Binary trading seems easy and simple, but successful binary trading requires some effort, market analysis and education. One of the most helpful market analysis techniques for binary traders is technical analysis. It can help you predict the movements in the market and make correct trading decisions, which will bring you profit.
What is technical analysis?
Technical analysis is not the only principle for exploring and analyzing the market, but it is the most useful one. It is opposed to fundamental analysis, which is also often used for exploring the trends in the market, but it is not suitable for all types of options. Technical analysis can be applied to all types of binary options, no matter which assets you trade.
Basic assumptions of technical analysis
Technical analysis is basically relies on the presupposition that everything happening on the market is going in circles, and that every situation will repeat. This is why, if you want to perform technical analysis, you need to observe the market conditions from that reach far in the past. There are three assumptions on which technical analysis is based.To learn more about different technical analysis click here.
The price reflects the information
Technical analysis presupposes that the price of an asset tells the background story, so you do not need to know additional information about the asset. You can analyze the price only and conclude how this asset moves in the market, how it will move in the future and how other traders observe it.
Prices move in trends
Technical analysis and trend following are tightly connected. Traders who use technical analysis presuppose that every asset follows a certain trend. It can be concluded by monitoring the movement of the asset’s price over a certain period of time.
History will repeat itself
The third assumption of technical analysis is that every situation in the market will repeat itself, and that everything goes in cycles. Even though movements in the market can seem unpredictable over short periods of time, it does not mean that they are random. If movements over longer periods are observed, we can determine some patterns which repeat after some time.
Benefits of technical analysis for binary traders
It is practically unimaginable to be a successful binary trader without technical analysis. First of all, it can be applied to all types of binary options: it does not matter which assets you trade or how long are the time frames. Even some binary robots, like Fintech LTD use technical analysis to predict market movements and execute the trades.
Another advantage is that it allows within short time frames, which is particularly useful for binary options. Binary trading is based on short time-frames, so you need to predict the price movements over such periods, and not over the course of several days, months or years. This is particularly useful for swing traders, which need to react on every movement in the market and every change of price. Technical analysis is very useful for various trading strategies, and many of them are based particularly on this type of market analysis.
To conclude, if you want to be successful in binary trading, you need to master technical analysis and base your trading on it, because it will help you make correct predictions and decisions.