Binary options are known to be very profitable, but they are also pretty risky, and you need to prepare for trading them by gathering all the instruments you can. Just like with every other asset, traders use technical analysis to predict market movements and make decisions about buying or selling options in real time. But you definitely need to find truly effective and user-friendly indicators. In this article, we’re going to tell you about several good indicators known to be suitable for binary trading.
How to choose an indicator
Technical indicators are automated tools that help you analyze the market and make predictions about its movements. These tools use huge arrays of historical data and math models to find patterns on the market and tell you when you should buy or sell binary options. There are several indicators which are especially popular among binary traders: moving averages, relative strength index (RSI), and others, each of them with its own logic and mechanism. But what is the best indicator for binary trading?
There’s no single indicator that would suit all possible cases: you need to make your own set of useful indicators, and your choice will depend on the strategy you’re going to use. Some traders use just one tool to analyze the market, and others utilize a combination of several indicators at once. However, it’s easier to trade with one main indicator: if you don’t have too much prior experience, try to use just one analysis method and master it, then add other tools. Let’s take a look at the most popular indicators.
Moving average (MA)
Moving averages (MAs) are a group of very popular indicators that are good at predicting trends while helping you smooth out meaningless price fluctuations. MAs can be used to produce trading signals in real time, but these indicators are insensitive to regular price fluctuations and fundamental factors - top forex signals providers.
Relative strength index (RSI)
This index is one of the most widely used indicators in binary trading. It allows you to notice when the price of a certain asset gets too high or too low, producing clear signals to buy or sell. But you should be wary that RSIs are known to produce many false signals, too.
Stochastic oscillator
Oscillators are also known for frequent false signals, but they are still very useful. This indicator shows you how the price behaves compared to its recent maximum and minimum values, and it’s used to get many different signals.
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