Binary Options Trend Confirmation - Tips & Strategies for Trading

Binary options trend confirmation. How do I recognize important signals? This is what trading systems do. Read valuable tips now & use trading strategies.

We have presented several strategies for binary options trading in recent weeks. Most were based on the technical analysis of the underlyings, and we mostly used other analysis software for this, since most brokers for binary options do not yet have any mature software at the moment. We would also recommend every trader to carry out such detailed analyzes, as they contribute enormously to the learning effect and the reliability of the decision.

Looking back, we have presented strategies based on indicators, price patterns and economic events. However, courses can usually not be squeezed into rigid patterns, although many traders and proponents of technical analysis would like that. It is not uncommon for known patterns to generate false signals. We want to go into this today and give the trader of binary options a sense of when it makes sense to use a certain pattern and when not.

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Avoid false signals

We have often explained that the reliability of technical signals decreases with the decrease in the time unit under consideration. It is therefore only logical that false signals in short-term trading are also increasing. But how do false signals actually occur?

Let's look at the current chart of the currency pair Gbp / Usd in the 15-minute window. The chart shows a clear upward trend for the past two days. Market technicians see an upward trend as confirmed if it has been supported two or three times but has not been broken down (trend confirmation 1, 2, 3). As you can see in the example, it would actually be a worthwhile long entry late. This is one of the reasons why the best traders try to identify a trend beforehand instead of waiting for multiple confirmations. But this is another topic that we will discuss again in detail later.

Break-out trading is a strategy that is particularly well known to beginners. This strategy tries to trade breakouts from different patterns. Unfortunately, beginners tend to overlook the fact that courses do not move precisely, but rather head for zones. A beginner would therefore immediately take a position (put) at point 4, where the erroneous breakout below the uptrend line occurred and fall on the nose, since the course was again in the trend direction.

But how can you avoid this eruption now? We zoom in on the chart again and go to the 5-minute chart window. We see that candles 1, 2 and 3 are facing downwards and candles have broken the upward trend every three 5 minutes. It is clear that a put position would cost us our efforts in this case.

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Day traders often set the rule to protect themselves against these false signals that the breakout is only confirmed as soon as one of the breakthrough candles below the trend line closes. The following graphic shows a candle with the associated prices.

In our case, only candle number three closes clearly below the trend line. The second candle also closes below the trend line, but since you should not take trend lines precisely, you should be on the safe side and not let it go straight through as a breakout confirmation.

So if we have the third candle as confirmation of the breakout By looking at the closing price below the trend line, we can get ready to buy a put option. But it is not yet possible to buy immediately. The second rule is that we buy a put option when the third breakthrough candlestick has passed. In this case it is the price mark at 1.60436 Usd / Gbp.

But as we can see, this price mark is never reached and the price turns upwards again in the trend direction. If we included the two rules in our analysis, we would have saved a loss. To summarize again:

  • At least two trend confirmations define a trend.
  • Do not define trend confirmations precisely but consider them as zones.
  • Confirm breakthroughs with candle patterns (closing price under / above trend line).
  • Buy a call / put option only above / below the high / low of the breakthrough candle.

By following these rules, we are slowly moving in more or less meticulously planned and therefore almost professional trading of binary options. Of course, this method does not help to avoid every false signal. However, it enables us to reduce the risk to a certain extent. Such methods can also help to be more disciplined.

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Binary Options Trend Confirmation - Tips & Strategies for Trading

Strategies for trading binary options - trading in 5 steps

for There are numerous strategies available for trading binary options that you can take advantage of, although of course they are not a guarantee of a profit. It is essential to deal with the trade itself and the respective financial product in advance. Therefore, in the following slideshow we have once again summarized the basic information on binary options and illustrated which five steps are necessary until the first trade.

For trading binary options and implementing such strategies as presented above, interested parties should always look for a good broker. We can definitely recommend the binary.com broker. The broker comes from Great Britain, the mecca of the capital markets and you can see that from him. The services it offers are clearly more mature than competitors. The chart analysis software available for download is a very suitable tool, especially in the context of avoiding false trades due to false signals. In addition, the interested trader can open a virtual account. After sending the email address and a self-chosen password, the interested trader can practice trading with a demo account. Not all online brokers for binary options offer this function. The choice of language can also be set individually and is no longer restricted to just one language.

Binary Options Trend Confirmation - Tips & Strategies for Trading

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