Binary options are beginning to interest more and more people. With the right approach, they really can earn good money, even very significant. In this article, we’ll talk about trading binary options without indicators.
How can binary options be traded without indicators?
A novice trader can also face such a question, because there are a lot of “super” strategies on the Internet, using which the newcomer quickly merges his deposit. Why this happens, we are not going to find out now, as the reasons for this mass, and consider them in a separate article.
Beginners often learn that experienced traders do not use indicators in their trade, but apply some technical analysis. Technical analysis is a set of rules for trading in financial markets, formed as a result of empirical observation. This is a very broad science. Hundreds of books are devoted to technical analysis, and trader schools have written hundreds of seminars on this topic.
Traders working with binary options must at least superficially know this science, and be able to use it. We need to know just the basic principles – the levels of resistance and support, the types of trends and signs of their fracture, etc. In the framework of this material, we will not disassemble all of them, but we will only talk about a small part of the technical analysis, namely, the candle analysis.
Candlestick analysis in the context of binary options – adapted for binary options analysis candle models, formulated as a result of long-term observation. This type of analysis is used to determine the break points in the trend, and the points at which you want to enter the trade. For example, we are watching an uptrend that does not provide a safe entry point. We see only the trend, not understanding when to enter to close the option with a profit. Then a candle trend change model appears, giving us a signal to the input.
At least something, but 99% of traders have heard about this type of analysis. Someone uses it in trade unconsciously to close positions or as an additional condition for entry.
Usually, two types of candlestick patterns are distinguished: bull and bear. Next, we’ll talk more about them, and then consider how they work in practice.
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Bovine candle patterns
1) “Bullish Absorption”: This model is very common and before us is a black little candle, behind which is a white rising big candle. This configuration indicates that in the moment there was a change in market sentiment, buyers won the advantage and won.
2) “Hammer”: Looks like a small body and a long wick. It is believed that this model is reversal. But, we should not forget that the candle of the price growth following the “Hammer” can confirm this model.
3) “Morning Star”: This model includes three candles. Usual reduced candle, a small candle against the trend and a growth candle. In front of us is a candlestick model, which testifies to the excess of the strength of the buyer and the seller.
4) “Doji”: This candle has no body. Many people prefer not to pay special attention to it. It is more precautionary.
5) “Clearance in the clouds”: Similar to the previous model, this candle too, rather. Preemptive. To the next candle you need to look very carefully.
Bear candle models
1) “Candle bearish absorption”: As in the case with the bull, but in the opposite direction.
2) “Hanged”: Similar to a hammer, but in a different direction. We should expect the next confirmatory candle.
3) “Evening Star”: The same as the morning star, but it shows a decrease.
4) Curtain of dark clouds: Opposite is the gleam in the clouds.
These were the main types of candlestick patterns.
Next, let’s talk about practical recommendations …
1) Timeframe: Candlestick analysis, as a science, has been known for a very long time, then only the longest “timeframes” were used. Accordingly, “timeframes”, starting from 1 hour will give the most effective models. But looking at the chart, you will find that even with a “timeframe” starting from 15 minutes, many models still work remarkably well.
2) Expiration time: There are enough 1-2 candles to realize the trading idea. The most widely used model of candles on trades against trends.
3) Candlestick analysis: It should be combined with the basic principles of technical analysis. To learn the latter will help special courses.