Using Binary Options Graphs
To a lot of traders, the graphs on their trading platforms are mere formalities—they’re there to give them something to look at when they place their trades. This is because so many traders are gambling on binary options. You do not have to follow in their footsteps, however; you can actually make good use of binary options graphs in order to plan your trades.
Binary options graphs provide you with a visual context for placing a trade. How much you rely on the graph data to place your trade will depend on your entry rules. Entry rules are part of coming up with a trading method, also called a trading system. Having a method is a key component to becoming a real, professional trader instead of a gambler. Some trading methods rely heavily on the visual displays which graphs provide, while others may only reference the graphs for context. If you read our article on trading methods, you can find out more about the three main types of analysis used to plan successful trades. Of these types, fundamental analysis, which involves trading based off of news, probably relies the least on graphs. Price action and technical analysis both depend on reading price or indicators plotted on graphs in order to place trades.
Why You Should Download Software
Another article on this topic which can help you understand the importance of binary options graphs is our write up on the importance of charting software. “But there are charts already included on my binary options trading platform, so why do I need to download something?” you might ask. The reason is that if you look at those charts, really look at them, you’ll realize that the graphs provided by your broker aren’t there to serve as a tool. The reason they are included is to entice traders and excite them with possibility. Casual traders see those squiggly lines and all they think is, “up or down!” The graphs provide a visual display of the possibility of profit.
If you plan to trade seriously and profit over the long term, you have to look at graphs as a tool, and not merely a plot of your possible success. Graphs are not very useful however if you cannot plot indicators on them or examine price closely. What do we recommend to fill in this gap in functionality? If you will be trading currencies, we recommend MetaTrader 4. IFS Charting Station is a similar product which caters toward stock traders. These are free trading platforms.
How to Use Graphs to Trade Binary Options
- Download charting software. Some charting software may be compatible with your mobile device, but you may need to use your home computer to plan your trades. It’s best to sit down and really think about the trades you’re going to place anyway. Even if you’ll be trading on the go, planning takes focus.
- Choose a trading method which you’ll use to trade binary options.
- Set up your charting software so that the graphs display in a way you find clear and easy to interpret. You can set up the display to show candlesticks or bars, change the colors to make things stand out, zoom in or out, and choose a time frame to display.
- Backtest your trading method on your charting software. Scroll back in time and look at very old graphs for your chosen asset. Move the graphs forward one tick at a time and note where you would enter a trade using your system, and where you would exit a trade using your system. You may need to plot indicators on your chart to help you plan your trades, depending on your method. Do not cheat and look ahead. Write down the results as you go and refine what you do.
- Use your graphs in the same to help you plan demo trades in real time on a broker which offers you the ability to demo test. You will look at your charting software to plan, but will execute your trades on the broker’s website.
- When you are successful in demo, do the same thing when you trade live. Always use consistency when you use graphs to plan trades.
Have a little extra money to spend? One of the best charting platforms in existence is TradeStation. TradeStation carries a price, but it is money well spent. You can chart stocks, currencies, options, and more on this software and use it to plan your trades. It has received accolades from numerous successful professional traders. If you hunt around, you can sometimes find substantial discounts out there for purchasing it. If you are tempted to spend money on a trade signal service or a trading system, we suggest you consider funneling the money toward good charting software instead. It will probably pay off much more in the long term since it will empower you to test free trading methods or develop a method on your own, plan your trades, and trade with confidence.
Test out your charting skills at Binary Options Broker BancdeBinary now!