A Comprehensive Guide to Market Analysis for Binary Options

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A Comprehensive Guide to Market Analysis for Binary Options

If there’s one thing exciting about binary options trade market, it is the possibility of extracting high profit margin. However, a lot of traders suffer by not paying enough attention towards the market trends and fail to get hold of strategic decision making. If you have been among the ones who always felt hesitant to conduct a thorough market analysis, we have comprised this step by step guide for you. So, now you can easily perform the market analysis and locate promising trading opportunities.

How to Begin with Market Analysis?

In order to perform market analysis for binary options trade, you must have a comprehensive insight about the whole situation and various market trends. So, ideally you would start analysis on a longer period and then gradually work downward towards shorter ones. Interestingly, the longer periods would not be the one that would be directly involved in your trade. However, in order to overcome the impact of short periods, you would require an in-depth familiarity with the longer ones.

Let’s say the binary options market is somewhere around 200 day, moving average (referring to daily charts), this number would prove to be substantially insightful in the market decision making further along. So, even when you observe a downtrend on a 5-minute chart, it would be comparatively weak trend than the one on longer time duration; and would conveniently override its effect.

In the binary market, the traders that might be looking to invest in a downward option for shorter trends may be falling in the trap of a badly done prediction and would most likely be losing their profit. In order to stay clear of such pitfalls, it is imperative that you start analyzing the market trends with a focus on the longer time frames.

Below are some simple steps that you can take to conduct a market analysis for guiding your trade decisions.

Also, please check out some of our other educational articles we’ve recently written here:

1. Mapping the Daily Chart

It would be wise to stick to pattern matching in the initial phases of analysis and later pay attention to the more technical aspects. A good daily chart may make use of a moving average of around 50-days, 100 days, 200 days and may include Bollinger bands. You may also make use of other relevant indicators; the focal point is primarily the overall approach that is directed from bigger to smaller time frames and relationship of all these different periods of time. When you plot a daily chart, it is important to pay attention towards the movement of long-term trend (whether it’s an uptrend or a downward one). Also pay attention to the sideway movements of the long-term trends. When you analyze the daily charts, you would get an overview of the whole market situation and be able to make better trade decisions.

2. Getting Familiar with the 1-hour Chart

The hourly chart isn’t very distinct from the daily chart, however, if you observe that hourly chart resembles the daily chart, then, it becomes a strong indicator of the next turn of events in the market. For instance, if the daily and hourly chart show an upward market trend and the market continues in that direction, it would eventually break through the resistance of daily chart and would lead towards an upward momentum. On the other hand, if you see a turnaround in the market, it would simply be a confirmation of the resistance of daily chart and would add to the continued chart consolidation.

To trade smartly, you must keenly monitor the variations in daily chart. Let’s say, you observe an upward trend; it would be a great opportunity to trade a high option or go for a one touch option for uptrend. On the contrary, if you observe a downward trend, you may go with a fairly low option or a low ladder, or one touch option for downtrend.
What happens if you cannot see clear trend developments? Well, this is certainly a pressing question because without an appropriate trend development (in either direction) you have very limited options. The obvious and safe option is to look for any gaps that may accompany a low trade volume. Such gaps close and offers you an opportunity to predict a clear low/high, one touch or a ladder option.

3. Go for the Shorter-Term Charts

The two short term charts can be a 15-minutes and a 5-minutes chart. In the 15-minute chart you may also include the MFI (Money Flow Index) and gain more insights from the analysis. MFI proves to be immensely useful when it comes to making some predictions about investing in a one touch opportunity. As a rule of thumb, utilize a one-hour expiry (this would be equivalent to four periods).

Another great opportunity that enhances the probability of winning at binary options trade is a five-minute chart. When the market gets too volatile after last few candlesticks, MFI fails to show an oversold or overbought area during last few periods, moving averages alter their directions often and you observe last few candlesticks having longer wicks and shorter bodies; this would mean that the market highly lacks a direction. In such a scenario, it becomes tricky to trade a low or a high option. A much safer strategy would be to go for the boundary option. Because boundary options give you two target prices that are equidistant from the ‘prevailing’ market price (it’s more like a range). When the market touches either one of the target prices, you win the option!

Best Binary Options Brokers 2020:
  • Binarium

    1st Place! Best Binary Broker 2020!
    Best Choice for Beginners — Free Education + Free Demo Acc!
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  • Binomo

    2nd place! Good choice!

Let’s Sum it All Up…

If you want to perform a good market analysis, start with the daily chart and then move towards shorter time frames. Once you understand the conditions within each period, it would be a good time to consider a most profitable period and make an investment.

In the comments below, tell me all the market analysis tips and experiences that you have had.

Comprehensive Guide For Binary Options Trading

Discovering the binary options market and the benefits of trading with them may seem at first to be as simple as child’s play. But the real adventure comes when you immerse yourself into the reality of the binaries and start the real trading activity. Being a part of the real environment and watching how money can be made – or lost (prepare yourself for losses, because it’s an inevitable part of trading) – is difficult and not recommended at all without proper preliminary preparation. So instead of taking huge risks and investing money in vain, why not read our simple, but extremely helpful guide for trading with binary options. The guide shows you the basics and adjusts you to your upcoming challenges in the financial markets.



What Are the First Things You Need to Do Before Starting Trading with Binary Options?

Now, let’s see the very first things you must do before starting the real trading experience with binary options. We have categorized these little steps into different sections, but keep in mind that you may have already completed some of them. Though, revise them in order not to miss anything significant and important for a good final outcome and the exciting beginning of yours in the field:

  • Make sure you are 100% well-prepared and well-educated in the field. Even though you have already moved through this step, you need to be absolutely confident about the specifications in binary trading. This includes everything – from main terms to basic information like what is trading and what are binaries.
  • Choose a broker to rely on. It must be trustworthy, regulated, officially licensed to operate in the market, beneficial with bonuses and different privileges provided to the customers. Attention – check if the selected platform accepts users from the country you are based in.
  • Make a registration on the binary options website and find out how to open an account. You must be incredibly attentive, while reading the basic information and the terms and conditions that the broker has established. Missing a detail can be risky,especially while you are just a beginner.
  • Settle your primary budget. This is a very important step for your binary options preparation. It is very significant for you to know the level of your trading experience and knowledge. According to your skills you can then form a proper budget that will not be either too big, or too small. Taking risk is something you will eventually do during your future trading activity, so investing too little money is not an option. However, bringing all of your money to an initiative you have never faced before is a highly risky. Keep your trading budget balanced.
  • Consider things like using auto trading tools, subscribing for the educational centre of the broker, applying for bonuses, building up your own strategy and even using some help from a friend until you get deeper into the field.
  • Think about what assets you should choose when trading with binary options. Then, according to your choice, create a tactic that will fit your skills. No matter what asset you choose, make an analysis of the market and use the real facts for your predictions. Be aware that most binary options platforms offer dozens of assets, so you can easily choose the sphere that you are the better prepared for.
  • Choose your binary option type to trade. The different binary option types – 60 seconds, one touch and etc. – bring different sorts of pros and cons. It is all up to you to know what to undertake in your own personal experience.
  • Organize your trading activity in the best way. Convenience is a thing that simplifies any kind of job or initiative. Whatever makes your trading more convenient you should add it to your requirements. For example, ask yourself if mobile or ordinary desktop binary options experience is better for you. Choose a device, make a schedule when to trade by thinking over when you are free and when the market is more beneficial for traders to come into action.

How to Make Trading with Binary Options More Profitable?

Trading with binary options might be easy, but it takes experience to become advanced in it. Still, there are many approaches you can use to improve your initiative, as well as your skills. Check out our suggestions as to the strategies and specifications to take under consideration,to improve your trading experience:

  • Build up a strategy. The web is full of strategy hints and methods for trading with binary options. What you will choose is entirely up to you. But our recommendation is never overestimating yourself. There are strategies that are just not suitable for beginners and there are tricks that might work with some binary option types, but become absolutely incompatible to others. Things like hedging, mirror trading, signals, drawing support and resistance lines could be good for you to investigate as a start.
  • Try new things. This means to replace the binary options once in a while and even to change the broker you are trading in. Test modern software types that improve both – the activity and the learning process. The more your perfect yourself, the better you will become. Never stop learning new things and accept binary options field as your new motion. Motivation is everything.
  • Subscribe for analytical news and analyses of the market. There are many websites that offer such services these days. The best thing about them is that they overview all the financial and economic (even political) news to give you only those that could be helpful for your trading activity. Analyses, on the other side, are essential to make you think faster and consider when the market is great to make money from it.

Top Factors that Make Your Binary Options Trading Successful

Lastly, we want to name for you the top factors that will make your binary options trading activity successful. Make sure you understand and apply each of them to your own experience, too:

Organization and Discipline

Always have a plan and always know what you are doing. You are working with money so to be organized is essential in order not to lose it. Arrange your trading activity in a way that it goes up and forward, but not returning you to the beginning stage.

Safety is a must

Whether it is about choosing a good broker like 24Option, or selecting a trustworthy payment method, safety is a factor that should influence your funds and your trading activity. Yes, many people are in the binary options market, but many of them have lost money to scams, too. Don’t become one of them and investigate the security factor.

Ability to lose

People who cannot bear to lose money, should not even come on the binary options arena. Prepare to lose some money and embrace risk cleverly. It should not exceed your analytical skills, but it shouldn’t exclude a little gambling approach, either.

Know when it`s time to stop

Speaking of gambling… Traders tend to increase their trades in both cases – if they lose too much or if they win a lot. In both hypotheses you can make a mistake, because neither the loss, nor the winning forms your strategy. What forms your strategy is the analysis, the market research and the current financial condition of the selected asset.

Progress is everything

Progressing in your trading skills means progressing in your profits. So once you have learnt the basics of binary options, you have only just begun. Become a constant student of the market and the financial trading service. Innovations appear every day these days, ensure that you don’t miss them, and hopefully make huge progress with their applications.

Adjustment to the audience

Sometimes, looking at the rest of the traders` actions can be a good lesson for you. Whether you have friends, or you just look at the common statistic of historic trades, the wider audience movements always has something interesting or useful to tell you.

Proper classification

Realize what trading with binary options is for you. Is it a hobby or a real job? Thus, the motivation and the next goals to achieve can be aligned. It is interesting to know that many traders have begun trading as a hobby, but eventually they have managed to be the pros of 21st century on the financial market
Use our guide and revise it once in a while, when you need either some stimulation, or courage to proceed wining more and more from binary options!

Market Analysis

Binary options analysis is the practice of analysing a binary options trade prior to execution. Before taking on a trade in any market, it is necessary to carry out technical and fundamental analysis of the asset you intend to trade in order to increase the chances of success. The binary options market is no different. Without binary options analysis, trade would be more of guesswork and nothing would distinguish it from the roulettes and other stuff that belong to the casinos of Las Vegas. In binary options, there is no place for gambling or guesswork in trades; leave that to the guys in Vegas.

Sometimes, binary options trades are referred to as bets. I really do not like this terminology, because trading is not something you pick up from the street. If one has decided to trade binary options, it has to be taken seriously and learning to perform binary options analysis is an integral part of the learning process.

Binary options’ trading is all about predicting the directions and behaviour of assets. Since the same assets that are traded in their respective markets are the same ones we will encounter in binary options, it is necessary to know how to analyse these assets technically and fundamentally. When the trader has mastered this, he will be able to carry out solid binary options analysis.

Let us take an actual trade example. This trade was a Touch/No Touch trade for the EURUSD taken on October 25, 2020, with a 24-hour expiry. We placed a No Touch binary option trade for the EURUSD, predicting that the EURUSD would not touch the price barrier of 1.4031 before expiry.

The trade was successful, as the EURUSD did not reach the price barrier before the expiration date. A total of $55.65 was staked in the trade, with a profit of $44.35, giving us a total payout of $100.

Now was this a product of guesswork or a trading hunch? No. This was a product of technical and fundamental analysis carried out on this pair prior to the execution of this trade.

The Binary Option Analysis for this Trade

The first step in performing a binary options analysis for this trade was to locate a chart for the EURUSD to analyse. Since most binary options brokers do not offer charting tools, we had to locate a forex broker whose trading platform had charts or us to use. We located one and started the analysis.

Fundamental Analysis

In the financial markets, the fundamentals of an asset always supersede the technicals. This is why we did a fundamental analysis first. At the time of analysis, there was a meeting of the Eurozone financial ministers to determine how to put together a rescue package for Greece, which was groaning under a sovereign debt crisis. At the same time, Italy was also on the radar as its debt reached a staggering 600billion Euros. These were indeed bad times for the Euro and the markets had responded accordingly. The meeting was due to end later that week with the issuing of a communiqué to announce measures to help these countries out. We knew that the markets would be range-bound as traders looked to the outcome of that meeting for direction. Thus, we did not see the Euro climbing past the 1.4000 psychological barrier before the end of the meeting.

Technical Analysis

We headed over to the charts to see what the price action was saying, and we got the confirmation we needed. A strong resistance had capped the EURUSD at 1.39605 for three days straight. Thus, we were able to set an appropriate price barrier that we felt that the EURUSD would not achieve in 24 hours.

The trade was then setup on the binary options platform, with a price barrier of 1.4031 and a 24-hour expiry. As at the expiration of the trade on October 26, 2020, the resistance cap was yet to be breached, putting us in the money.

Binary options analysis is not about guesswork, or trading on a hunch. You must be able to perform the appropriate analysis of the fundamentals of the asset you want to trade, look for confirmation on the charts and then execute the trade accordingly.

Best Binary Options Brokers 2020:
  • Binarium

    1st Place! Best Binary Broker 2020!
    Best Choice for Beginners — Free Education + Free Demo Acc!
    Sign-up and Get Big Bonus:

  • Binomo

    2nd place! Good choice!

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