Binary Options: Trends

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As an entrepreneur, one ought to know that trends are among the most important factors to be considered in business. This is no difference when it comes to binary options trading. The productivity of other trading strategies is directly or indirectly related to trends.

In this article, you will learn more about trends in binary options trading as well as their importance.

What is a Trend?

Trend is a term used to refer to the most prevalent direction of the price of a given asset over a period of time. A trend can be either short-term or long-term. Long-term trends normally incorporate the former.

What is Trend Strategy?

It is the process of analysing the charts of a given asset that one wishes to trade in. This review is intended to determine an asset’s trend and can be carried out over a number of days or a couple of weeks or a year. The Top 5 Binary Options Beginner Tips recommends trend strategy for all South African traders wishing to engage in binary options trading.

A trend can be

  • Upward
  • Changeable
  • Downward

Upward Trends
An upward trend is also referred to as uptrend. This is a trend that displays a huge number of higher closing highs and higher closing lows. In this trend, the most dominant movements of the assets price will be upwards. Many traders recommend binary options trading during this trend. Look out for the Top 5 Binary Options Beginner Tips to know about other points to consider.

Changeable Trends
Changeable trends have no definite highs or lows. They loop from high to low. In this case, an asset does not show distinct directions. Such trends are also referred to as non-trending.

Downward Trends
In downward trends, the prices of an asset have low closing highs and low closing lows. Though there will be a number of times when the price goes up and remains average at times, the most prevalent direction will be downwards.
South African traders are reminded that binary options trading can only be profitable when the prices of the asset in question show a vivid movement, i.e. uptrend or downtrend.

Importance of Trends

Many trading trends are persistent.  This means:  if the cost of an asset is increasing, the chance of it going down is relatively slim. If the trend charts show a price decline, the chances of it going up are also low.

Trend strategies can thus be used on many assets in South Africa. This strategy can also be applied in currency markets.

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Setting Up a Simple Binary Options Trend Strategy

This is a strategy that works on hourly time intervals. It can be used for long-term and short-term trends. The approach focuses on the first hours of trade.

What You Need

  • A record of an asset; set this into a 30-minute time frame
  • Set averages on the record to 5, 10 and 20 days.
  • Set an end-of-day contract for the asset in question

If the Day 5 and Day 10 prices have crossed those on Day 20, then this is a positive signal and trading can be done. Normally, trade positions will be opened if this happens within four hours of market opening.

In many cases, binary options trend strategies are best employed when the markets are trending on the highs. If you notice an uptrend in South Africa, then it’s advisable to place a call. If it’s a downtrend, then it’s time for South African traders to place a put. The Top 5 Binary Options Beginner Tips recommends avoidance of changeable trends owing to their unpredictable nature.