4 Choosing the Right Indicator for your Binary Options Trading

Binary options come in different shapes and sizes. It is possible to trade commodities, stocks, indices and currencies. It is possible to trade over a week, a day, 2 hours, 30 minutes, 15 minutes or even 60 seconds. The information that is needed to have predictive accuracy is different for each trading scenario. Essentially though Binary Options are simple. You either predict that the direction of a price will go up or down. Indicators can eliminate the need to spend hours doing technical analysis to understand the current trends, and likely future trends. Or they can be used as a small part of an overall strategy. The right indicator is all about the strategy.

What successful traders tend to do is develop a strategy for a particular scenario type. For example, they may trade a certain stock with thirty-minute expiries. They may use indicators to point them to the fact that a bullish or bearish trend is likely to continue. This same indicator would probably not be relevant for a 60 second trend as the fluctuations are too unpredictable. Indeed, most serious traders tend to stay away form the 60-second trades. 

 

There are many indicator services available on the market. Some profess amazing success rates. At the end of the day they are all after your subscription and you should be wary of overinflated claims. Choose an indicator service that has a long history of success, check forums and find out what others are using, and read reviews. If an indicator service is going to be an important part of your analysis strategy you should vet thoroughly and then test it repeatedly. Good service providers will offer a trial to demonstrate their proficiency.

It is important to take a balanced view of indicator services. They can add value to your trading, save you time and improve your success rate. However, you should understand your technical and fundamental analysis and not rely on an outside service too much. Many people that are new to binary options are looking for the magic solution. In reality trading successfully and consistently is about using indicators for trends, moving averages, economic indicators to inform your understanding and help you reach a level where you have predictive power on an ongoing basis. 

 

Indeed, the right indicator is the one that provides you with information to make a successful trade. Often traders will use indicators to confirm something they already suspect. Trading successfully is about going through a process. Being confident that a price is going to go a certain way may involve doing ones own technical and fundamental analysis, reading reviews from others and then checking indicators to see whether they corroborate what you suspect. For some traders the indicator service information has the power of veto but is not used for initial predictive insight.

So the right indicator is dependent on the personality of the trade and the strategy adopted. Getting an edge in binary options trading is not easy. Use indicators wisely and understand your traded assets better than others and you have a strong likelihood of ongoing success.

About the author:

Eleonora Marchetti is an expert on financial markets specializing in foreign exchange and trading in binary options. An honorary graduate of the SDA Bocconi School of Management in Italy, she provides consultation services to various economic powerhouses, including the globally renowned binary options trading firm, Banc De Binary.