Success in binary options investing depends on what you believe about the future direction of movement for the prices of individual stocks, commodities, currencies and for Indices. Graphic trend analysis is essential for your ability to accurately predict those movements.
How can we predict the future direction of prices?
How can we predict the future direction of prices? Anything less than intuition will usually fail. Guesswork is not going to bring you profits. You need to make your prediction based on credible information and knowing how to apply graphic trend analyses is an absolute requirement for that. Newcomers to binary options investing might think it is too difficult to learn or even impossible, believing instead that prices move in random patterns and not recognizable ones. It is generally true that prices move up and down, changing direction according to market forces of supply and demand. But those ‘up’ and ‘down’ changes of direction that we see happening every day are certainly not strictly random. There are real financial reasons and actuated trading strategies behind all of the price changes that we can study. To do so effectively for success in binary options, we use graphic trend analysis.
Why do we need graphic trend analysis?
Simple logic tells us that asset prices can go ‘’Up’’ or ‘’Down’’. In binary options language, ‘’Call’’ or ‘’Put’’. There are no straight lines in the markets, however, and ‘up’ and ‘down’ assumes the perspective of a line of events on a graph. Let’s look at an example, and for this example I will show you a comparison between the market price for Gold and for the US Dollar.
Note the ‘Up’ & ‘Down’ Contrast in the High-Lighted Areas
Looking at the snap-shots from Stern’s trading platform, you can see an obvious diametric trend is clearly obvious in the two high-lighted areas on the charts. When the Gold price is moving up, the USD is moving down.
Gold and the USD are both favored as reserve assets. That is to say, investors, and particularly wealthy individuals, banks and big corporations, make a habit of moving their capital into Gold or the USD when they are not sure about where else to store their capital. Experienced market analysts and investors already know that when the Gold price goes up, the USD’s value goes down. The reason for that is complicated, but at the simplest, the reason is that when people sell dollars to buy gold the dollar drops down in value. Likewise, when investors sell their Gold the value of the USD invariably rises. Mindful of this culture of behavior therefore, we can look at each graph in the example shown here, recognize the contrasting trend lines and foresee the direction of price movements.
Our graphic trend analysis means we are now in a very advantageous position. We can consider making two binary option contracts:
A – ‘’Call’’ contract on Gold
B – ‘’Put’’ contract on the USD
Based on the strength and length of the trend lines, we can feel confident that the risk is minimal and we could potentially win both contracts. A virtually perfect situation for the binary options investor.
The start and end of a trend.
Most people don’t understand how a computer works but nevertheless they can operate a computer. Similarly, it is not necessary to know precisely what is driving the changing price of an asset, as long as you know the direction it is moving through time you can use this knowledge to advantage your prediction. That is what graphic trends analysis is for. Trends describe the general direction an asset price is moving in, and therefore, they enable you to make sensibly informed predictions.
Every trend consists of three points:
(1) A Starting Point.
There is one starting point – the point you choose to commence your trend analysis. The tops and bottoms of the line of the graph are alternating and, in theory, can repeat endlessly. The markets refer to an uptrend as bullish, and a downtrend as bearish. As long as each bottom is higher than the preceding bottom, it means an uptrend continues intact. Likewise, as long as each top is lower than the preceding top a downward trend remains intact.
Learn to do graphic trend analysis for binary options.
When doing graphic trend analysis, you will find that although the market appears to be moving in random manner, there are some noticeably definite patterns. We can say that as a general assumption, all the factors driving a price are contained within the price. Therefore, once you know what the price has been doing in the past, you have all the information you need to base a prediction for the future. The example I have given here is instructive but simple. Stern Options knows the value of graphic trend analyses to your success and when you become registered with them you will have access to the Stern Options online training academy. Free to use and accessible 24/7, there are no entry qualifications required. The academy is a fantastic resource comprising demonstration videos and ebooks. There is a special series of videos devoted to graphic trend analysis, and courses for every level of your experience. Check it out, and you can be sure your strategy will trend more successfully.