Best tools to use in your binary options strategy

binary-options-trading-tools2014There are many tools available that you can use in your binary options strategies. These are basic indicators that help in creating enough understanding about the market dynamics and help you come to the right conclusions.

Predicting Binary option is complex and not always possible. Yet, their mathematical nature assures that we can make some calculations and predict the outcomes based on the information at hand. Such predictions are not always correct – if they were, the whole exercise will become pointless but they offer stable guidelines to make strategic decisions.

MACD (Moving Average Convergence Divergence) Tool

A technical analysis tool that is highly helpful in making accurate decisions based on behavior patterns and trend lines. The trick to understanding MACD revolves around understanding Exponential Moving Average (EMA) and how it works.

Two lines of EMA’s are taken – one is plotted for 26 days with higher weightage given to the latest days with the EMA of last 12 days being subtracted from it. The other contains the EMA of last 9 days which are then overlapped with each other to provide the signal line. The moment these lines overlap or change directions, the sell and buy signals are generated. MACD is the basic tool available for almost all charting tools and combined with other tools, it provides the first and basic matrix of understanding binary options.

Simple Moving Average (SMA)

The SMA trend is a very simple and essential tool to include in your binary options strategy. It is a trend indicator that simply shows the cumulative effect of the historical data based on the period that you desire. It is often mapped over SAR or parabolic SAR to provide a definitive sell or buy signal but it helps in basic understanding of how the market is shaping and in which direction you should make a decision.

A highly simplistic yet effective tool that requires constant monitoring in order to make right choices and decisions.

Commodity Channel Index (CCI)

CCI is another one of those common tools which are often used by traders to see the market oscillation and movement. The CCI index provides momentum shift indicators and informs about a stock being over bought or over-sold. The popularity of CCI has increased over time and it has become one of the first tools of trade that traders look to when they are trying to predict the nature of stocks.

It can be linked with MACD, SMA, EMA or other trend tools to provide reversal points and the strength of the trend. Based on the charting tool and the pulse that is being used, the CCI can help traders make multiple trades within a short time frame.

In order to make complex decisions, you have to use a combination of complex charting tools and simple trend identifying tools. There is no single formula for making right decisions, you may have to improvise and use multiple tools to make a right decision.

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