Using trader sentiment as your dominant binary options trading strategy can be lucrative, but you must have a thorough understanding of what the sentiment numbers actually mean, and when they may or may not be useful. Here, we will take a quick look at what trader sentiment is, and how to use it. We will […]
Trading the Current Price Data
The most current asset price is an important element in all binary options trades. It will be this price that indicates the prime point of market entry based upon a comparison between it and past prices. Current price information is easy to find and easy to understand. However, correctly applying it to technical and fundamental analysis is going to require an understanding of how it applies to each type of trade.
Both past and current asset prices must be taken into consideration prior to each trade. What you’ll be looking for is where the existing price is positioned in relation to past prices. This comparison can be made for various time-frames. Typically, short-term trades do not require you to examine past price action for an extended period of time, as the most current movement is most important. For long-term trades, however, it is wise to evaluate price movement over a much longer period of time.
The current price of any asset is a direct reflection of the current market sentiment. When prices are moving steadily upward, the market is said to be bullish. Bearish is the opposite, with prices steadily declining. It’s important to remember that all price movement, regardless of the particular assets, is caused by the decisions made by investors. When a large number of investors decide to sell off an asset, the value is going to decline, while lots of purchasing will drive the price up.
Expiry time play a huge role in binary options trading. In order to earn money you must be able to look at the current price and then determine if the price is going to be higher or lower than that level when the contract expires. Since even 1/10th of a pip can be the determining factor within most platforms, there exists an extremely fine line between trades finishing in or out of the money. Your position simply needs to be on the correct side of the fence when the trade expires.
Lengthier expiry times can be challenging for novice traders, as it can be tough to know how the price will move over a longer time-frame. Fortunately, there are much fast running options such as 60 Seconds available. Shorter expiration periods leave little time for huge shifts in market sentiment to take over and change the price direction. This is not to say that there is no value in long-term trades, but instead that they require a different type of analysis if they are to be profitable consistently.
The most current price of any asset must be taken into consideration when preparing to trade. Consider also the highest and lowest prices of all time, along with the highest and lowest prices reached for the time frame you are analyzing. Since asset prices tend to remain within these levels the majority of the time, this can information can tell you much about when to expect support and resistance to be a factor. The more you know about typical price behavior, the more you’ll earn from trading binary options.