This is why their implications were weak — not many traders backed the movements, they might be the result of just a few errant trades. The hammer in the second-to-last candlestick featured a much higher trading volume. Its bar is more than twice as long as the previous bars, which implies that something motivated traders to buy during this period.
Volume Based Binary Option Trading
Backed by many traders, the implications of the last hammer are much more significant than those made by the earlier ones. Once you see this hammer, it would be a great time to invest.
The following large upwards candlestick is the likely outcome of the high volume. This is why this analysis can help you to filter signals and understand the importance of single candlesticks. A sudden rise in volume very often indicates that a candlestick is of high importance and that the market will continue to move in the direction it implies.
Part 20: Technical Analysis – Market profile and market volume
Often, it starts a strong movement. Some technical indicators create volume based predictions about what will happen to the price of an asset. There are too many technical indicators that consider the volume to present them all at this point, so we will focus on the most popular of these indicators: the Money Flow Index MFI. The MFI compares rising to falling periods.
It multiplies the length of each period with its volume and multiplies it with the volume. It then puts the sum of all rising periods in relation to the sum of all periods with falling prices. The MFI displays its result as a value between 0 and that indicates the percentage share of volume-weighed rising prices. The volume is the weighting factor that determines the importance of each single period of the MFI. This is why the MFI can open your eyes to completely new insights about what is going on in the market. While you can analyze the price action and the volume on their own, it is difficult to combine them.
There is simply too much data to make sense of it. The MFI probably is the most popular volume-based technical indicator. There are many other technical indicators that use the volume, too. For example, you could consider trading one of these indicators:. These and many other volume-based indicators can provide a solid basis for a binary options trading strategy.
For binary options traders, there are two ways of trading the volume that relate to the two ways of measuring the volume:. This is the simplest and most direct way of trading the volume. You can trade two kinds of signals:. If the asset you are looking at is very close to one of the boundary lines you should consider placing a trade which is the opposite of the current trend. Alternatively, if it currently near the middle but moving in one direction you could place a trade with the asset movement. Volume is an important technique to confirm the way you are reading the chart and your gut instinct.
Volume And Binary Options - How To Improve Your Trades Using Trading Volume
If there is a large amount of movement on the market then many traders have picked up n the upward or downward trend of an asset and are attempting to make a good return trading its trend. By combining the volume with the highs and lows on the average price candle you should be able to predict the turning point. You can then place a trade which goes against the majority movement in the market and you should see a correspondingly high return as your trade seems more risky than going with the market. It is vital to consider your trade carefully before placing it; if the volume movement is high; and you have calculated the highs and lows correctly, then timing is crucial.
You need to trade just before it peaks and reverses; this will allow you to make the maximum possible return, and, provide a great sense of satisfaction! Toggle navigation. Subscribe To Trading Secrets.
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WASP 5 minute binary options trading is a kind of trading that is related to scalping as an expiration time is very short yet with many entry points and high profits. One of the most common ways to select bear or bull puts on binary options is by watching the volume of the asset that is being traded. People tend to take a good look at this because they want to see what the majority opinion on the market thinks an asset will do. Although this is natural to think and do, it is also not without its drawbacks too. Once you have established that you have the volume trend of the asset market wide then next you should do the following: Find an existing hourly chart of the binary option you wish to trade and find the last biggest candles in both the bear and bull markets.
After that has been done, then the next step is to average both the highs and lows based on the results of your previously established candles, then draw two horizontal lines that connect the highs and lows of the two candles. You can then base your put or call on the binary option when the market is trending toward either the max or minimum volume near the horizontal lines.
What Is Volume?
Why is volume important; because volume can be used as an excellent confirmation tool when you are trying to figure out chart patterns and asset trends. This alone makes it one of the most important aspects when making puts or calls based on technical analysis.
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- Part Technical Analysis - Market profile and market volume | x Binary Options.
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It is also very important to note that price alterations that are connected to volume highs tend to be more relevant than price alterations connected to volume lows. High volume price indicators on average are more likely to signal a trend reversal then are low volume indicators. Your email address will not be published. Necessary cookies are absolutely essential for the website to function properly.