What are analytical tools for a trader?

Ted Capwell

Successful traders make forecasts of changes in rates, analyzing the graph of the selected asset. The study of behavioral factors of price movement is the basis of technical analysis, and various analytical tools help to structure the data obtained.

Practice shows that many novice traders do not pay enough attention to technical analytics, relying entirely on another type of analysis – fundamental. They follow economic news and try to recognize signals in various events.

Fundamental factors have a significant impact on the market and their study is also the key to successful forecasting, helping to identify emerging trends. But often it is the technical picture of the schedule that determines the priority direction of the course in the short term.


Analytical tools for traders


What analytical tools are used in profitable trading?

Before you start investing your own money in market speculation, it is recommended that you familiarize yourself with the basic principles of technical analysis. Having a basic knowledge, a novice trader will be able to improve trading skills faster and more efficiently, while gaining profit from the conclusion of transactions.

Technical analysis combines a huge number of tools. These include charts, indicators and oscillators, systems, volumes. What affects the current asset rate is in the history of the chart, and it is constantly repeated. The reversals and rebounds that occur regularly are the result of cyclical actions by market participants.

The main analytical tool of a trader is a chart. It is he who shows us how the price has changed, and, studying its history, we make predictions of price changes. The reversals and rebounds that occur regularly are the result of cyclical actions by market participants. Visually, the graph is constructed in four main types:

● lines;

● bars;

● zone;

Japanese candles.

Most traders choose the last type of charting – it is he who most clearly shows the history of price behavior. Each candle is a price change in a selected period of time, from one minute to one month. The body of the candle shows the range of opening and closing, and its shadow is the minimum and maximum price within a period.

Where to follow the charts of changes in exchange rates of assets?

Binarium trading platform provides high-quality service for analytics of more than 30 trading assets. In addition to this, the company’s clients have the opportunity to open transactions based on their forecasts and receive a fixed profit for it.

Transactions are opened for a specific period – from one minute to three months. The task of the trader is to predict how the chart will behave over the selected period of time, go up or down relative to the opening of the transaction.

A set of analytical tools integrated into a trading terminal helps in forecasting. These tools are universal for all analytical services – on their basis numerous trading systems are built. In more detail we will tell about them further.

Binarium also has its own unique developments that are indispensable in analytics and help to make even more profitable deals. For example, “Trading Room”, in which a professional trader gives signals, supported by technical and fundamental analysis. And the Binarium “Trends” application helps a trader save time, which is usually spent on finding market trends, and start trading one-click trend strategies.

Each new client receives a reward from the company – when crediting a trading account, he receives a bonus of 100% of the deposited amount. A big bank is a guarantee of comfortable and successful trading. The withdrawal of earned funds is carried out on the most popular payment systems, including bank cards of Visa / MasterCard systems.

Trend as the basis of market analysis

One of the main advantages of using analytical tools is the ability to predict the behavior of a chart in small timeframes, down to the minute. Technical analysis, coupled with a fundamental study of the market, is becoming a powerful weapon in the hands of a trader.

The movement of the chart always happens in a certain direction, which is called a trend. It is ascending or descending. Most trading systems are built on trends. If we look at the long-term chart, we can see the general trend, while in the short-term periods it consists of small trends. When there is no clear trend on the chart, the movement of the chart is called sideways.

An indispensable tool for detecting a trend on a candlestick chart is a moving average (moving average). It shows the average value of price changes. There are several types of moving averages: MA, SMA, EMA, etc. Different types of instruments are used in various trading systems – from one moving average to several at a time (there are indicator strategies with more than 5 types of MA).

How to use lines on charts?

The basic analysis tool is the lines that are plotted on graphs. Each trading terminal is equipped with this tool – most often it is put on maximum candles in order to identify how the price will move in the future, as well as to determine the moment of the trend reversal.

The lines also indicate the channel in which the price moves. The direction of the channel determines the trend, it can go up, down or in the horizontal direction. Exiting the channel is a signal of an emerging trend, a reversal of the current or price rebound. It all depends on the situation.

Another purpose of the lines is the designation of support and resistance levels. The lines go in relation to the levels from which the price rebounded. The resistance line goes above the candles – it resists growth, not allowing the price to go beyond the designated mark. Accordingly, the support line, on the contrary, does not allow the price to fall below.

These levels have psychological significance for bidders. No one wants to buy assets at too high prices and sell at too low. Until the market gives a signal to action, then the price breaks through the level, and in the future it will have to look for new points of support or resistance.

Psychology of traders and support / resistance levels

Psychological marks are another important part of a competent analysis. These marks are at levels with round numbers – 10, 50, 100, etc. The closer the price is to the psychological mark, the more active the traders are selling or buying assets.

For example, the dollar at the opening of trading was 65.35 rubles. The factors positive for the Russian currency determined the intraday trend, and the dollar began to fall in price, approaching 65.00. Somewhere around 65.05, traders are beginning to actively buy US currency, as they are confident that the rate will not fall below an important psychological barrier. As a result, the price rebounds and there is a trend reversal within the day – the dollar is rising. Exactly the opposite happens with the psychological level of resistance – the price approaches the round mark, but does not break through it, instead it rebounds and goes down.

Support and resistance levels, under the influence of various factors, are always punctured. Then there is a change of roles – if support has been broken, then in the further movement of the chart it becomes a resistance level, and vice versa.

Do not forget that “false breakdowns” occur on the charts, when the price managed to go beyond the channel, but there was not enough power to develop the movement, and it rolls back to the previous range.

It is economic news that most often causes breakdown of support or resistance levels. The emotional component of the bidders is very important, so the loud events in the global economy and geopolitics are able to stir up even the most tranquil segment of the market.

Technical Analysis Indicators

Having dealt with the schedule, moving averages, trends, lines, levels of support and resistance, you should proceed to the study of indicators of technical analysis. This analytical tool helps to work better with the history of the graph, but in no way case is a panacea in forecasting.

The most popular indicators are oscillators. They have a scale from 0 (oversold asset) to 100 (overbought). These values ​​allow you to expect an asset to rise or fall.

There are a huge number of indicators, the most popular of them are:

● ADX – determining the strength of the trend;

● RSI – determining the strength of the trend and the probability of a reversal;

● MACD – effective for receiving signals at the intersection of moving averages;

● Stochastic – shows the ratio of the current price to the price range of a certain period.

Experienced traders use on an ongoing basis only 1-2 of their favorite indicators. At the same time, newcomers sin by putting several indicators on the chart at once, which is why it becomes similar not to an analytical tool, but to a New Year tree. Many people go through this, and, in the end, select for themselves the optimal arsenal of analytical tools for making successful deals.


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