Using Charting Software to Plan Your Trades
There is often a casual approach taken to binary options trading, but just because other traders are casual doesn’t mean you have to become just another gambler. If you’re at all serious about making money with binary options and possibly getting into investing to make a living over the long term, you’re going to need to put real time and effort into planning your trades. The little charts included in binary options platforms are not sufficient for this purpose. They usually only show you what’s going on right now and give you very little context. Only a few brokers offer you the ability to see multiple timeframes. And you rarely if ever are given technical analysis tools.
That’s why you should get some charting software. Different programs are out there, depending on the types of financial instruments you prefer to trade. One of the best you can use for planning binary options trades of currency pairs is MetaTrader 4. Programs like MT4 give you the ability to view charts on many timeframes, set up the bars in a visually clear style, and add technical indicators to your charts.
Charts Provide Framework
There are many different ways you can plan your trades, not all of them involving technical analysis. If you use price action, however, you’ll need to be able to view some nice charts, just as you would if you were using technical analysis. If you use fundamentals, you still probably want to get a good look at the context of what is going on with price by viewing charts. Charts give you a framework within which you can see what is happening and also make your own trading method concrete.
Charting programs give you access to a lot of historical data. Using this data you can test your method for accuracy. For example, perhaps you use moving average crossovers to trigger your binary options trades. These crossovers are supposed to tell you when a new trend is forming so that you can place a High/Low trade. Why guess at the accuracy of your method when you can actually scroll back in time and test it out? Move your charts ahead one candle at a time and when you see a moving average crossover that fits your specifications, place a back test trade and move the chart ahead to see whether you’d have won or lost. This will help you to pick expiry times, or if you use One Touch/No Touch, trigger points.
It is particularly essential that you take this step with binary options because you don’t generally have an opportunity to demo your trades for an extended time period. Most brokers will limit you to a couple of weeks of demo testing if they even offer you the opportunity. Banc De Binary is a great broker that we highly recommend, in part because they do offer a demo account, and it’s risk free. Nonetheless, using charting software to backtest and plan your trades is an essential part of the process of becoming a successful and consistent binary trader.