candlesticks should help guide you and NOT be used as the only signal to trade. Alone, the reversal signs from candlesticks aren't very accurate. If used with Price action (as discussed in other posts) there effectiveness is much higher. Take a look at the image below.
At the start, price is moving up (indicated by the green candle). The second candle is what people call a pin-bar. It signaled that price moved up, then moved back down to where it started at that candle. If the 'wick' of the candle is on top, it's a possible sign that price will start moving downward. The 5th candle is the same thing except it signals price might start moving upward. The 8th and 12th candle are called doji's. A doji also indicates a possible reversal and is characterized by a wick on the top and bottom with little net movement in price from the beginning to the end on the candlestick. Use candlesticks as guidelines for when price might reverse in binary options. They are by no means guarantees that price will change direction.
Other things to look out for in candlesticks is when a candle 'engulfs' the previous candle (shown below). This is also a good sign that a reversal may happen This can happen over the course of one or two candles and still signals a possible reversal. The requirement is that the candle or pair of candles contain all of the prices of the previous candle as well as closing past its open.
Green line indicates engulfing candle.
Price Action trading
here
No comments:
Post a Comment