Using Binary Options Candlesticks
March 30, 2016
Binary Options candlesticks are used to track price movements, and traders use them as a means to predict the direction of an asset’s price and which way it will move. Candlestick charting analysis is an ancient resource for analysing price charts. The patterns on the charts will indicate whether the market for any particular asset is bullish or bearish. Traders are wanting a bull market.
The candlesticks refers to the shape of the price bars and two wicks showing the high and low of the bar. The data that these candles provide means that binary options traders can determine the short-term direction of the market. For binary options trading, candlestick chart patterns are certainly a worthwhile tool. There are many candlestick chart patterns, with some being less common than others. Some of the more important patterns to know and recognise are –
- hammer – this pattern where the lower shadow is twice the height of the real body when candlestick trading, emerges when the price of an asset is declining. A hammer occurs after a security has been declining and indicates that the bulls are strengthening.
- shooting star – this pattern develops after a robust rise in an asset’s price. The price opens above the day before close and goes on rising. It falls during intraday trading, closing near the opening price. The day’s candle looks like an inverted hammer.
- doji – this pattern indicates uncertainty on the markets. You’ll find this pattern when an asset’s closing price is almost the same as its opening price. The candle’s wick creates an upright or inverted cross or plus sign with the bar.
- spinning top – intraday trading where the price of the assets first drops and then rises far above the day’s open-close range, creating the spinning top pattern. The spinning top pattern is a sign of market indecision.
Using Candlesticks is an Effective Trading Method
Your ability to recognize common candlestick chart patterns will help you choose more profitable trades. New and seasoned traders can use simple or more complex candlestick patterns to learn how to make first predictions about future market movements. Complex candlestick are made up of 2 or 3 candlesticks, maybe more and come with names such as falling star or dark cloud cover and others.
Many candlestick formations indicate changes in market behavior that aren’t visible with line charts for instance. Candlesticks can indicate impending direction changes in market direction well ahead of other indicators.
Binary options trading is often about whether an underlying asset will move somewhat higher or lower during its life, and candlestick analysis can be a useful, accurate and effective trading method.
Preserve your Trading Capital
It isn’t necessary for a trader to know every candlestick pattern, but to rather focus on just 2 or 3 and to recognise these in live market conditions. These visual charts, where prices in a given market are moving, makes trading easier. A powerful advantage of candlestick charts is that both the colour and the size of the body can provide plenty of information. An example is a long white real body which signifies the bulls are in charge, and with this information, candlestick charts can be an important strategy to help you preserve your trading capital.
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All info was correct at time of publishing