MACD Indicator For Binary Options Trading
While the concept of binary options trading is a simple matter to understand, the binary trader must be able to formulate an effective trading strategy on his own in order to got the right skills for being a professional independent binary options trader . In this article, we will take an in-depth look at how we can use the MACD technical indicator (Moving Average Convergence Divergence) to further our trading advantage when trading Call/Put binary orders. Analysts generally use the MACD indicator to help them understand better the magnitude of the momentum in the market.
The MACD indicator uses the relationship between a shorter moving average of the market prices and a longer moving average of prices to discern the momentum of a trend movement. It is derived by deducting a 26 days exponential moving average (EMA) from a 12 days EMA. To act a trigger for a trading signal, a 9 days EMA is then plotted over the MACD. The graph diagram above shows an example of what a MACD and signal line will look like on a candle stick chart. However if the MACD indicator is to be of any use, as a professional binary trader you should be able to interpret it correctly and know what each signal is supposed to indicate.
Crossovers between the MACD and the signal line can occur from above or below the signal line. If the crossover is from below the signal line, this is taken as indicative of a bullish signal. On the other hand, if the crossover is from above the signal line, this is taken as a bearish signal.
Enter a trade:
With reference to the graph diagram below, since the crossover of the MACD indicator and signal line occurs faster than the crossover of the two EMAs, there will be slight gap between the two crossovers. You can use this crossover gap as an advance signal for entry into a binary trade.
As to whether you should enter a 'Call' trade or a 'Put' trade, this will depend on whether the crossover is bullish of bearish. If the signal is bullish, buy Call trade immediately after MACD and signal line crossover point. Conversely, if the crossover is bearish, buy Put trade right after the crossover point.
While the MACD is an excellent indicator, you must be careful not to put too much emphasis on it. This is because a price market could easily cause the prices to vary significantly from the prevailing trend. In such a case, it is always prudent to reconfirm your binary options trading signal with another indicator before deciding to act.
Thank you for reading our strategy review, this time about MACD Indicator For Binary Options Trading. In our next chapter we'll explain about another useful & powerful indicator for binary options trading with a lot of ITM's success ratio, so be very tuned! In your meantime, you can read our Nonfarm Payrolls (NFP) binary strategy with a lot of market's volatility power, If you are new to binary options trading you must trade with an EU regulated and recommended broker like TopOption OR you can visit our trusted brokers list and choose your favorite one. In addition to a good and profitable strategies and your willing to increase your income, a good AutoTrader is highly recommended to use such as Mike's AutoTrader that has a lot of testimonials and an insane ITM's percentage!!