If you log onto just about any binary options platform, there are a few common features which you can expect to see across the board—one of which is the presence of a chart for the asset you have selected. You will see this on SpotOption as well as the other major white label trading platforms which power most binary options websites, and you will see it on proprietary platforms as well. When you are a newbie to trading, charts can seem really intimidating.
In essence however, they are fairly simple. The complexity of analyzing them depends very much on what you choose to do with them. In this article, I will teach you everything you need to know about customizing and understanding binary options charts so you can make smart and profitable trading decisions!
Binary options charts show you what price has been doing over a certain specified time period. You can also see the open, high, low, and close for each specific candle if you have your chart set to show candles—more on that shortly. Charts allow you to visualize the movement of price. Furthermore, if you are using sophisticated charting software which your broker may or may not provide , you can add indicators and draw lines to help you interpret that movement and make predictions about the future.
These tools are incredibly valuable—so use them. If you want to use the charts your broker provides, you should find them on the trade page. Just select the asset you want to trade, and the relevant chart should open. If plenty of useful tools and indicators are offered and the chart is clear and updates in real-time, you can feel free to use it.
If however your broker does not offer advanced charting tools or the charts lag behind, I strongly suggest downloading charts. At that point, you should turn to some other charting software. Here are some recommendations:. Actually, I recommend downloading a program like MT4 no matter what, even if your broker provides usable charts.
The reason is that MT4 is great for backtesting, since it has a lot of historical price data loaded in. That is pretty much it. I recommend doing some extra research on these settings. In particular, if you do not understand what bars and candlesticks represent with the open, high, low, and close, educate yourself on that, because it is going to really help you out.
In fact, you can get started by reading my Guide to Candlesticks. Now that your charts are set up, you are ready to start learning about the trend lines and visualization tools you can use to see what is going on with price. I am not going to get overly in-depth on this as that is outside the scope of an introductory guide. The goal is just to get you started discovering how to trade with charts.
One thing that is really important to grasp when you are studying price charts is that you are not trying to predict the future. What you should be focusing on is trying to understand what price is doing right now. This is the key to making accurate predictions about what is likely to happen next. It also helps you to see when a trade which you are in now no longer is justified, which tells you when it is time to exit early.
Along with the basic drawing tools mentioned above, you can add numerous different types of technical indicators to your binary options charts. You can use these to conduct analysis and look for trade setups. Here are some examples:. This is hardly a complete list—just a few of the most popular indicators. Some programs like MT4 even let you load in custom indicators of your own. Try to avoid the temptation to cover your charts with dozens of indicators.
If you do, you will have a hard time seeing what is going on, and will get too many conflicting signals. While binary options charts allow you to conduct technical analysis, that is not the only approach you can take to try and interpret what is happening with a financial instrument. Price action is a form of analysis where you look for formations in the bars which commonly precede trend reversals or the start of new trends. This is a particularly elegant approach to binary options trading, because you are letting price itself speak to you.
Some purists in fact do not put any lines or indicators whatsoever on their charts. They just look for the patterns. I recommend however that you look for some ways to combine some of the indicators and charting tools above with your price action techniques. Price action patterns only have reliable results when the surrounding context is right, and sometimes indicators and trend lines can help you make a determination moving averages and pivot points work well.
If you want to learn more about price action, see my article on Candlestick Patterns to get started. Finally, one more useful thing to know is that many charting platforms give you the option to create templates. So after you have your chart set up the way you want with indicators you usually plot, go ahead and save a template and give it a descriptive name. That way the next time you sit down to look for trade setups, you can load the template and save yourself some time.
You can then get right to work. This may also prevent mistakes in the future i. Many casual traders only glance at price on their charts when they open up their binary options trading platforms.
They look at the way the line has been moving up and down, and make a gut guess at what it will do next. But that is not what charts are for. Binary options trading charts are powerful tools—but only if you harness them as such. That means finding or developing a trading method which can produce repeatable results with the help of price action, technical analysis, fundamental analysis, or a combination. Learning to make the best use of binary options charts takes time and effort.
You will do a lot of research and testing before you are able to read charts with the same clarity and ease that you read a book. But with dedication, you too can learn to spot excellent trade setups and profit from them! What Are Binary Options Charts? You have a couple of options when it comes to locating charts to use. Use the charts provided by your broker Download software see the next section If you want to use the charts your broker provides, you should find them on the trade page.
Here are some recommendations: If you are trading stocks, I recommend this as your solution. It is totally free, and actually, you do not have to download anything at all—it runs right in your web browser. For currency pairs, I cannot recommend MT4 highly enough. You do have to download it and it takes a few steps to get it set up, but once you do, you will be amazed by how feature-rich this totally free program is.
And what is super awesome is that you can set audio alerts, so you can step away from your computer and be notified if any of them are triggered. A Comprehensive Guide What is an Oscillator? Your capital is at risk. Trade with caution, these products might not be suitable for everyone so make sure you understand the risks involved!More...