Why not trade in the direction the big guys are going and volumes are the ones to show the direction, right? Binary Options Volume Indicator However, this does not mean we should not trade forex based on the volumes one broker is showing and actually there is even a strategy for that.
One should go on the hourly chart and scroll back in time and look for the last biggest volume candles in both bullish and bearish markets. How to Use Volumes?
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As mentioned earlier, this may give an educated guess for the trader that trades with volumes in the sense that it is forming an idea regarding what the market is looking for, but in the end it is only an average. However, it may just be that the trader is closing a short position from way higher levels. In order to close a position, one has to square it, so when shorting and wanting to book the profits, traders are actually looking at buying the same position. That is the real cause of the spike higher in volume and the trap is being laid down for novice traders.
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A more exact and clear way to use volumes is to look at the COT Commitment Of Traders that it is released on a scheduled basis and look for orientation. Adapting the Expiration Date of an Option It is worth mentioning though that long-term positions should be used in the case one is trading the COT reports as there is no straight line as how the market will react and when.
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- No Comments One of the most common ways to select bear or bull puts on binary options is by watching the volume of the asset that is being traded.
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Can volumes be traded using the classical Metatrader trading platform? Yes, they can, and quite successfully.
With binary options, considering that kind of trading is a fixed percentage result and this makes missing a trade or two not that important. What a trader should do is to take the volume indicator and plot it under a chart, ideally under the hourly chart.
By right clicking on the indicator, trading binary options on volumes can be edited and one or two lines can be placed at the medium-high of the spiking candles. Candlesticks With Volumes Whenever a candle is breaking those levels, it should be considered a signal or a striking price when a trade should be placed.
With binary options, end of month expiration dates should be always favored when the option is being taken in the second half of the month.
By trading with the system mentioned above, the trader is facing a pretty straight-forward situation: it avoids low volumes by setting the standard with the higher level candles and avoids fake signals by choosing a bigger expiration date than normal.
We would not recommend this strategy on bigger time frames than hourly chart as those volumes will indicated more fake moves and signals and the expiration dates are rarely more than the end of the month or one month.