Binary Options Chart Reading How To Exploit Charts

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How to Read And Understand Charts

Binary options charts are used by traders to track the progress and movement of various assets. There are multiple types of charts used for numerous types of trading, but there are some common ones that you will see more often. From simple one screen line formats to multiple screens displaying various assets and data, it is essential to make sure you have the data you need to be able to trade effectively.

Each one follows a similar format. First, you have the y-axis which has numbers written up and down the side of the chart referring to price; then there is the x-axis along the bottom which represents the time or date. It is necessary, when it comes to online trading, to ensure that all data is shown in real time to be able to trade effectively.

The type of chart that you will use will depend on the source of the data and the options that you are trading in. From simple charts to more complicated options that offer a more detailed analysis, there are a whole host of solutions available to traders no matter what level and experience you have.

In this guide, you will learn:

    What binary charts are and how they work Why Identify the different chart types How to use different charts advantageously

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What Are Trading Charts

Charts are used to display data in various formats. When it comes to binary options, they are used to demonstrate the movement of an asset in a specific time frame and the historical data of that asset. This information can then be used to study the various assets, identify trends and help you to understand the movement of the different trade types offered; commodities, stocks, indices and currencies.

It is much easier to trade when you have the historical and current real-time data available to you as you are more likely to be able to identify patterns and use them to make successful trades.

Those traders who are just starting can use the basic formats to understand the price of an asset and the trends over time. Beginning at a basic level is probably better, to start with as it allows you to become familiar with the various assets one by one. As you get more experienced with charts, you can begin to examine them in greater detail and look for more in-depth data.

The type of chart that you will use will depend on the options that you are trading in.

The Different Types of Charts

Tick, line and candlestick charts each of the different types serves a different purpose, and some of them are more complicated than others.

For simple trade types such as short term, High/Low options involving one asset type you would use a simple tick or line chart. For more complicated trades, when you need more information, you might use a candlestick chart (candlestick because it looks like a candle with a wick coming out of the top).

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Many brokers offer a simple line chart which is OK for necessary trades and beginners, but for those who need more data and in-depth analysis, an alternative could be better. It can also depend on the types of assets you’re trading, some assets are faster moving and need more chart options and data.

There are many services online that offer more detailed analysis but before you choose it is essential to ensure that you understand what you are looking at and how to use the data presented.

Choosing Your Chart

The chart that you use will depend on the type and number of assets that you are trading in. It will also depend on your level of experience and your ability to read and analyse data.

Brokers have their form of charts on their trading platform that is displayed when you click on to their trading platform. These vary significantly between brokers and while some are fundamental others can be much more advanced. If you prefer to have a lot more data to analyse, then you will need to choose your source of data very carefully.

Sometimes they can be very basic so for those that prefer more information you can use chart sites with more advanced formulas. Avoid the temptation to rush in and get caught up in the buzz of your first trade. Take some time, analyse the various information that is available to you, have a look at the various data of the assets that you think you might choose and start to become familiar with the trends of each.

How to Use Charts And Data

First of all, you choose your asset; usually in a search box above the chart. Next, you pick your time frame; this is generally in the form of a drop-down menu next to the asset search box. If you want to compare the performance of two different assets, then you can choose to use the comparison tool.

To alter the term, you can usually zoom in and out to check the performance over a day, week, month, year etc. Now while this type of search functionality is offered by some brokers, for others, it is a case of scrolling through and choosing your asset and then clicking to reveal a simple data display.

There are various sources of information that will answer questions about the different charts and how to read them, but if you are unsure and nervous, you can always use a demo platform to get familiar with using the information before you start trading with actual funds.

Many brokers offer a demo platform with virtual money, often they are free, sometimes though you need to have chosen your broker and deposited a minimum amount before you can use it. Finding a free demo platform is an excellent place to start.

Robert has consulted for our website for five years and is a well-established member of the team. While he is passionate about the site, most of Robert’s time is focused on his current position as CEO of a professional coaching company.

Binary Options Charts – Free Charting

Binary options charts have not always been of high quality when delivered direct from brokers – as discussed in more detail below. That is changing however, particularly with established CFD and spread betting brokers entering the binary options market.

Live Binary Options Chart

Brokers with Charts in Russia

Some brokers now offer high quality binary options charts for traders, and ETX Capital and IQ Option also deliver MetaTrader 4 integration.

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Where to get more charting

If you have used any of the binary options broker platforms, or you are just a beginner who has looked around one or two of the platforms, one thing will stand out in a glaring fashion: the absence of interactive charts. Charts are the mainstay of technical analysis in the binary options market. Without charts, there would be no analysis of assets for trading opportunities, and without analysis, the trader would essentially be gambling.

It is important for the trader to know where to access charting tools for trade analysis, as these will provide the trader with information for an informed trade decision when trading binary options assets. In this piece, we will identify some places where traders can get charting tools in order to analyze the markets and trade profitably.

Charts Explained:

Chart Sources

Chart sources are of two types:

a) Online charts are web-based charts available from the websites of certain brokers and software vendors. These charts generally do not provide a lot of flexibility in terms of interactivity and the tools that can be used with them. For the purposes of binary options trading, it is not recommended to use online charts.

b) Downloadable charts as the name implies, can be downloaded either as part of forex trading platforms or as software standalone plug-ins. They are the best for the purposes of analysis of assets for binary options trading since they come along with many tools that augment the results of analysis. They are the recommended chart software for binary options analysis.

Some of the charting sources will provide free access to the charting tools. There are some which are free but will require some paid plug-ins to work, and there will be those that come in a complete package that has to be paid for 100%. Some of these charting sources for downloadable forex charts that are used for binary options analysis are as follows:

aa) FreeBinaryOptionsCharts.com

FreeBinaryOptionsCharts.com has an easy to use (and free) binary options chart. They also have a great guide for beginners about how to use binary options charts. This is Mifune’s site and so the quality of the strategy articles is very high.

a) Forex Charts Widget v1.7

Developed by Chris Craig and available for a free download from Softpedia, the Forex Charts Widget v1.7 is a downloadable chart software that allows the user to view the currency charts for several pairs. The user will have the ability to choose the time frame and apply a set of indicators that come with the plug-in.

b) MT4 Charts

Probably the best source for free charting information and interactive charts is the MetaTrader4 platform.

This platform is available from almost every market maker broker in the forex market that there is. However, there are a few worth mentioning due to the fact that they have a more comprehensive asset base that matches the binary options asset index.

Ideally, you should download the MT4 platform of a broker that has more than 40 currency pairs, all the major stock indices (or at least 8 of them), stocks and the spot metals (gold and silver, sometimes listed as XAUUSD and XAGUSD respectively).

Examples of the MT platforms that you should use for your charts are those from FXCM, FxPro, Finotec and Forex.com. Virtually everything that you need for charting is found on these platforms. The best part is that it is all free and can be obtained when you download the MT4 platform and create a demo account. Another beautiful factor that works in the MT4’s favour is that the MQL programming language on which the platform was built supports the building of EAs, indicators and software plug-ins that aid in signal generation. These signals can then be exported to the MT4 platforms. Check out our MT4 guide in the forum for more info here or watch this video which explains some tips and tricks for MT4:

c) Interactive Brokers Information Systems (IBIS)

The word “interactive” in this broker’s name says it all. Interactive Brokers has one of the most comprehensive charting platforms for technical analysis. The Interactive Brokers Information System (IBIS) platform provides institutional level charting facilities. The charting facilities on IBIS boast of 22 configurable technical indicators, an alert wand that supports alert creation, and allows traders to use any of the three chart types (bar chart, line chart or candlesticks). The package comes at a cost though. Users have to subscribe to its use at a cost of $69 a month.

d) My FX Dashboard (from OFX)

This forex charting service from OFX allows traders to conduct lines studies, use indicators,etc. This software is not downloadable, but is a Java-enabled web-based application that allows users to switch between basic charts and advanced charts. This charting software is coded with EasyLanguage, which is the programming language that powers FXCM’s TradeStation, so you can also use it as a software plug-in on FXCM’s flagship trading platform.

e) MultiCharts

Multicharts is a downloadable chart software that provides high-definition forex charts on 30 different currency pairs in partnership with TradingView. The charts also have a web-based version. Traders can utilize several time frames that span from one minute up to one month. Developed by MCFX, the MultiChart charting and trading platform is a robust package that even has a unique ODM chart trading feature that zeroes down on the exact price that a trader wants to execute his trade on, tags it and uses this information to remind the trader about the trade if there is a lag in time between signal generation and trade execution.

f) Free Stock Charts

Nuff said. Click here for free stock charts. (Go To “Help” in FreeStockCharts.com and view the video tutorial, it is very helpful for beginners.) Looking for Candlestick view on fsc.com, go to top left of chart and click on Price History in green then click Edit, then change the “Plot Style” from HLC Bars to Candlestick and click “OK.”

There are many other sources of charting information for use in generating binary options signals. It is up to the trader to decide on which one to use based on cost, ease of use and other parameters tailored to taste.

Charts

In general, binary options are relatively short-term investments that require research and technical analysis. Because of this, analysing and interpreting binary options charts is extremely important to the success of any trader, as it will be hard to be profitable without knowing the ins and outs of chart reading and technical analysis. These trading charts do not have to be intimidating and you can be a successful trader by learning how to use charts to assist in your overall trading strategy.

Time frame

As binary options are frequently traded on relatively short-term time frames (Often end-of-day, hours, minutes or even 30 seconds), it is key to analyse charts within a given time frame that is in keeping with the trading style or analysis. For example, if trading an asset that expires in one hour, it is going to be of little value to look at charts with a five year time frame. Similar time frames might back each other up, confirming a trade, but there is a limit to the use of unrelated time-scales. Charts can be broken up into timeframes as follows: 1 minute, 2 minute, 5, 10, 15, 30, 45, 60, 90, daily, weekly, and monthly.

As mentioned above, on occasion, it might be advantageous to use multiple time frame charts when examining a possible binary option trade. When doing so, make sure to look at the longer time frame chart first – this should provide the overall longer term trend. From there, you can then scrutinise a shorter time frame chart, and establish an entry point you wish to get in the trade. As an example, if the daily chart is showing bullish signals but the weekly chart is showing bearish signals, traders may wait for the daily to turn bearish before placing your trade. The longer term trend will then hopefully be less likely to work against the shorter term trade.

Live Chart

Types of Binary options chart

Candlestick charts

Many technical analysts believe that market trends are a reliable predictor of future events, but also provide entry and exit points too. Looking for indicators on a candlestick chart will allow you to decide whether it is the right moment to open any calls or puts. Candlestick charts are a visual mix between a line chart and a bar graph, making a combination that presents more information than is typically available in a more traditional chart. The name “candlestick” comes from the thin bars at the top and bottom, that display the high/low range of the day, plus opening and closing price (thus resembling the wick of a candle). These candles are arranged in the same way as a basic graph, with a new ‘candle’ for each unit of time. The ‘wicks’, and more importantly their relative length, can add additional information about trader sentiment.

A candlestick chart can alert traders to whether buyers or sellers are currently “winning the argument” in terms of the market of a particular asset. Utilising a candlestick chart along with several technical indicators can push your trading strategy to the next level.

For more in depth analysis of candlestick patterns, see our full article.

Binary Chart indicators

There are so many chart indicators to choose from it can make your head spin. (See why price action is important) Technical analysis is a huge subject, and one with very few definitive answers. All charts are useful in their own way, so it is important to understand how and when they should be used in your trading strategy. Let’s take a look at a few of them to give you an idea of how they can be utilised in binary options trading.

Moving averages – Many binary options traders utilise moving averages heavily. Some have even built trading strategies that revolve around asset prices crossing over moving averages over time. A moving average is a trend following indicator that is based on the historical price of an asset. Moving averages can be calculated in two ways, one in which all historical prices are weighted evenly (Simple Moving Average) or another in which more weight is given to more recent prices (Exponential Moving Average). Bullish and bearish signals are evident when the price of an asset crosses over its moving average, or when there is historical support of the price in relation to a moving average.

  • Moving average convergence divergence (MACD) – MACD is the trend indicator that displays the relationship between multiple moving averages of an asset (the most commonly used values are 12, 26, and 9 day moving averages). Over time the MACD can display strong bullish or bearish signals depending on when the price of the asset and the MACD indicator are diverging, the MACD is rising dramatically, or there is a crossover of the MACD indicator and the signal line.
  • Stochastic Oscillators– Stochastics – An indicator that compares an assets closing price to its price range over a given period of time. The theory behind stochastics is that in an upward-trending market, prices will usually close near their highs, and during a downward-trending market, prices will close near their lows. Stochastics are generally displayed in a number between 0 and 100, or -100 and 100. Traders begin to take note, once values move beyond 80, or 20 – assuming the scale is 0-100.
  • Fibonacci numbers – Fibonacci was a mathematician who identified a sequence of numbers that were repeated throughout the natural world. More recently, analysts have noticed similar patterns often occur within the trading markets as well. They can often be used to try and establish support and resistance levels.
  • Volatility – Not strictly a price chart, but the VIX measure of current volatility is a useful graph to keep an eye on. Particularly if the trading ‘greeks’ are important within your trading strategy. Boundary and Ladder options will be particularly sensitive to volatility, in terms of judging value.
  • Relative Strength Index (RSI) – A momentum oscillator which measures the change and speed of price movement. It allows traders to spot overbrought or oversold assets, and ‘failure swings’. It moves between 0 and 100.

Binary options charts strategies in real time

While binary options charts can be extremely useful in determining entry points for binary options traders, and can provide valuable insight to the historical performance of an asset, they must be understood completely in order to be fully utilised. It is also important to not let emotions get in the way of what charts are displaying. If the moving averages have a significant trend to the downside such as a downward cross, don’t let your emotions tell you that this doesn’t matter. The indicators tell a story that as a trader you must listen to. Utilising charts can be very rewarding when done correctly, but you must first educate yourself and determine which patterns and technical indicators you prefer to use in your trading strategy. Each trading strategy will be as individual as the person using it, so there are few ‘right and wrong’ answers when it comes to charting. Demo accounts can be a good place to experiment with trading strategies and see what works.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    The Best Binary Options Broker 2020!
    Perfect For Beginners!
    Free Trading Education, Free Demo Account!
    Get Your Sing-Up Bonus Now!

  • Binomo
    Binomo

    Good Broker. Only For Experienced Traders!

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