In order to conduct successful binary option trade, traders need to have certain auxiliary tools. Technical analysis indicators refer to these tools. Currently, there is a fairly big amount of the indicators that can grant an aid to the trader’s work in a certain way.
The beginners in trading frequently use indicators without getting into their theoretical aspect (mathematical principle that stands behind the signal’s formation). It is a mistake. Thorough understanding of the technical analysis’s theoretical basis allows interpreting the trading signals sent by an indicator more clearly and correctly.
Main binary options indicators
We offer you the list of the main binary options indicators. You can easily set each of these indicators on our binary options chart. There is a detailed review of each indicator; you can also get recommendations on how to use indicators in the binary options trading.
- Moving average indicators
Simple moving average (Moving Average, MA, SMA)
Exponential moving average (EMA)
Weighted moving average (WMA)
Smoothed moving average (SMMA)
- Binary options trend indicators
Average directional movement index (ADX)
Directional movement index (DMI, +/- DM)
Bollinger Bands (BB)
MACD indicator (Moving Average Convergence/Divergence)
TRIX indicator (Triple Exponential Moving Average, TRIX)
Commodity Channel Index (CCI)
Price Channel Upper (PCU)
Linear Regression Index (LRI)
Mass Index indicator
Williams’ Accumulation/Distribution (WAD)
Average True Range indicator (ATR)
Elder’s Force Index (EFI)
Aroon indicator (AROON)
Ichimoku Kinko Hyo indicator
Chaikin Money Flow (CMF)
Bill William’s Alligator (Alligator)
- Oscillators for binary options
MACD indicator (Moving Average Convergence/Divergence)
Stochastic oscillator (Stochastic)
Stochastic relative strength index (StochRSI)
Stochastic momentum index (SMI)
Relative strength index (RSI)
Relative Vigor Index (RVI)
Williams’s %R (%R)
Detrended price oscillator (DPO)
Momentum oscillator (MOM)
Rate of Change indicator (ROC)
Awesome oscillator from Ben Williams (Awesome Oscillator)
Acceleration/Deceleration oscillator (AC)
DeMarker indicator (DeMarker)
Oscillator of moving average (OsMA Oscillator)
Adaptive Stochastic Oscillator (ASO)
Indicator Gator Oscillator
- Volume indicators
Accumulation/Distribution indicator (A/D)
On-balance volume indicator (OBV)
Volume Rate of Change (VROC)
Price and Volume Trend (PVT)
Money Flow Index (MFI)
VA index (Chaikin’s index)
Volume Accumulation indicator (VA)
Volume weighted average price indicator (VWAP)
Ease of Movement indicator (EOM)
As you can see, the amount of indicators for work with binary options is fairly large. Professionals use 3-5 indicators in their trading. On the basis of these indicators they build their own strategies. Beginners in trading are recommended to study theory and try all of the indicators in practice. During testing the abovementioned 3-5 indicators will appear. Using them a trader will manage to get the clearest trading signals. Trader’s behavioral characteristics influence the choice of the indicator for trade too. Scalpers prefer certain indicators’ types, long-term traders prefer other types. As for the trend trading, indicators can be conventionally divided into two types:
Trend indicators are those auxiliary tools that help a trader to determine a presence in the market of the trend that is the main movement’s direction. Using this type of the binary option indicator on the chart, a trader can easily determine the trend’s presence in the market and trade in accordance with it.
An example of the trade indicator is the simple moving average. You can set few simple moving averages with the different periods on the chart. You can determine the trend using the moving average depending up its inclination. If it is inclined up, then the trend is ascending. If it is inclined down, then the trend is descending. When a chart has few moving averages set, when they reverse unidirectional, it is also possible to say that the trend’s formation has begun.
Very interesting indicator of binary options market’s analysis is MACD (Moving Average Convergence-Divergence). This indicator shows the difference between two moving averages and has an appearance of the histogram. Exponential moving averages are taken as a basis for this indicator. In addition, indicator’s chart has an additional line that shows signals for an entry and an exit from the market.
Few methods of the trend’s determination using this indicator exist. You can determine the market’s direction by finding the indicator lower or higher than the zero level, by the inclination of its histogram and signal line and by crossing of a histogram with a signal line.
Counter-trend binary options indicators
Counter-trade indicators are those indicators that show the change of the current movement’s direction in the market in the nearest perspective. Using such indicators, it is possible to find the binary options buying points against the main movement during the trend’s reversal.
Stochastic can serve as an example of the counter-trend indicators for binary options. This oscillator has two moving lines that move in a way between two points 0 and 100. For the usage of this graphical tool, it is conventional to set the fields of overbrought and oversold in the settings additionally. When the price exits the overbrought field on the indicator, the signal for the buying of the Put binary option appears. If the price exits the oversold field, the Call binary option can be bought. Such indicators are applied in the binary options and are frequently called oscillators.
The other counter-trend indicators work according to the similar principle. In order to determine the trading signals, traders closely follow, whether the indicator’s line is in the overbrought or the oversold field, and when the line exits these fields, they start trading.
There are numbers of the auxiliary binary option indicators that can be used for the determination of volatility and the chaotic price movement. Such indicators are almost never used independently. They are needed rather to help a trader in making a decision on the buying binary option or on staying out of the market at a certain time.