Many traders, especially brand new traders with little experience, may get confused with the concept of binary options indicators since there are so many of them. Indicators are essential for successful trading binary options but, due to a misalignment of knowledge and exactly how to use them, many traders don’t experience the successful profits from their trades that they want.
Gaining a proper understanding of binary options indicators is vital for successful trading, and is guaranteed to improve your strategy and profitable earnings. So, if you’re new to trading or are feeling confusion towards the topic of binary options indicators, by the end of this page you’ll have learnt everything you need to know to get started.
What Actually Is A Binary Options Indicator?
Simply speaking, a binary options indicator is nothing more than mathematical values presented on the trading chart. They’re shown in visual form for you, the trader, to see and interpret.
As binary options indicators are primarily based on mathematics, a formula is needed to generate their values; this formula is entirely based on price. Whilst using binary options is likely to make trading more successful, it’s important not to get carried away and remember that these indicators are still based on mathematics – they aren’t a guaranteed method to generate continuous earnings and high profits.
One of the main factors of why many traders get confused with binary options indicators is the sheer amount that’s out there. Below, you’ll find a detailed list of the primary types of indicator you need to know about.
Types of Binary Options Indicators
- Trend Indicators – the most well-known of these indicators is referred to as a moving average, and these are generally overlaid on price plotted on the trading chart. Simple and easy to interpret, the moving average form of this indicator is essentially just the average price. So, when the current price displayed on the chart is above or below the average price, you’re then able to establish whether there’s currently an upward or downward trend when compared to the average.
- Oscillators – indicators that basically oscillate (swing back and forth) between specified levels, and are there to demonstrate any oversold conditions that may have occurred within the market. They essentially enable the trader to be able to identify any reverses in price.
- Volatility Indicators – Similarly to trend indicators, volatility indicators are also presented on the chart over the price, and are there to show high and low variations in price. A trader can use this indicator to establish how volatile an asset is, and whether it’s worth executing a trade or not.
When To Use Binary Options Indicators
The most difficult thing here isn’t learning what binary options indicators are, it’s figuring out when and why to use them. As you’ll have seen, all the above indicators are very different and all display varying aspects of the market. This means that, dependent on current market conditions, the right binary options indicator for the circumstances may change.
For example, if the markets are currently trending, it makes perfect sense to use the trend indicators. This is because its ‘moving average’ component will directly compare the market’s current price to the average price, giving you a much better insight into what’s actually going on. In contrast, if markets appear to be moving in a sideways pattern, oscillators will be more appropriate. Its power to identify oversold levels is the perfect solution for you to accurately interpret and understand what’s happening.
It’s clear to see that binary options indicators shouldn’t be ignored and taken lightly. Without the correct information and knowledge behind you, you could unknowingly use the total wrong indicator and sacrifice any successful trading you could have had if you’d been using the right one. The key here is to take a look at market decisions and then make the decision as to which indicator you’re going to use – it shouldn’t be the other way round.
Hopefully this has taught you something new and shown you that, as long as you do your research properly and educate yourself, you are not merely optimizing your opportunities, you are maximizing them.