Binary Options Charts
Trading binary options is very easy and straightforward, but if you want to gain the upper hand in your trading, then it`s good to familiarize yourself with the different kinds of charts. Charts are used for technical analysis and predicting the price movement of an asset. Knowing how to use them can greatly aid you in your trading and help you develop your own strategy. There are many different ways to illustrate price behavior as a chart and each has its pluses. In the end it`s up to you to decide which one suits your goals and trading style best. Here we`re going to take a look at the 4 most popular chart types.
Line charts are the most basic chart type and consist of simple lines connecting the data points. Usually this kind of chart is used for indicators that have only a single daily value (unlike high/low).
This kind of chart utilizes vertical bars to represent the price action of a given asset for a specific day. It shows the lowest and highest price of the asset for the day. The left hand notch shows the beginning price for the asset while the right hand notch shows the ending price. This kind of chart can be adjusted to present data for daily, weekly or monthly intervals.
The candlestick chart gives a broader and more detailed visual perspective of the bar chart that is mentioned above. The beginning price is included in the chart and the daily activity would be represented in the following way:
- an “up” day would be indicated by a green rectangle
- a “down” day would be indicated by a red rectangle
The rectangle indicates the beginning to end range, while the wick shows the full day`s range.
Usually this kind of chart is used for a one-day period but some analysts also use them to gain some long-term insight (for weekly or monthly periods).
Candlestick charts are among the oldest techniques for technical analysis. The best thing about them is the good visual representation of the price movement during a given period. This makes pattern much easier to notice.
Here is an example of a candlestick chart
The Moving Average
The moving average is one of the most popular indicators and is used by analysts for many different purposes. It can be used to locate regions of short-term support or resistance as well as general trends. The biggest advantage is that it has smoother data lines, which makes it more useful for locating trends and looking at the bigger picture. One of the downsides of the moving average is that it`s not a leading indicator but rather a lagging one.
There are two main kinds of moving averages.
Simple moving average – it calculates the average price for a specific period of time. To illustrate, a simple moving average for 50 days will give you the result for the average mean price from the ending prices for the last 50 days.
Exponential moving average – it gives you the average ending price for a certain period of time as well but it stresses on the more recent prices. This makes it more sensitive to present price fluctuations, which decreases the issue with lagging.
Here`s an example of a moving average