Finance Magnates Telegram Channel Trend following is a term used to describe a type trading binary options on the trend trading where order placement is based on correctly reading the chart in front of you. In contrast to range trading where one would normally place trades opposite the recent swing and where the market tends to move between two areas of support and resistance, trend following requires placing orders in the general direction of the market.
Of course traders need to differentiate between trending and ranging markets to be able to follow the trend.
For example, if the charts starts from the top left corner and ends on the bottom right corner, the market is in a bear trend and this means that putting is preferable to calling. Join the iFX EXPO Asia and discover your gateway to the Asian Markets Example of a downward trend with 15 minute bars Trading binary options is generally simpler to trading other financial instruments.
The only thing that a binary options trader needs to do is correctly analyze the direction of the market for the next one to several candles or bars depending of the type of chart. He does not except for very rare cases care by how much the market is going to move with or against him.
And since binary options traders do not care by how much the market moves in their direction, trend following is a safer bet for novice and skilled binary options traders alike. Example of an upward trend with 15 minute bars Placing orders with the trend is better when we can recognize strength in the most recent move.
The strongest candles have closes that are near or at the high or low of the candle.
We also need the candle not to be too big or too small, but just the right size when compared to the candles before it. And once again, using the bear trend example, it is a good bet to put after the close of a strong candle that closes on its low.
Apart from using specific techniques to place orders on the market, it is a good rule to remember that when trading binary options on the trend trend is strong and clear, placing an order with the trend for any reason is a good strategy. Of course trend following is a subject for many discussions and there is no bulletproof strategy that can guarantee winning all the time, but following it is a strong foundation for traders who want to further develop their skills.
Spotting Trends in Binary Options Watch Carefully To See Unless you are trading with a binary options broker who allows you to do boundary or no touch trades, you are going to be profiting or losing through movements of price. Look for Breakouts Before a trend starts to develop, price is ranging. Price ranges between invisible boundaries of support and resistance, inside of a channel. Channels may be relatively flat, or they may have some angle to them up or down. Either way, they contain price movement.
Share this article.