Best Binary Options Indicators
A look at some of the Best Binary Options Indicators
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Pivot Point Indicator
Highly liquid major currencies represent one of the favorite roaming-grounds for binary option traders. Everyone is an expert one way or the other when it comes to measuring the US dollar up against the EUR or the British Pound, so making predictions on where the value of such currency-pairs is set to head is naturally attractive. For such trades, the pivot point indicator is an especially useful tool, obviously when used together with support and resistance levels. Pivot-point based analysis is used for the detection of trends and directions, and more importantly, it works for any time-frame. It is precisely this flexibility in timing which makes it so well-suited for the trading of forex as well as forex-based binary options.
Commodity Channel Index
For the identification of extreme oversold or overbought conditions in the price of a given asset, the CCI (Commodity Channel Index) is one of the most straightforward solutions. The CCI compares the current price of an asset with its average over a set period of time. The average price-level used in the formula which defines the CCI is usually the Moving Average. A major advantage of the CCI is its flexibility in regards to timing, a feature which makes it especially suitable for the trading of binary options. The formula which defines the CCI is the following: CCI=(Current Price – Moving Average)/0.015xD, where D is the standard deviation from the MA.
If the CCI yields a value above 100, the trader is looking at the potential start of a strong uptrend. If the CCI’s value is below -100, we’re looking at the start of a massive downtrend. The binary option choices are quite obvious in both cases. Like most other indicators, the CCI can be used/combined with other indicators, like the Stochastic Oscillator, for added reliability.
The Stochastic Oscillator is one of my personal favorites. It is safe to say that most traders know the stochastic oscillator, and while they do understand the results it generates and those results have to be put to use, most people don’t really understand the logic behind how the oscillator actually works. What it does is that it follows the momentum of the price change (the speed with which change occurs). The logic is that the change in momentum occurs before the actual price-reversal, so it essentially foreshadows a future trend. Whenever such changes in momentum occur, the stochastic oscillator indicates oversold/overbought situations in the asset-price. The formula which determines the Stochastic Oscillator’s value is indeed a superb description of what it is/does.
%K is the stochastic oscillator, C is the current asset price, L14 is the lowest price-value of the last 14 cycles, and H14 is the highest price-value of the same period. The stochastic oscillator also makes use of %D, which is the 3-day moving average of %K. The formula makes it clear that the stochastic oscillator is a range-bound mathematical entity, perpetually between 0 and 100. If the value is above 80, we’re looking at an overbought situation, pointing at an impending bearish reversal. If the value is below 20, the situation is oversold, and a bullish reversal is in the books.
The bottom line: the above-described indictors are some of the most widely-used technical analysis tools. One should feel free to use them combined and/or with other such indicators. Bringing the fundamentals into the equation whenever possible is also a good idea. The goal is always to gain as strong a trading signal as possible and then to act on it. This is how binary options success is made.
This article was written by Peter Wassenberg.
For more of his articles please visit- http://www.autotradingbinary.com/