Make Use of Technical Analysis to Increase Your Winning Percentage
In binary options trading, if you do not make use of technical analysis, it is surely difficult to win the trade continuously. Here, we explain technical indicator and analytical methods for binary options trading.
What is technical analysis?
Technical analysis is used to predict trends by analyzing the current market movements. It is primarily used in trading in financial markets such as stocks, commodities and forex. Traders use the technique to identify patterns of trading activities in time series, which can forecast future price developments.
To put it simply, technical analysis is a technique used by traders to find the best time to trade. In binary options trading, there is no such thing as “selling”, and this is different from forex trading. Therefore, in the case of binary options trading, it is a technique used to find the best time to place a trade.
Technical analysis is very useful in short-term trading, which is different from fundamental analysis. Binary options trading is a perfect type of short-term trading. Thus, technical analysis is essential in binary options trading.
In technical analysis, there are two approaches: trend line analysis and oscillator analysis.
Trend line analysis
To analyze in which direction will the price move: up or down.
To signal overbought and oversold.
For trend line analysis, common techniques are used such as Bollinger Bands and moving average. For Oscillator analysis, the Relative Strength Index (RSI) and the Stochastic Oscillator are two examples. There is also the MACD, which is a very popular trading indicator in trend line analysis. Some people also categorize it as oscillator analysis.
How to conduct technical analysis?
On most trading platforms, it is difficult to find a technical analysis tool. Some brokers provide simple analysis tools and charts. However, there are few brokers provide powerful technical analysis tools, which are usually provided separately.
To conduct technical analysis, you can use MetaTrader 4. Below are the procedures:
① Download MetaTrader 4（MT4）
② Navigate to technical analysis
③ Open MetaTrader 4 interface and trading platform interface at the same time. Look at the MetaTrader 4 interface, conduct technical analysis, and find the best time to place trades.
④ After you conducted technical analysis, you can place trades on the binary options trading platform.
The MetaTrader 4 is originally a forex trading platform. In binary options trading, you can use it as a tool to do technical analysis.
The trend line analysis is very useful for identifying market directions. For example, when the moving average moves in one direction, you can predict that the price will move in the same direction and place a position. You can have a high winning percentage. As for the oscillator analysis, it is useful to analyze ranges and suggest possible trend reversals. The Stochastic Oscillator, which can signal overbought and oversold, is also very useful for you to make an analysis.
The price moves up and down. Sometimes it is a trend and sometimes a range. Instead of using one technique, it would be better to use several techniques to analyze the trends. This is very similar to the way you place trades. Instead of focusing on one currency pair, it would be better to place trades on several currency pairs to reduce risks and you can build a solid investment portfolio.
Besides technical analysis, there is also the fundamental analysis. In fundamental analysis, traders look at economic factors and do not examine the charts. It is mainly used in long-term trading. In binary options, traders mostly use the technical analysis.