"Business is not so complicated. Many people have a very average intellectual abilities, earn enough. Really smart people can get the real wealth, if they really dedicate yourself to it. "
You know, the most simple and intuitive best hidden from our eyes, is not it? The human brain is used to complicate things. When we look at people who have achieved stunning success in life, we believe that it is difficult, it is almost impossible for us. Do you agree with this? Personally, I do not. That is why today will be touched upon, which is somehow connected with all known traders - Trade with the trend, against the trend (reversal). The true and deep understanding of these phenomena will take your trading to the next level options.
Trade with the trend. The cornerstone
With what it cost to start? Of course, with the determinations, but not excessively complex and scientific, and understandable. What can argue, if we you will have different understanding as to what is the trend, and consolidation? So, let's begin.
Trends binary options - A stable price change in one direction, up or down. And yet? You ask. It does not need many words, just look at the chart below.
As you can see, not all movement is the trend, and this is very important. A common mistake novice trader - failure to understand that small movements in the opposite direction (market consolidation) - It is not part of a trend, this is the course of prices in the opposite direction. Separate these phenomena, but more on that below.
What is the logic? Why is there a trend? Trade with the trend, against the trend (reversal) - it is always the action of the crowd, the desire of the majority. No major player in the market can not easily break the trend, the crowd simply redeem or sell out of it. When buying or selling reach the peak point, the crowd begins to show fear, that is the end of the movement, they begin to cover the position. Thus, we see a pullback in the chart.
What may be the trends?
Trends binary options can be measured by the strength (direction angle), as well as the volatility (speed):
As you can see, sharp fluctuations are prone to rapid formation of market consolidation. There is a wonderful phrase: "The market is moving from the accumulation to the distribution." So the trend - the distribution of, and what it will, the sooner new accumulation.
Consolidation in binary options
Market consolidation, which we have already said a few words - a price movement in a particular corridor. The trader environment, you often find synonyms "outset", "corridor", "Correction", "rollback", "accumulation". Named as you like, the essence does not change.
How it looks on the graph?
What happens during the correction? We have already mentioned that at that moment positions are being closed because of the fear of the crowd, but there is something else. This is just the time for the big players, here they start gaining a position. You see, if you, for example, can buy options for a certain amount for a single click of the mouse or the asset itself, then the major participant does not do this. He has to enter the small (for him) parts for a long time. As a rule, large players and market makers buy on the fall of the market, but sell on growth. Therefore, we see consolidations and rollbacks from the trend. But, large participants also restrain the global trend to some extent, when small traders (the crowd) begin to cover positions, then large players buy or sell them an asset.
It is necessary to distinguish between a major player from the market maker, the latter considered by the market manipulator, "puppeteer", etc. In fact, this is not true. Maybe it's okay, maybe bad, but it is due to market makers, we may at any time purchase or sell the asset at the right price to us. This phenomenon is called liquidity, and its maintenance - the main task of any market maker. This makes the price movement is not obvious because, when in fact the crowd has no vendors and no offer meets our demand for market maker, he pays for it Exchange, with which it is associated.
Trade ideas and strategies
It would seem that everything is simple, to buy or sell at the end of the rollback. Unfortunately, most traders do not adhere to this simple truth. Greed and fear prevail, the position is opened too early or too late. We are not going to go into details Risk Management Trade in conventional traders, consider trends in binary options directly.
When working with this tool has its own characteristics that must be considered. We 2 important aspects:
1. The direction of movement
2. traveling speed
This is not important the size of stop-loss, take-profit, the size of the hall and other wisdom. However, the standard trading assets, will not play a huge role speed in the options - a key factor. After all, if the expiration time (expiration) occurs too early, it would be a shame if we got the loss, while defining the right direction.
So, what would be a typical input signal for a purchase option PUT, so that you can earn?
The picture shows Trade with the trend, against the trend (reversal) - That's another story. Catch the "knives" and reversals - activity for thrill, if you want to understand the market, to obtain from him a profit, the Trade trends. Most do not realize it, trying to enter the consolidation and other minor movements, but it is risky and pointless.
Here is an example of an option for trading CALL, when you can get a profit of 100%.
Traders have huge advantages with options, they do not need to look for an input with a minimum risk-profit ratio, they just need to predict price movement in one direction or another for a certain time. Believe me, this is much easier than trying to open a deal with a short stop-order and a large take-profit. It does not even need the purpose of the movement, only time. For the same reason, there is no sense in catching a market turn, because it is not required to enter the early point of the movement, it is safer to buy options under obvious circumstances - out of consolidation in the direction of the trend.
Additional methods of work
On consolidation, the analysis do not forget to also use figures of technical analysis, As mentioned in other articles, such as a triangle and its subtypes:
• Flags, etc.
These models are the signals the continuation of the trend, and often do not need to wait for the breakdown of local minimum or maximum to enter into a deal with a lot of potential profit. Let me remind you of this recent example.
Too big pullback (more than 50% from the main motion), its rise indicates a possible change in the current trend. Turn may not occur immediately, the market usually tends to update the highs or lows before. In this case, you have two options:
• Receive loss
• Wait for better conditions for entry
I think the second option is more attractive to you. Remember, a successful trader - one who knows how to wait. In the last example, was just such a situation when the rollback was too big almost 100% of the previous movement. What is the result? Immediately after updating the minimum, we get a strong reversal with a gap. Let us look again for clarity.
What's more, you can use?
Follow reversal pattern "head and shoulders", "double top / bottom", which are also discussed in the previous articles - this is useful. Note that candlestick patterns are not talking about global change, but the beginning of consolidation say it is. All this will help you earn.
To sum up
There is no doubt that the essence of trading is simple and clear as day, "the trend is your friend" - saying the truth truthful. All you need for a stable income is:
1. Determine the trend
2. Wait for the breakdown of consolidation
3. Watch for danger signals and reversal
The problem starts with the options trading in the determination of the entry point. All in a hurry, can not wait, especially if you are late with your purchase. The human factor, greed and fear - the most important are your enemies. Do not make common mistakes. You have come to earn, so by all means seek to profit. Fortunately, the options are not required to determine the exit point. I wish you a passing trend!