Binary options indicators
Trading in classic options appeared long before the start of world financial markets. But binary options have appeared quite recently. It is now the youngest area of trading.
It all started in 2008 in the "financial center" of the world - the United States, or rather in Chicago. The Chicago Board Options Exchange (CBOE) has allowed large traders to enter into new contracts for themselves.
Several American exchanges now offer binary options trading. But let's immediately notice that real trading is very different from what Internet brokers offer us.
The situation improved significantly in 2012 when the Cyprus Securities Commission (CySEC) officially recognized binary trading as a financial instrument. What did it do? Traders now have a guarantor of protection in the person of CySEC (today it is one of the most reliable regulators in Europe and the world). And honest brokers were able to provide their services officially. Also, after the decision was made, the public was inclined to believe that binary options are still a financial instrument, not a gambling one, although the disputes are still ongoing.
Why are trading indicators needed?
An indicator is a price chart passed through a formula, or additional trading information, from the size of the spread to the display of upcoming news.
The resulting curve or histogram greatly simplifies the "chaos" of price movements.
Price conversion helps in finding trading signals, but sometimes traders use non-trading indicators that provide additional information: spread size, swap size, time until the end of the session, candle close, fundamental news release, etc.
The purpose of binary options indicators is to summarize historical price data on a chart to make it easier for a trader to interpret the behavior of the markets.
The result of using the indicator can be compared to glasses. Fluctuations in quotations are similar for a beginner to a blurry picture of vague outlines of objects, observed with the naked eye of a short-sighted or farsighted person. Only by putting on glasses, he will be able to read the text or see an obstacle in the distance.
Depending on the type of indicator, the trader can easily determine the trend, postpone the deal due to the proximity of the overbought / oversold zone, waiting for a correction or confirmation of further growth. The type and purpose of each specific tool is determined by the formula embedded in it.
All calculations are performed using simple operations of addition, subtraction and / or division of four parameters: closing prices, opening prices, highs and lows at a certain time interval. It is set by a standard series of time values from 1 minute to a month and is displayed in the trading terminal in the form of a candle.
We are dealing with a limited number of variables: price, time, and sometimes volumes.
That is, any indicator, if it is not informational, receiving data from external sources, does not carry any "new" information in itself, but only passes all the same data through a different formula.
It is customary in the market to divide the best indicators for binary options into three conditional groups:
- Trendlines - curves and broken lines drawing on the chart, describing price fluctuations, suggesting a trend;
- Informational - displaying data from external sources or auxiliary statistics;
- Oscillators - determine the current position relative to a range.
Each indicator on the chart must have a target. One target, one indicator.
List of indicators for trading binary options in Nigeria
Accumulation / Distribution is an indicator that is designed to measure underlying supply and demand. It does this by trying to determine if traders are actually accumulating (buying) or distributing (selling). This is achieved by calculating the total cash flow for each period. ADL can detect divergence (discrepancy) between volume flow and actual price in order to first either confirm the current trend or anticipate a future reversal.
Aroon (also referred to as Aroon Up or Down) is a technical indicator that consists of two separate dimensions that display the number of periods that have passed in an n-period of time since the highest or lowest price (n-periods at the trader's discretion). For example, the 14-day Aroon-Down indicator will calculate the number of days that have passed since the 14-day high was set, and then, it calculates a number between 0 and 100. The 14-day Aroon Down indicator does the same, except that it calculates number taking into account the establishment of a 14-day low. This number is intended to indicate the strength of the trend (if any). The closer the number is to 100, the stronger the trend is. Arun is not only good for identifying trends, it is also useful for identifying periods of consolidation.
ATR is a tool used in technical analysis to measure the level of volatility. Unlike other modern popular indicators, ATR is not used to identify the direction of price movement. It is only used to measure the level of volatility, especially volatility caused by price gaps or slow chart updates.
Awesome Oscillator is an oscillator-type technical indicator, which is based on the difference between simple moving averages (SMA) with a period of 5 and 34. Moreover, the moving averages are plotted at the median price - the average value of a bar or candlestick.
Bollinger bands are a technical analysis tool for financial markets that reflects current fluctuations in the price of a stock, commodity or currency. The indicator is calculated based on the standard deviation from a simple moving average.
Chaikin Oscillator is one of the most popular and effective volume indicators, the author of which is the well-known trader and analyst Mark Chaikin, who also created analysis tools such as the volatility indicator and the Money Flow oscillator.
Commodity Channel Index is a technical indicator developed by Donald Lambert in 1980. It shows when the market is overbought / oversold and helps to assess the direction and strength of the trend, as well as identify new trends.
Directional Movement is a technical indicator created in 1978 by the financier Wells Wilder to assess the vector and strength of a market trend.
Donchian Channels is a fairly simple channel indicator that reflects the boundaries of price fluctuations using a specified time interval.
Ease of Movement Indicator EMV, Arms Ease of Movement Value is a technical analysis indicator developed by Richard Arms. The indicator shows the ratio of prices to volumes.
The Elder Strength Index measures the strength of a price movement using price and volume to calculate. The indicator can also be used to identify possible reversals and price adjustments. EFI is an oscillator that fluctuates between positive and negative values above and below the zero line. Alexander Elder, the creator of the indicator, believed that there are three components that cause the price of a security to change. These three components are direction, stretch and volume. All three of these components are combined in EFI to create an oscillator.
Ichimoku cloud. The Ichimoku Cloud, also called Ichimoku Kinko Hyo, is a popular and flexible indicator that helps identify support and resistance levels, set trend direction, measure pace, and generate trading signals for the greatest security. It gives a clearer and clearer picture of price movements. These signals help traders find the best entry and exit points. The indicator is represented by five lines on the price chart (each representing a different time frame), was developed by journalist and financial analyst Goichi Hosoda, who improved this analysis technique for a long time before publishing it in the late 1960s.
Keltner Channels is a technical analysis tool that consists of bands similar to Bollinger Bands and Moving Average Converters. They consist of a Top envelope, above the middle line, and an Envelope below the center line. The middle line is the moving average price over a user-defined period of time. Typically, a simple moving average or exponential moving average is used. The top and bottom envelopes (user-defined) are exposed as a range away from the centerline. This can be a multiple of the daily high / low range, or, more commonly, a multiple of the Average True Range (ATR).
Linear Regression. The linear regression channel consists of a median line and two parallel lines, above and below it, at the same distance. These lines can be seen as support and resistance. The middle line is calculated based on linear regression of the closing price, but the data source can also set the opening price, high or low. The height of the channel is based on the price deviation towards the centerline. Extrapolating the channel forward can help provide bias and find trading opportunities.
MACD (Moving Average Convergence / Divergence) - stands for Moving Average Convergence / Divergence. One of the most popular indicators, which is quite simple, but at the same time, very versatile. This tool can be used both as a trend indicator (since it is based on moving averages) and as an oscillator.
Momentum is a leading indicator that measures the rate of change of an instrument. It compares the current price with the previous price for several past periods. The indicator line forms an oscillator that moves above and below 0. It is an unlimited oscillator that has no lower or upper limit. Bullish and bearish interpretations are determined by looking for divergences, center crossovers, and extreme readings. The indicator is often used in combination with other signals.
The Money Flow Index (MFI) is a tool used in technical analysis to measure buying and selling pressures. This is done by analyzing both price and volume. The MFI calculation generates a value, which is then displayed as a line that moves in the 0-100 range, making it an oscillator. When the MFI rises, it indicates an increase in buying pressure. When it falls, it indicates an increase in selling pressure. The cash flow index can generate several signals, first of all: overbought and oversold, divergences and rejections.
Balance volume is used in technical analysis to determine the strength of buyers and sellers. It belongs to the indicators of accumulation. This means that on the day the price went up, the daily volume is added to the total OBV. If the price went down, then the volume is deducted. The OBV value then forms a line for easy perception. The On-Board Volume Indicator is most often used to confirm or determine the general direction of a trend, or to predict price movements after a divergence.
Parabolic SAR is a time and price tool used to identify potential stop and reversal levels. In fact, the abbreviation "SAR" stands for "Stop and Reverse". The calculations of this indicator form a parabola. If it is below the price, then the trend is bullish; if it is above, it is bearish.
Price Volume Trend is used to measure cash flow. PVT is similar to another technical analysis tool like On-Balance Volume due to the accumulation of volume. While OBV adds or subtracts the total daily volume depending on whether it rises or falls, PVT only adds or subtracts a portion of the daily volume. The amount of volume added or subtracted to / from the total PVT amount depends on the amount of the rise or fall of the current day versus the close of the previous day. Price Movement (PVT) can primarily be used to confirm trends as well as to identify possible trading signals due to divergences.
Rate of Change is a momentum oscillator. It calculates the percentage change in price between periods. The ROC takes the current price and compares it to the "n" price periods (user-defined) ago. The calculated value is then displayed and fluctuates above and below the zero line. A technical analyst can use the ROC indicator to identify trend and overbought and oversold levels.
Relative Vigor Index, unlike classic oscillators, does not have overbought and oversold zones, but gives trading signals to make deals by crossing the RVI line and the signal line. If the RVI line (red, faster) crosses the signal line (green, smoother) from top to bottom, then at the opening of the next candle, a purchase is made with a stop order placed behind the last extreme.
RSI is one of the most important and well-known indicators used by traders around the world. By its nature, the RSI indicator is an oscillator, that is, it fluctuates in a certain zone, limited by the maximum (100) and minimum values (0).This indicator displays "momentum" - the speed and amplitude with which the price movement changes; how much the price changes in the direction of its movement. In other words, the RSI indicator shows the strength of the trend and the likelihood of its change.
Stochastic was developed by professional trader and technical analysis instructor George Lane. It is an oscillator that consists of two lines:
- % K (or main line) = this is the main line, displayed as solid.
- % D (or signal line) = this is just a% K moving average. It is sometimes called a signal line and appears as a dashed line.
When the stochastic lines are above 80, the market is considered overbought, and when below 20, oversold.
SMI Ergodic Oscillator. It is perfect for analyzing an asset when the market is flat (sideways trend). The general principle of the indicator's operation is simple: if the curve line of the indicator reverses and moves down, it is a signal for the PUT option, if the curve of the indicator line reverses and moves up, it is a signal for the CALL option. You also need to monitor the intersection of the smoothed and short-term lines.
Triple EMA differs from traditional EMA and MA in that it reacts faster to price changes. Triple EMA direction indicates short-term price direction and general trend. However, the lag is not completely eliminated, so it is important to remember that when prices change rapidly, the indicator may not immediately track these changes. In addition, if the period is long, then the Triple EMA will be slower to track direction and price changes.
The Ultimate Oscillator (UO) is a technical analysis tool used to measure momentum over three different time frames. The problem with many impulse oscillators is that after a rapid advance or decline in price, they can generate false divergence signals. For example, a bearish divergence signal may appear after a rapid rise in price, but the price continues to rise. The Ultimate Oscillator tries to fix this by using several rather than one time interval in its calculation, which is used in most other impulse oscillators.
VWAP. Volume Weighted Average Price "VWAP" is a technical analysis tool used to determine the volume weighted average price. VWAP is commonly used on intraday charts to determine the price trend. VWAP is similar to a moving average in that a price below VWAP indicates an uptrend, while a price below VWAP indicates a downtrend. VWAP is most often used by technical analysts to identify market trends.
Volume indicates the total amount of a financial instrument that has been traded during a certain period of time. It can refer to stocks, contracts or lots. The data is tracked and provided by exchanges. It is one of the oldest and most popular indicators. It is usually presented in the form of colored bars, where green indicates an increase in volume, and red indicates a decrease, with a moving average. This is one of the few indicators that is not price based. High volume indicates high interest in the instrument at its current price and vice versa.
A sharp increase in trading volume indicates an increased likelihood of price changes. Typically, you can see an increase in volume during news events. Strong trending moves go hand in hand with increasing trading volume. Therefore, it is considered as a measure of strength. You can expect a high buy volume at the support level and a high sell volume at the resistance level. There are several ways to use volume in trading strategies, and most traders use it in conjunction with other analysis methods.
The Williams Percent Range (Williams% R) is a momentum-based oscillator used in technical analysis primarily to detect overbought / oversold market conditions. % R is based on a comparison between the current closing price and the highest price for a user-specified period in the past. % R fluctuates between 0 and -100 (note negative values), where readings closer to 0 indicate a more overbought condition, and readings closer to -100 are more oversold. Typically,% R generates values based on overbought / oversold market conditions, as well as changes in overall dynamics.
Williams Alligator. The Alligator indicator was developed by Bill Williams and combines moving averages with fractal geometry. The indicator helps traders determine if the market is developing. It consists of 3 lines: a blue line (Alligator's jaw), a red line (Alligator's teeth) and a green line (Alligator's lips). Each of them has different periods and offsets that can be set by the user. The alligator is easy to use and can look for different trade setups based on how close or far apart the lines are, like an alligator opening and closing its mouth. This indicator can be used in combination with other analysis methods.
Indicators can be seen as gauges of market fluctuations on a trader's trading panel. They help the trader to predict future market movement or reveal hidden signals, such as price discrepancies. Informational indicators make the trading process more convenient for a trader or add auxiliary data from external sources.
It is extremely difficult for beginners to start trading without indicators. The extent to which professionals use these tools depends on personal experience. One should understand that indicators are not a machine for extracting money from the market, but a simple service measuring tool for forecasting and identifying market signals.
On a trading platform, it is most convenient for a trader to use indicators for binary options and trade at the same time. To do this, it is necessary to register on the trading platform. The trader needs to confirm his name and email address. After getting an account on the trading platform, you can open a trading account.
You can trade binary options with the help of indicators after making a deposit and funding your account to the amount you want. Considering that you have already chosen your trading strategy and the best indicators for binary options, it won't take long for you to make a profit. Withdrawals are made at the trader's request. It is processed and the money will be transferred in the way specified in the application.