A Look At Moving Averages For Binary Options

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Simple Moving Average Binary Options Trading Strategy

Profitable binary options trading strategy can be built even on the most simple technical indicators such as Moving Averages. Using a combination of different types and settings for this widely used technical indicator as well as several general rules of Moving Averages’ behaviour could turn into a whole trading system which proved its profitability.

What is a Simple Moving Average Trading Strategy?

The best type of the Moving Average depends on the timeframe you choose to trade. The Simple Moving Average (SMA) works in the best way for short-term timeframes intraday (M1, M15, M30, H1, H4). Longer timeframes with a wider scale need to have an additional filter and the best type would be the Exponential Moving Average (D1, W, MN). This binary options trading strategy uses two indicators with different settings – periods 21 and 70. This combination allows a trader to monitor trend reversals as well as oversold and overbought levels when the price is going too far from its average value based on previous periods.

If you like this strategy, you might also be interested in this Rectangle Pattern

Simple Moving Average Trading Rules

After the price crossed one of the lines, we should wait a bit and see what would be the close rate of the current candle. This pause is needed for understanding if the reversal occurred. So, if the prices have reversed on the chart before reaching the second moving average (with the higher period of 70), then we enter the market on crossing (slightly earlier) of the first Moving Average with the period of 21.

The stop-loss order should be placed slightly behind the recent bottom or top (depending on the direction of your position).

How to use Simple Moving Average Strategy?

This simple binary options trading strategy has certain disadvantages though. One of them is a large number of fake signals which could occur when the trend is reaching its final stage (going to reverse). But at the same time, there is a huge advantage of this strategy which is the fact that you will always follow the trend when trading on this system. Sometimes beginners wish to open too many positions against the main trend, but this is definitely not the winning approach in binary options.

7 Binary Options

One of the most underused and least talked about analysis tools when it comes to binary options trading is that of moving averages. Sure, these are mentioned in many types of analysis tools, but they are rarely talked about in depth. What makes this all the more peculiar is that binary option trading is all about directional movement. Let’s take the opportunity to look at moving averages more closely.

In a lot of strategy scenarios it is very difficult at best to determine the correct movement trend of an asset every single time because of price fluctuations and other short term trends. That is where moving averages come into play; they are a great way of minimizing the effect of these short term trends that often keep you from seeing the correct trending direction. Moving averages are simply calculating the average price of an asset over a set period of time.
One of the nice characteristics about moving averages is that they can be determined using different time frames. The basic thinking behind them is the longer the time frame they are based on, the stronger their indication signal is. The time frames represented within moving averages are called bars. Some of the more popular numbers of bars used to plot moving averages are 9, 15, 30, 150 and 200 bar ranges.

There are three key things that moving averages help you spot that are critical to making successful binary option trades:

1) Trends – in order to trade successfully you have to know which way an asset is trending.

2) Wave Analysis – wave analysis can be a very effective tool in spotting potential entry points in which to make a trade. Several moving averages calculated by using different time frames and then plotted together on the same chart form the basis for wave analysis to take place.

3) Coincident Indicator – If you are not sure of anidentifying signal from other technical indicators, it is often a good idea to overlay them with moving averages for comparison.

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As you can see, moving averages are extremely useful tools to keep statistical analysis in balance and to keep trends from looking too skewed. This helps you to be able to see the data more accurately and clearly, in turn, you should be able to make more successful binary option trades which are based on that data. So even though moving averages are often not talked about that much, they play a very large role in successful binary options trading.

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Binary Options Articles

IMF Upgrades Global Growth

What does a couple of days and some improving economic data give? Answer: It gives an IMF global economic growth upgrade from 3.3% to 3.5%. In what some may think is rather surprising move the IMF has upgraded global growth but has also said most major economies “still face major brakes on growth”.

The IMF has cited that the risks to global growth still remain with the debt crisis and rising oil prices the biggest threat. The IMF baseline case is for low growth in advanced economies where they see US growing by 2.1% and Europe in “contraction” of -0.3% and most importantly they see China growing above 8%.

Let’s try to reconcile this one: China has stated long term GDP growth of now 7.5% from previously stated long term goal of 8%, Europe in mild recession and US improving marginally. IMF has upgraded Australian growth to be in line with the Australian government forecast of 3.5% versus IMF previous of 3%. Canadian growth forecasts have also been upgraded from 1.7% to 2.1%

IMF upgrades world growth forecasts

Markets have taken this positive for now and it is near term bullish for commodity based currencies like AUD and CAD. Don’t forget China though!

Read more articles from binary option

A Dummies Guide To Trading Binary Options

dummies guide to binary optionsThe boom in popularity in trading binary options is mainly due to the fact that it has established itself as the quickest and easiest way to profit from the financial markets. Unlike traditional forex, there is no risk of losing more than you invested for there is no leverage involved in binary options. Returns of up to 60 – 360% can be made within minutes of confirming a trade making just simple yes or no decisions on the direction an underlying assets price will move in. Here’s a dummies guide to trade binary options and join one of the fastest growing industries online:

The advance of technology has provided more trading opportunities both easier and faster. Usually platforms will offer three instruments in which to trade binary options. These are:

For the High/Low instrument:

Choose ‘High’ if you think that the price of an asset at the time of expiry will be higher than the target price.

Choose ‘High’ if you think that the price of an asset at the time of expiry will be lower than the target price.

For the Touch/No Touch instrument:

Choose ‘Touch’ if you think the price of an asset will touch a target price at any time before the option expires.

Choose ‘No Touch’ if you think the price of an asset will not touch a target price before the option expires.

Boundary or Range (In/Out)

For the boundary or Range instrument:

Choose ‘In’ if you think the price of an asset will close inside of the range formed by the upper and lower target prices at the time the option expires

Choose ‘Out’ if you think the price of an asset will close outside of the range formed by the upper and lower target prices at the time the option expires.

Trade in Three Easy Steps

Generally a trade can be achieved in just three easy steps once a deposit has been made.

First, you choose an underlying asset to trade from a wide range of Currencies, Stocks, Indices and Commodities.

Next, you decide the direction the price of the asset will move in

And finally you decide the amount to invest and click buy.

The length of the contract before the expiry time varies from asset to asset and can be anything from a few minutes to a week. The pay outs are always predetermined and you can never lose more than you invested which limits your risk. Many binary options trading platforms even offer a refund of up to 15% on an investment finishing ‘out-of-the-money’.

dummies guide to binary options trading

There are many strategies of differing difficulty that can be applied to binary options trading. However, a novice trader can give themselves a better chance of success by following a few basic tips.

Firstly, its good practice to get to know a particular asset or a few assets. Different assets have different traits and it’s important to familiarize yourself with them. An example is the US Dollar; when it strengthens and rises in price, commodities like Gold and Silver which are traded in the USD, become cheaper and decline in price. Also, certain currencies are sensitive to the price of Oil – Canada an exporter of oil benefits from high crude oil prices and the Canadian Dollar rises on increases in the price of Crude Oil. Japan, a large importer of Oil sees the value of the Japanese Yen decrease at times of high oil prices as the cost to import rises. The more you get to know an asset, the more you will be able to predict its movements.

Secondly, it is very wise for a trader to start using and learning to read a good economic calendar. Market volatility increases on the release of economic data and from events happening in the world’s economies. Speeches by heads of institutions and finance ministers should always be looked out for in a daily diary as they often spark major market moves.

Thirdly, don’t be afraid to try some of the many trading strategies that can be applied to binary options. Popular strategies include Hedging, Call and Put, Reversal and the Straddle and each can be used to build a successful trading strategy. Remember, attempting to beat the market does not normally work. Traders should monitor trends and look towards following them by generally buying Call options in a bull-ish market and Put options in a bear-ish market.

Finally, a last but important tip for new investors is to remain unemotional when making a trade. Make trades based on research, not sentiment or on just a hunch, other wise you may find you end up losing more times than you bargained for. Remain alert and commit to the time needed to be able to react to events in the market as they happen, ensuring you take advantage of when possible profit opportunities arise.

So that’s binary options – trading the financial markets has never been so easy or as profitable.

Using technical analysis to trade binary options

Trading Binary Options involves making just simple Yes/No investment decisions. However, a truly successful binary option trader will use a variety of analysis tools at their disposal, both technical and fundamental, to help predict the way the markets will move. Whilst fundamental analysis focuses on how macro and microeconomic forces can influence prices, technical analysis is the method of analyzing statistics and data of specific options to assist in ascertaining the future price direction.

There are a number of different methods used in technical analysis, but they can all be categorized into two studies – objective and subjective. The objective studies comprise trend following methods, momentum methods, and means reversion methods. Subjective studies comprise support and resistance and pattern recognition.

Objective Technical Analysis

One of the most commonly used strategies in technical analysis is studying past prices to ascertain if a trend has formed in the price of an asset. This can be achieved by looking at the past moving averages of an asset. A moving average (sometimes called a rolling average) is an average in which the most recent days are removed from the calculated average. In a 10 day moving average, on the 11th day, the 1st day is removed from the calculated average.

The 2nd most commonly used tool in following trends is the MACD – moving average convergence divergence. This ascertains market momentum and indicates if the momentum is rising or dropping. It measures the daily movements in the moving average by comparing a shorter moving average change with a longer moving average change. Should the changes of the shorter moving average be larger than the longer moving average change; the MACD will go up signifying increased momentum. When the reverse happens the MACD is dropping.

Mean reversion is a theory that the price of an asset will eventually revert back to its average price (the mean) after moving away from it over an unspecified time period. A commonly used technical indicator used to determine mean reversion is Bollinger Bands which makes use of a mathematical formula to calculate a certain standard deviation centered on a particular average.

Bollinger bands can be used for almost any financial asset

This is where the trader looks to identify a pattern which can be used to predict a future price movement. A good example is called the head and shoulders pattern; where 2 shoulders and a head are formed in the charts and typically the market will drop after the second shoulder has formed.

Head and Shoulder pattern in a bullish market, can also work in a bearish market where the graph will be upside down

Support and Resistance

This is a popular tool in technical analysis and is used to determine at which level a price is likely to rise and at what level the price is likely to fall.

A support level is the level where the price is going down and finds support (investors buying). The price then rises from the ‘bounce’ upwards from this level. However, if the price ‘breaks’ this level, the price is likely to continue falling until another support level is found.

A resistance level is the other end of the scale. This is where the price goes up until it finds a resistance level (investors selling) and the price starts rising. However, if the price has ‘breaks’ this level, the price is likely to continue rising until another resistance level is found.

For the Binary Options trader, technical analysis should form an integral part of any trading strategy. Learning the techniques involved in technical analysis can prove essential to a Binary Options trader when they enter and exit positions as well as keeping track of a positions’ risk. Combined with a sound understanding of the fundamentals, technical analysis can be invaluable tool to assist in trading success.

How to Choose the Best Binary Options Trading System

One of the best techniques for trading in the currency market on a binary options trading system without the complexity of normal trading is through binary options. In binary options you get additional benefits as you do not have to spend a large sum of money for getting yourself started. You also have the added benefit of being able to achieve returns on your investments that can be as high as 60% to 500%.

Most of the online brokers offer fixed payout binary options along with best payouts. With binary options you can trade stocks, commodities and indices on account of the complimentary charting packages and tools that are used for methodological study by the traders who trade in currency.

Binary Options Trading Platforms For a normal unchanging binary options trade payout, a lucrative deal pays out 60% to 70%, even as a loss results in a 15% come back on the investment, which means a total loss of 85% of the invested amount. However, the likelihood of getting a profit of 60% to 70% in opposition to a loss of 85% is something that everybody gives a second thought. But, you can start trading by means of a potent binary options trading system.

These systems or platforms give you an approach through which you can create a zone of profit with a large amount of the best possible positive prospects.

It has been seen that about 80% of the options expire valueless. This can be simplified by the online trading system. This system enables you to create a winning trading system on the basis of analysis of the historical data after getting the information of market trends. You can fully automate each Binary options trading system. You should, therefore, choose a system through which you can trade automatically.

Binary options platforms You can find a lot of different types of binary options trading platforms which will help you in online trading. These platforms are simple to use and you get a chance to know about your loss or gain in binary options trading. Binary options trading platforms have many benefits in terms of their features. You should be conscious about the benefits and drawbacks of the binary options trading system and then weigh the one that suits you the most.

Binary Options Platforms Review A simple review of some of the binary options platforms are as follows:

The standalone or web-based trading platforms

These platforms help you to have better control over your trading; however there are many hidden costs in such systems. Before you choose any definite standalone platform, you should find out about its maintenance, storage facilities and user-friendliness.

Multiple Currencies trading platform

In binary options trading, you can trade on commodities, currencies, US market, EU market, Indices and many more. So, if you regularly trade with currencies, then you should choose a binary options trading platform that supports many currency pairs.

High Security Trading Platform

At the time of selecting a binary options trading platform you should enquire about its security level from the broker. You can look at its encryption level, and be able to interpret, which platform is best for you. Typically, a binary options trading platform having at least 128 bit SSL encryption is a good platform.

Pay Back for ‘Out Of The Money’ platform

Even a cent makes an enormous difference in binary options trading. Therefore, trading platforms, that would give you, at least some pay back for ‘out of the money’ should be chosen.

Minimum deposit platform

In most binary options trading systems or platforms there is a minimum deposit of 100 dollars. However, there are a few where the deposit can be as low as 50 dollars.

Moving Average Binary Options Strategy
By Binary Diaries

A Moving Average is a moving mean of data. In other words, Moving Averages perform a mathematical function where data within a selected period is averages and the average “moves’ as new data is included in the calculation while older data is removed or lessened. Moving averages essentially smooth data by removing ‘noise’. This smoothing of data makes Moving Averages popular tools in identifying price trends and trend reversals.

The differences between the three types of moving averages lie in the way that they are calculated and whether they look at all the data available or only the data within a selected period. This means that each type of moving average has its own characteristics, for example how quickly each will respond to changes in the underlying price.

Simple Moving Average

Simple Moving Averages are the most common and popular form of moving average. The primary reason for this is the relative ease with which Simple Moving Averages are calculated. A Simple Moving Average is calculated by adding values over a set number of periods and then dividing the sum by the total number of values.

As with other types of moving averages, Simple Moving Averages smooth the data by removing ‘noise’ over the selected period. The ability to smooth data makes them a useful tool in identifying price trends and trend reversals.

Moving average – Weighted

As with Simple Moving Averages, Weighted Moving Averages smooth the data by removing “noise’ over the selected period. However a weighted Moving Average will be more sensitive to recent changes in data. This is because a Simple Moving Average gives all observations equal emphasis in its calculation, but a Weighted Moving Average assigns a greater weight to the most recent observations.

Moving average – Exponential

The Exponential Moving Average is similar to the Weighted Moving Average in that they both assign greater weight to the most recent data. Where they differ is that instead of dropping off the oldest data point in the selected period of the moving average, the Exponential Moving Average continues to maintain tall the data. In other words, a 5 day Exponential Moving Average will contain more than 5 pieces of data information. Each observation becomes progressively less significant but still includes in its calculation all the price data in the life of the instrument. The exponential Moving Average is another method of weighting a moving average.

The most common uses of Moving Averages in Binary Options trading:

A common method involves looking at the slope of the Moving Average and the relationship of the prices to the Moving Average. For example, if the Moving Average is sloping down and prices are below the Moving Average then prices are considered to be in a downtrend. The opposite is true for an uptrend. If prices are moving above and below the Moving Average and the Moving Average is flat then a non-trending market exists.

When trading binary options, this can be achieved a number of ways. The first method looks at the relationship between the close and a single Moving Average. If the market closes above the Moving Average then a buy signal is generated, if the market closes below the Moving Average then a sell signal is generated.

The second method uses two Moving Averages, one with a shorter observation period than the other. Buy and sell signals are generated when the short moving average crosses over the long moving average. For example if the short moving average crosses above the long moving average, a buy signal is generated; a sell signal is generated when the short Moving Average crosses below the long Moving average.

When trading binary options, both these buy and sell techniques is most effective when the market is trending. If the market is non-trending then these techniques are likely to give false signals. This is simply because the market needs to continue in the direction of the buy or sell signal in order for the trade to be profitable.

Exponential Moving averages are used in the same manner as the other types of moving average, usually to identify price trends and trend reversals.

Parameters

To use Moving averages in your binary options strategy, the exact averaging period to be used will depend on the purpose of the moving average. If you are using moving averages to identify the trend, the length of the averaging period should reflect the length of the trend you are trying to identify. The longer the trend – the longer the averaging period. For example, if you are looking at a daily chart to identify the long – term trend, you may decide to use an averaging period of 200. For short and medium term trends periods of 20 and 50 could be used respectively.

If you are using moving averages to generate buy and sell signals then shorter, more responsive averaging periods are normally used. For example a two moving average system may use averaging periods of 5 and 20.

It is also important to note that when selecting an averaging period there is a tradeoff between the averaging periods, the number of signals generated and the risk associated with the signal. A longer averaging period will generate fewer signals but will require a larger price move before responding, sacrificing potential profits in order to confirm the signal. A shorter averaging period will generate more signals and require less of a price move before responding, however the risk that the signal is false increases.

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Best Binary Options Brokers 2020:
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  • Binomo
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