You can use technical or fundamental analysis to help you make trading decisions, but one great method that is sometimes overlooked is price action.
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What is price action? Price action is a way of theorizing which way price is headed based off of what it is already doing. Whereas fundamental analysis relies on interpreting events surrounding the market, and technical analysis relies on indicators that are a step removed from price.
Overview of Price Action Charts If you browse the web at times, it can be difficult to determine if you are looking at a stock chart or hieroglyphics. For example, I have talked with traders whose screens look something like the picture below. Too Many Indicators I have even seen some traders that will have four or more monitors with charts this busy on each monitor. When you see this sort of setup, you hope at some point the trader will release themselves from this burden of proof. What if we lived in a world where we just traded the price action?
Price action takes you straight to the source. Using Price Action Trading Binary Options When you use price action to plan a trade, you look for patterns in the price that have predictable outcomes.
One great thing about price action is that the same patterns that occur in one market may also occur regularly in another market. These patterns have often shown to repeat themselves as well. When you can recognize these patterns forming by watching price action, you can trade accordingly. One common price action pattern a lot of traders work with is the insidebar.
This is a breakout pattern, without a specific direction. If either of your triggers are touched during the payment window, you win your trade.
These are entry rules only, and you will need to also learn to develop the equivalent of exit rules. These decisions should be very specific and should not be random.
The Bottom Line Binary options are financial options that come with one of two payoff options: a fixed amount or nothing at all. That's why they're called binary options—because there is no other settlement possible. The premise behind a binary option is a simple yes or no proposition: Will an underlying asset be above a certain price at a certain time? Traders place trades based on whether they believe the answer is yes or no, making it one of the simplest financial assets to trade. As simple as it may seem, traders should fully understand how binary options work, what markets and time frames they can trade with binary options, advantages, and disadvantages of these products, and which companies are legally authorized to provide binary options to U.
While price action can be very reliable, it works better under some market conditions than others, and some formations may be more intuitive to you than others. We'll not accept liability for any losses incurred by relying either directly or indirectly on the information provided on this website.