Trend line definition is a line linking two or more lows or two or more highs, with these lines projected into the future.
As far as binary trading is concerned, Binary Options trend lines are a sequence of movements on the FX market in a particular direction, similar to either the lower highs or higher lows. Trends are one of the essential tools for trading in all the FX markets that help the traders to know how and when to trade. That is why trend lines are one of the most priceless and valuable tools for traders in binary options trading.
If you understand how to apply trend lines and how to make a trend analysis for determining the diagnosis of the market patterns, then you will be expected to rely a lot less on the many technical indicators frequently used in trading. It is also noteworthy that each of the trends has some distinguishing elements, most importantly the core trend line.
On the other hand, there are many more trend lines that give you an idea about short lived trends that diverge from the original trend line and run to the disagreeing direction.
In binary options, the supremacy of the trend analysis is its aptitude to forecast what the future will tell about the FX market. Remember the fact that the trend lines are not indicators, and not lagging as well. They are real maps that describe the boundary hopefulness and fear.
The Trend Lines Strategies
Learning the trend trading strategies and understanding how to use them accurately and efficiently can result in a successful binary options trading, while the reverse will be the case if not knowing the way to use trend lines strategically can result in making many bad binary options trades.
How to Draw a Trend Line
As a beginner to binary options trading, there is the possibility that you might not be familiar with how to draw a trend line which can lead to misjudging the price action. To draw a Bullish trend or uptrend line, look for the lowest low, find the next higher low following the lowest low and then draw a line from the lowest low to the higher low and then continue into the future.
The Low Highs and High Lows in Trends
Are you a trader that wants to be updated about trends in binary markets? Then you need to avail the opportunity of low highs and high lows in trends. It is certain that the trend will begin to form when that particular movement happens on the chart. Before long, it will be likely to see a channel also, and you can now purchase options as far as bearish movement is concerned, or call options by using the bullish movement.
But as a binary trader, you must never underrate the significance of charts. This is due to the fact that charts can offer much handy information that leads to improved money investment and guiding against loss in the course of preventing you from missing on a trend.
Tips for Trading Binary Options with Trend Line Strategy
As mentioned earlier, a trend line is the most crucial tool in the toolbox of a technical trader. Trend lines are easy to understand and can be used together with any other tools you might be using already. In an ideal world, traders look at these extended binary options trend lines and trade on prices that are reacting around them.
1. Determine the time frame you want to trade because the time frame of the chart you are trying to analyze is very crucial and also figures out the expiry time of the options you want to trade.
2. Plot a trend line. Link two successive lower highs if you discover that the prices are making lower highs or higher lows in a situation where the price is trading higher.
3. Just wait patiently for the trend line to be broken as patience is the key here!
4. Price closes above the falling trend line or closes below the rising trend line when the trend line is broken. At this point, purchase a CALL or PUT option with the same expiry time as the chart you are using. For instance, your option expiry time will be 25 minutes or the following candlestick, if you a 25 minutes chart is what you are analyzing.
Note: You can only initiate a PUT or CALL option when price cuts the trend line with a strong candlestick and then closes above or below the trend line.
Here’s what you can do to ensure that the trend lines you have drawn are suitable for binary options trading.
Join Swing Highs to Swing Highs or Swing Lows to Swing Lows
With binary trends, you want to draw a line linking two or more swing highs or two or more swing lows. For those who are new to the term swing highs/lows, all it means is the mountains and valleys made with zig zagging prices. As soon as you connect peaks with other valleys, you want to see the line that is not broken by any candle amid those two points.
Buy Bullish Trend Lines, but Sell Bearish Trend Lines
The simply implies that you should always endeavor to buy at the bullish support lines and sell at the bearish resistance lines if you are a skilled trader.
Bullish – This is an upward sloping trend line and it indicates that the price is trending up. In this case, you should look for the opportunity to buy. However, the buying chances happen when the price eventually comes down and drops very close to the trend line that initiated the upward bounces previously.
Bearish – A bearish in binary options trading is a downward sloping trend line which indicates that the price has been trending down, therefore it is time to look for selling opportunities. These changes happen by the time the price moves up and comes near the trend line that has originated the downward bounces previously.
It is noteworthy that trading just in the course of the trend lets the traders use possible trend line bounces as confidently as possible. And due to the fact that these lines won’t provide traders with winning trades regularly, the winning trades should provide traders with more pips than they had been trying to place trades against.
FAQs Binary Options Trend Lines in Binary Options Trading
Question: Why is it necessary to use good trend trading strategies?
Answer: Trend lines are a very handy and well-built indicator tool to see the price movement. A good strategic move for trading trend lines is essential in binary options trading as you will either succeed or fail on your trade depending on how the trends in the market once you place a put or call. On the other hand, trend lines are very useful in recognizing both the oversold and undersold circumstances.
Question: What is the number of binary options trend lines in a chart?
Answer: Well, the truth is that you can not say categorically the number of binary options trend lines you will find in one chart. This is because you will see some other smaller trends following their own trend line, once you have found the original or main trend line for a trend. While some of them will just be valid for quite a short time, some will be for a longer period of time, even as some will run in the opposite direction of the major trend line.
Question: What happens should the price cross the trend line?
Answer: The following three things will happen if the price crosses the trend line.
- The trend can carry on as it has in the past, but the trend line will flatten a little bit.
- The price could enter a stage of sideways movement, and generate an extension or an overturn pattern. The price will then make a new trend with a new trend line in the opposite direction or its original direction, after some time.
- There will be an instantaneous reversal and the formation of a new trend in the opposite course.
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