We talk about price action throughout this site. If you’ve watched our videos, you know this is how we trade almost 100% of the time. Watching the pattern of the candlesticks is what gets us excited everyday. This is an art, when it comes to binary options trading and will take a lot of time for most people to really get a good understanding. Instead of using trading indicators such as the MACD and RSI, we watch how price forms certain levels. These levels are what we look for when trading. The key to price action trading is to only take the best setups. You really want a few things working for you before executing. Without the catalysts on your side, price action will not work for you.
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We’re going to go over some of the major items we look at on our charts everyday. Without applying indicators you can still see lines drawn on the charts. Each line represents some kind of price action. The four major factors we will discuss are Trends, Support and Resistance, whole numbers and old trading levels. Each of these represent price action in some form or fashion no matter what you’re trading. We will look at each, in a binary options point of view.
Watching the Trends
Probably one of the most obvious price indicators is knowing what the trend of the price is. If we’re looking at the EURUSD, and price is climbing, we know an uptrend is happening. If price is dropping off from a certain level we know a down trend is forming. Picking the right side of the trend is where the money is made.
Things to consider:
1. Are you looking at the daily trend?
2. What is happening during the intraday price action?
3. How far up/down is the price?
Each of these will help you determine what the trend really means. Assuming there is a trend, what is the best time to trade it. Going against the momentum could lead to tougher trades. Although reversals carry solid moves, you need to make sure you have a couple of things backing you up. You can learn more about trend trading here.
Support and Resistance
This is another major factor when it comes to finding good trade setups. Knowing areas of support and resistance (S/R) will most likely be your biggest asset. You can use them in any market and at any time. Using the support and resistance level along with the trend will also increase your trading odds. Once you learn S/R, you will become a stronger trader. You can read up on support and resistance here.
This price action strategy had been one of our favorites while binary trading for some time now. We used to use in in the Forex market, so as long as it worked there, it should work in the binary options market as well. The whole number has a gravitational pull working for it. It works as heavy support and resistance. If you combine trading whole numbers with the trend things get even better. For example, you will watch the price of the EURUSD move to the whole number of 1.31000 and just stop. It will pull back, consolidate or slowly extend through. If you only traded whole numbers you can make money trading. Watch our videos and you will learn what we mean about these levels.
Old Trading Levels
The last major item we look at on a daily basis are the past trades that succeeded. Once we find a good trading spot we will apply a line to the chart to remind us of a successful trade area. These spots won’t always repeat themselves, but they could help increase the odds of future trades. Keep an eye out for solid winning areas and see what happens when price revisits that area in the future. You’ll be surprised how many times these levels create nice setups.
Although there are several other factors to price action, these are some of the variables we look at on a daily basis. If you can learn and incorporate them into your trading, things will become a lot more simple. You won’t have to worry about a ton of squiggly lines and delayed data. With a solid chart platform like Metatrader, you can have all the tools you need right in front of you. You want real time price action telling you what to do, which will definitely find the most authentic trades. It does take a lot of time and practice, but over time you’ll be a lot better off.