The role of technical analysis in binary options trading

Ted Capwell

The vast majority of newcomers in binary trading, completely unaware of the principles of work on the stock exchange and in matters of market forecasting, are beginning to trade options. The natural result of this activity is the loss of investment capital. To remedy this situation, we decided to consider the role of technical analysis in trading in the options market, as well as provide information on the classical forms of forecasting that this approach offers estimating trading quotes.

Technical analysis and binary options

So, first about the role of technical analysis. In binary trading, the main condition for obtaining a profitable trading position is the generation of a forecast that has the maximum probability of confirmation. To determine the future direction of trading quotes of the underlying asset, there are two areas of analysis – fundamental and technical. The first variant of generating forecasts is in the vast majority of options the prerogative of professionals and financial analysts with extensive experience in trading. The reason for this is complex assessment techniques and a wide range of indicators that need to be analyzed to form a trade forecast. Technical analysis in this regard is simpler and is available to a simple investor of the online market for binary options. The techniques of this direction of market valuation allow identifying high-cyclical signals on the market for registration of trade rates, which are often formed with the help of automatic or semi-automatic tools. This allows us to use the principles of technical analysis even for traders with minimal experience and knowledge in trading. At the same time, the effectiveness of using this signal generation technique is characterized by the maximum level of efficiency and allows you to obtain the highest financial indicators of trading in binary options. Thus, the role of technical analysis in option trading is invaluable.

Classical techniques of technical analysis

This direction of generation of forecasts differs by an extremely broad list of various approaches and forms of strategies. If you analyze their main list, then all systems of technical analysis can be divided into conditional types.

• Indicator strategies

In this mode of forecast generation, specialized automated tools are used to assess the market and generate trading signals. Indicator strategies are the simplest and most effective technique for technical analysis, which allows you to receive more than 60% of successful contracts in a stable mode. A simple example is a strategy based on trend and oscillator indicators, the system of signals of which gives 85% of the effective forecasts for binary options:

• Graphical Analysis Systems

In this mode of technical analysis, simple regularities are used, in which asset quotes in the process of fluctuation form a variety of reversal levels and geometric shapes, allowing the trader to execute option contracts under the most favorable conditions. A classic example of this kind of strategy is working at the trend levels – support and resistance. Simple signals in the form of rebound quotes from the trend level or in the level breakdown format allow you to make up to 80% of the effective deals on the market:

• Trading on Japanese candlestick patterns

Japanese candles are a peculiar mode of charting quotes, which is distinguished by a wide set of trading patterns that are effective for trading, allowing you to clearly identify the upcoming market movements. Candlestick patterns have many varieties and make it possible in a universal mode to generate trading forecasts. A classic example is the reversal pattern “Absorption”, which identifies the initial moment of the formation of a new trend:

As you can see, the variety of methods of technical analysis and a set of its technical tools gives a wide range of possibilities for investing funds in a binary market. Any trader for good financial results simply needs to thoroughly study the techniques and strategies of this area of ​​market analysis!


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