Binary option indicator (Binary options) is a fairly new form of investment in the UK. However, recently there have been many mixed opinions about this form. Many people think that it is like online betting and very risky because it is not currently regulated by law. So what is the Binary option in technical analysis? Is it a scam? Follow the article below by Crypto Trading!
Learn about Binary option indicator
Below are the detailed definitions, advantages, and disadvantages of the Binary option indicator :
What is a Binary option indicator?
Binary Option indicator, is a form of double option trading, with only two options based on predicting the price to increase or decrease. When the transaction ends, if the prediction is correct, the participant will receive a profit according to the exchange’s rate. If wrong, they will lose all the money for that transaction. In particular, the Binary Option allows traders to know in advance the potential profit and risk.
This form of price prediction is commonly used in stock exchanges, Crypto, stocks, and gold. The forecaster will consider the volatility of these assets over a certain time to choose the right investment.
Advantages of Binary Option in Crypto Investment
Investors do not need to go through a complicated buying/selling process. They just need to place orders on the software, and profits will be automatically transferred to their accounts. You can trade on many markets such as cryptocurrencies, stocks, and bonds. Rewards and risks are predetermined before trading. This helps to plan for quick responses.
Binary Option is a simple and easy-to-use form of investment that can be used for speculation or risk hedging. It can also be traded on any platform such as computers and mobile devices.
Disadvantages of Binary Options indicator in crypto investment
This form of investment is risky, investors cannot be sure of the results and depend on luck. It has been banned in some countries such as the EU and Israel. Investors cannot close the deal themselves and the potential profit is set in advance. Fraud is likely to occur because high profits attract fraudulent companies. This leads to property damage for inexperienced investors. The profit rate is limited to 60-90% of the investment capital. Inaccurate information about exchanges can lead to choosing the wrong unreliable exchange, causing risks for investors.
See more: Know MACD for perfect crypto transactions
Popular Binary Options in Technical Analysis
Below are the popular Binary option indicators in technical analysis:
Call/Put
In binary options, predicting an asset’s value to increase or decrease is the most common, especially in Call/Put trading. Investors can choose to buy (Call Option) or sell (Put Option) the asset in the future at a predetermined price. Both options come with a premium called Premium (P).
One/ No – Touch Binary option indicator
This type of binary options trading is simpler in technical analysis. Because you only need to determine whether the asset will touch or not touch a certain price within the specified time to win or lose. With a One-Touch Binary Option, you predict that the asset price will touch the limit price at any time during the trading period.
On the other hand, with a No-Touch Binary Option, you predict that the price will not touch that limit price. The limit price is set in advance and is up to the investor. For example, if the current price of an asset is $5 and the limit price is $12. If you predict that the price will not touch $12 in 10 minutes, you will choose a No-Touch Binary Option.
In range/Out of range
Also known as a range option, this is quite similar to a touch or no-touch option. However, the difference is that you choose a price range to bet on instead of a specific price. With a range option, you bet on a range of prices instead of a specific price.
Best Technical Analysis Indicators to Evaluate Binary Option Indicators
Let’s take a look at some of the top technical analysis indicators, see how they work, and popular strategies for applying them.
Moving Average (MA)
Moving average (MA) is a popular indicator in the trading markets. It is calculated from the average of price data over a given period, usually the closing price. For example, MA 100 (closing price) represents the average closing price over the past 100 days. The trend is up when the price is above the MA and down when the price is below the MA.
In short-term trading, popular MA periods are 5, 10, and 25 days, which react quickly to small price changes. A common strategy is to use multiple MAs with different periods to determine the trend.
For long-term trading, the gold/death cross strategy uses the 50-day and 200-day MAs. A sell signal occurs when the 50-day MA crosses below the 200-day MA, and a buy signal occurs when the 50-day MA crosses above the 200-day MA.
MACD technical analysis indicator
MACD is a versatile tool that generates trading signals based on trends, momentum, and divergence. When the MACD line crosses the signal line from bottom to top, it is an uptrend signal, and vice versa when it crosses from top to bottom.
Traders often use the zero level on a chart to determine trends. A level above zero indicates bullish conditions, and a level below zero implies bearish conditions.
The first popular strategy with MACD for crypto is to use histogram bars against moving averages at 0. A potential reversal occurs when bars move away from 0, and continuation occurs when bars edge closer to 0.
Divergence on the MACD is when the price and the indicator do not match. Bearish divergence is when the price is higher but the MACD is lower, and vice versa. Divergence is often the earliest sign of a reversal.
Relative Strength Index RSI Technical Indicator
RSI is a popular indicator that measures the strength of a market over a specific period (usually 14 days). Its chart ranges from 0 to 100 with 30 and 70 being extreme levels.
When the RSI indicator exceeds 70, the market is considered ‘overbought’. When the RSI exceeds 30, it is considered ‘oversold’, often accompanied by a short-term pullback. 50 is generally considered neutral, with readings above 50 indicating an uptrend, and below 50 a downtrend.
Another charting technique is to use two RSI lines with different periods. A buy signal occurs when the short-term RSI crosses below the long-term RSI below 30. While a sell signal occurs when the short-term RSI crosses below the long-term RSI above 70.
Stochastic technical analysis indicator
Stochastics, a momentum oscillator, is similar to RSI but more sensitive. It is suitable for volatile markets. The %K line shows the recent closing price relative to the 14-day low and high. The %D line is a moving average of %K.
The crossover between %K and %D provides a bearish signal when %K crosses below %D. Conversely, a bullish signal is given when %D crosses above %K. The %D and %K lines crossing in overbought or oversold areas also provide trading signals in technical analysis.
Stochastic RSI, a hybrid of RSI and Stochastics, was developed to combine the advantages of both indicators. Using Stochastic RSI, traders can apply trading techniques combined with momentum tools. Like other oscillators, Stochastics is also used in many divergence strategies.
Bollinger bands
Bollinger Bands is a popular trend-based technical analysis indicator that measures volatility and overbought/oversold conditions. It consists of a 20-day moving average (middle band) and two standard deviations represented by the lower and upper bands.
The market is bullish when the price is above the middle band, and overbought when above the upper band. The market is bearish when the price is below the middle band, and oversold when below the lower band.
The simple “squeeze” strategy trades breakouts, based on band contraction. Band squeeze indicates low volatility, predicting an upcoming expansion where prices surge. Applicable when bands are contracting, more complex when the market tends to expand the bands indefinitely.
Parabolic SAR
In binary options trading, Parabolic SAR can be used as a technical indicator to help traders identify trends and predict entry and exit points. How can What is parabolic sar help in binary options trading? It includes:
Trend Identification: Parabolic SAR helps identify the main trend of the market. In binary options, knowing whether an asset is trending up or down can help traders make more accurate “call” (buy) or “put” (sell) decisions.
Identifying Entry and Exit Points: Parabolic SAR can indicate trend reversal points. When the SAR points move from above to below or vice versa, traders can use this information to decide when to enter or exit a trading position.
Risk Management: Using Parabolic SAR along with other risk management strategies helps traders limit losses by making decisions based on clearer trends.
See more: Instructions for opening an MEXC global account
Basic guide to investing with Binary option indicator
Playing The Binary option indicator is quite easy, which makes many newbies join. Here is a basic guide on how to play Binary Option:
Detailed steps to play
- Step 01: Choose a reliable Binary Options trading platform
This is very important, do not waste time and money on unreliable exchanges, because it can cause a loss of money that cannot be withdrawn. To know which exchange is the most reputable, continue to follow our section below.
- Step 02: Select assets or products to trade
Brokers often offer a wide range of options for investors. These include currency pairs such as EUR/USD, GBP/USD, gold prices, stock prices of Google, and Facebook, or economic indices such as S&P500…
- Step 03: Select contract end time (Expiry Time)
This is the time when you predict the price of the asset will increase or decrease after the end. Choose at least one minute to trade, because the longer the time, the easier it is to analyze and predict.
- Step 04: Select the amount for the transaction
Choose a minimum amount, usually from $1, which is specified by each different exchange. Besides, manage your capital effectively, do not invest all your money in one order.
- Step 05: Select the transaction type on the BO exchange
Each BO exchange will have different types of transactions such as Up/Down, Call/Put, and High/Low…
- Step 06: Wait for results and profit if prediction is correct
As you can see, the trading method is quite simple. To understand better, practice by opening a demo account on the Binary Options platform.
How to identify a reputable Binary Option platform
To choose a reputable Binary Options platform, you can consider the following factors:
- History and development of the exchange: You should choose a exchange with a history of formation and development for 5 years or more.
- Stable trading platform: Reputable exchanges often provide trial accounts so that customers can test the stability of the trading platform.
- The exchange provides specific, clear information and has complete paperwork to demonstrate transparency.
- Participating Investors: Look at other investors who have participated in the exchange.
- Avoid platforms with high profit and commission policies. This can be a sign of an unreliable platform.
- Review the payment and transaction processing process. Make sure that the payment and transaction processing process is quick and hassle-free.
- Avoid over-promoted exchanges. Beware of exchanges that advertise unrealistically high bonus policies.
- Join investment communities to update information about reputable Binary Options platforms. However, select information carefully.
Is the Binary option indicator a scam in crypto investment?
There are opinions that the Binary option indicator may be a form of scam. However, this has not been fully proven because BO is not yet recognized in the UK. Most Binary Option platforms from abroad enter the UK market in various forms. Almost all have representative offices but are not supervised by the law. Therefore, when there is a conflict between the customer and the trading platform, the customer will be fully responsible. And unfortunately, the law will not intervene or protect.
Investing in Binary Options is considered a 50:50 chance of success. However, if you are a long-term investor, engaging in this type of investment can create unwanted risks.
Conclude
Below is an article to help investors find useful information about Binary option indicators and make the most accurate trading decisions. Hopefully, you have the answer to the question of whether to join the BO exchange or not. Crypto Trading also shares a lot of knowledge about the financial market through our articles. To become a smart investor, don’t miss any of our articles. Follow us now!
FAQs
Which Binary option indicator is best for beginners?
For beginners, SMA or Bollinger Bands can be a good choice to start with.
How to find and select the right binary option indicator?
Traders can refer to reviews and reviews from experts. Or test each type of indicator on a demo account before applying it to real trading.
Is the Binary option indicator reliable?
The reliability of the binary options indicator depends on the usage and skill of the trader. However, when combined and tested carefully, they can assist in making trading decisions.
