Enough popular tool that helps in trading binary options is the Chaikin Oscillator. This Binary Options Indicator He has developed a well-known American trader Marc Chaikin, in their work guided by the work of no less successful colleagues. Chaikin Oscillator essence - show how active buyers and sellers of a particular asset.
Chaikin Oscillator - this is the usual indicator MACD, only applied to the indicator of accumulation / distribution. It can help you calculate the difference between the three-day simple moving average and a ten-day simple moving average of the Accumulation / Distribution indicator. The calculation takes place according to the following formula: Chaikin oscillator = SMA (A / D, 3) - SMA (A / D, 10), where under the SMA refers to Simple Moving Average SMS and under the A / D - Accumulation / Distribution indicator (Accumulation / Distribution) .
Thus, using an indicator Chaikin, you can predict changes in the Accumulation / Distribution indicator.
How was coined Chaikin indicator? Its creator was watching the prices of financial instruments and found that of particular importance is the average price range (to learn that it is necessary to lay down the maximum and minimum for a certain period and divide the result by 2). If the current rate above the average range of the asset increases, as buyers are consolidated. If, however, below, to the fore sellers: there is a so-called asset allocation.
Another important observation creator options indicator is as follows: increase in asset prices implies a growth in the volume of the asset. If the volume does not have time to grow in proportion to the price, there is a weakening trend, which may even lead to a reversal of the existing trend. Based on this information, Chaykin has developed showing the nature of the acceleration of price oscillator, which is useful and traders in the Forex market, and those who trade binary options.
How to use the Chaikin indicator for binary options? The most common way in which and the need to focus - this trade due to the intersection of the zero line with bullish or bearish divergence. Notice how Chaikin indicator appears on the graph of binary options.
Oscillator here - it is a curve in the lower window. We need to track it changes from zero.
Here are the basics of this indicator signals of binary options:
- If the curve indicator Chaikin oscillator crosses the zero point from the bottom up, you need to play to improve the (CALL).
- If a curve crosses the zero mark from the top down, you need to play for a fall (PUT).
- In addition, it is possible and it is necessary to monitor the performance at bearish and bullish divergences. The most reliable signals Chaikin Oscillator shows when forming peaks and troughs. Accordingly, when the schedule is set up from the minimum value, you can safely conduct transactions on purchase of binary options, and when the maximum value is set up - the transaction for sale.
Nevertheless, experienced traders - including myself - recommend using this indicator of binary options very carefully. The fact is that when using it, the occurrence of a lot of false signals is inevitable, which is due to the work with short sliding curves. Therefore, it is not necessary to work with this indicator of binary options as the main one - it is better to use it together with other indicators. As examples of signals that work well with the Chaikin oscillator, you can bring the Bollinger lines, as well as indicators of overbought and oversold - for example, Stochastics.
We summarize the information about the major advantages and disadvantages of the inevitable, which means this indicator binary options. The advantages include:
- CO (Chaikin Oscillator) slightly faster than the binary indicator of A / D. This trader is able to successfully find the best entry point, which will be much more accurate than most competitors.
- This indicator has been used successfully with classical signals useful to complement them. Accordingly, its operation can be entered in any popular strategy for working with binary options.
- He did not redraw values, which makes it much safer to the user.
However, one can not say about the shortcomings. One we have already mentioned above: it shall not be a binary indicator, the need to carry out complex configuration, using it in conjunction with other signals for binary options. Due to the excessive flexibility CO often gives false signals of binary options, so it is necessary to ensure that they are filtering.
Thus, the Chaikin Oscillator - a brilliant invention or something unfairly "untwisted"? There should not rush into extremes. Yes, the creator of this tool a great job and really invented a noteworthy indicator for options trading, however, decided to apply the CO in practice, it is necessary to process a large amount of information, not to lose on false signals.
There is another, more unusual way to use this oscillator. Trades to increase and decrease should be opened when forming highs and lows on the scale. But with this basic application increases the risk of a large number of false signals.
But there is one secret that will increase the effectiveness of your strategy based on the Chaikin Oscillator indicator. For filtering, use additionally a simple moving average line with a period of 200. When a Chaikin peak appears, open trades only when the price is below the MA200 line.
And the increase is correspondingly higher. This confirms the current trend, and you can not trade against the trend.
Advantages of the Chaikin Oscillator:
- indicator faster;
- does not redraw its values;
- successfully combined with other oscillators.
Disadvantages of the Chaikin Oscillator:
- excessive flexibility of the indicator, the intersection of the moving with the zero level occur quite often. This is confusing to many even experienced traders, not to mention newbies;
- false alarms occur too often; you must use other indicators to filter them.
None of the existing indicators is 100% profitable. Each of them has its own advantages and disadvantages. And only you choose which one to use in your trading strategy, weighing all the pros and cons.