Basic instruments for analysis in options trading

Ted Capwell

The main goal and task of any trader, including binary one, is to obtain a high financial indicator of trade, and here it is necessary to include the stability of the increase in profit. To do this, the trading uses a set of market analysis techniques that undoubtedly provide technical and financial advantages to the market. Professional analysts and market participants are well acquainted with the widest range of analysis techniques, which gives them the opportunity to count on the maximum performance of trading.
The binary market, in spite of more adapted algorithms of the main trading instrument – binary options, also requires systematic and professional forecasting of market movements. Therefore, technical strategies, originally developed for other areas of financial trading, are often used here. In our material, we will talk about a basic set of tools, techniques and services that can provide investors with the necessary arsenal for effective work in the market.

Basic instruments for analysis in options trading

Forms of analysis

Absolutely all newcomers who have chosen for themselves the main direction of the work of binary trading, first of all, it is necessary to master the basic forms of financial market analysis. In this issue, there are two main areas:

Fundamental – a mode of the analysis of the market and forecasting in which fundamental indicators of the market are used as signal indicators for registration of contracts. This includes: statistical data on the work of the economic sectors of states, monetary and financial policies of the Central Banks, data on reserves and volumes of extraction of basic consumer resources, political statements of leaders of advanced economies, news about catastrophes of both natural and man-made nature, a certain sphere of the economy. This list of factors and drivers of influence on the market is very wide, but we presented you with a basic list of data considered in the fundamental analysis.
Technical – the mode of market valuation, in which the direct patterns of movement of liquidity quotations of assets are used as signal indicators for trade. Here we take into account the various levels of the market, the direction of the trend of quotations, the patterns of price candles on the chart, and the mode of application of special automatic services for forecasting is a separate direction of technical analysis.

Each of the presented analysis areas is divided into many forms of strategies and methods for estimating trading quotes that can lead to the highest and most stable result of trading.
It is worth noting that it is impossible to work on a binary market, using only one of their varieties of market analysis. The fact is that the quotes of the asset and the laws of their movements are subject to the influence of many factors, therefore, in the arsenal of a successful trader, there must be as many as possible various instruments. We’ll talk about this later.


Economic Calendar – the main tool of fundamental analysis

Given that the fundamental analysis is based on the use of a variety of financial and economic indicators of the world market, the main tool for forecasting the movement of quotations of a certain asset will be an economic calendar! It is a kind of announcement or, perhaps, a program of publications of the most important and significant for the market. Use in the analysis of the economic calendar or at least taking into account its indicators in the issue of forecasting is mandatory for the work of the trader in the binary market, and it does not matter – you are a novice trader or an experienced and experienced investor! Without taking into account in the forecast of the fundamental indicators of the market, any strategy will give you only a negative result.
The calendar of news is easy to find on the Internet – a lot of information portals offer multifunctional and informative forms of this tool. Usually it is a set of news that should come out during the day, week, month. At the same time, the calendar offers a complete list of all the necessary information for processing the effective contract:

• Exact time of data output
• A financial asset, to which the fundamental news will have the greatest impact
• Level of importance of news
• Previous indicators
• Forecast of analysts for forthcoming publication
• Actual indicators

This is more than enough for effective work in the market. Often an economic calendar is used as a trading strategy “On the news” or as an auxiliary service for adjusting the work of another type of strategy – Price Action or Indicator.
Having mastered the principles of work on fundamental analysis, you will receive an indispensable tool for forecasting technical movements of the market and will be able to get the highest trading indicators.

Technical Analysis – Indicators

Prior to the development of technology and the emergence of computers, traders had to do on their own, literally on a piece of paper, complex calculations of market indicators, assess the possibilities and effectiveness of trade contracts. However, today, information services allow it to be done in a simpler and more technologically advanced way, and most importantly – in real time, which raises the dynamics of trading and its performance to new heights.
Indicators of analysis are complex automatic algorithms in the form of programs that are able to quickly, correctly and accurately calculate the probability of movement of quotations in a certain direction. Their work is based on cyclical, mathematical and technical patterns of market fluctuations.
It should be noted that the number of indicators available today to assess the market, there are several hundred titles, which significantly expands the trader’s arsenal. To create an optimal set of indicators for effective trading, you need to study the work of a variety of services. This will not only expand your capabilities, but will also allow you to create a variety of trading methods and effective strategies based on a combination of tools. As a recommendation, we offer you the following list of necessary services:

Trend – these are indicators designed to determine current and forthcoming market trends. Here you can include: Moving Average, Alligator, Parabolic SAR, Bollinger Waves. These are the basic tools for conducting indicator analysis of trade trends.
Oscillators are instruments that, thanks to their form of work and the calculation algorithm, are able to correctly determine points of spreads of quotations for corrective and trend movements, which makes them indispensable services in professional analysis. To the main oscillators we include such a set of services: Stochastic, MACD, RSI. The advantage of these resources is not only the rapid evaluation of quotations and the formation of highly efficient signals, but also the possibility of their use as signal filters of other services.
Volume indicators – means for calculating trade volumes, number of contracts, and market sentiment offer the most informative signals for processing options at the most profitable points. As the main set of such services we offer the following tools: cash flow index (MFI), AD, OBV, Volume. This set is enough to create a high-quality strategy and obtain the maximum trading result.

Indicator strategies, thanks to the automated approach to analysis, are the most popular services in the trading environment and allow you to make a profit in a comfortable and dynamic mode.


Graphical technical analysis services

The next basic tool for analyzing the market in binary trading offers graphical services. This is at first glance the simplest tools: lines, rays, levels, horizons, various geometric shapes. However, their functionality in technical analysis makes it possible to obtain very good results.
Everything is built on different patterns of plotting assets. The fact is that quotes during the movement create certain cyclical indicators that can be effectively used as signals for trading. An example of this can serve as all known trend levels – support and resistance, allowing for simple signals in the form of breakdowns of levels and rebounds of prices from them to make out the most productive contracts. Here you can also include graphic patterns: Pennant, Flag, Triangle. With the help of simple lines and figures, professional strategies are built with a level of effectiveness of up to 90%.
In addition, the list of graphic tools includes and semi-automated resources such as: Fibonacci levels – this technical tool allows you to clearly calculate the mathematical levels of the market, in which the movements of quotations are carried out by regular trend reversals. Further such technical service as “Fork” is a resource for constructing regression channels – this approach to analysis allows you to earn to investors in the binary market at the lowest possible price fluctuations of the asset and leads to the receipt of the maximum quick profit.
The list of graphical tools can be continued indefinitely, but it is enough for you to include in your arsenal the specified set of resources – this will undoubtedly allow you to more professionally conduct technical analysis.

Trading techniques on a clean chart

The techniques and strategies of Price Action or the analysis of a clean schedule without the use of additional specialized services, despite the complexity, are the most effective form of forecasting. Here, all the processes and signals for trading are built on the basis of identification of simple patterns, in the list of which it is worth highlighting such a set of techniques: Wave market models, candlestick patterns, various methods of trading on line charts.
In the environment of professional analysts it is believed that this direction of analysis is the most effective, since the signals supplied by the market have the maximum accuracy and efficiency. And, indeed, strategies based on these methods bring very decent financial indicators to their users. In addition, such strategies, tested by time, for example, work on Japanese candle models, traders use more than two hundred years! Of course, for a beginner to disassemble the intricacies of such an analysis is difficult, but if you master these techniques, you will receive indispensable tools for forecasting.

Online Signals

Concerning the efficiency of the payload of online signals for trading, which are now offered on a variety of services on the Internet, there is much debate. We decided to include this resource in the basic set of analysis tools in binary trading for a very simple reason – you can use such signals as an auxiliary tool. Analytical online signal services allow you to carry out local customization of your own strategies, can be used as signal filters, and also open the possibility to expand the technical and information potential of analysis.
Of course, to effectively work on online signals, you will need a professional resource that you will trust. To select such a service, it is necessary to clearly understand the algorithms for generating signals, and also to test their effectiveness in real trading.

In conclusion, I would like to say that every trader who sets high goals and aspires to become a professional in binary trading must have the widest range of basic analysis tools. To do this, you need to constantly improve your skills and learn. Only in this way are the financial heights of work in the market and the maximum indicators of trading achieved.



“General Risk Warning: Binary options trading carry a high level of risk and can result in the loss of all your funds.”