Smart traders are capitalizing on one of the most promising trading avenues namely the binary options. This type of trading involves predicting the rise and fall of the value of a particular asset in a certain period of time. By gaining enough experience and by taking leverage of the right tools, you can perfect the art of predicting the value accurately which in turn will allow you to make huge profits. Remember, however, that if your predictions go wrong, you could end up losing a lot of money. In order to make the most of this type of trading, it is necessary to gain enough experience and use the right tools.
Trading breakouts for accurate results
The best way to make the most of asset price trends is to be able to predict price breakouts accurately. For this, you must first learn all about price action and how it is impacted by various factors at a particular period of time.
Price action in binary trading can be defined as the trend of trader activity in a specific market. There is no disputing the fact that almost all traders are out there to make money. The moment they identify a trend that seems like a potential money-making opportunity, they will not hesitate staking whatever they have to make the most of the trade.
Activity of traders depends entirely on which direction the price of a particular asset moves. If they are unable to comprehend the direction of the asset price, traders will refrain from doing anything.
binary options breakouts trading with pivot points
Trade breakouts using pivot points is one of the most reliable methods used by seasoned traders. Prices of assets are marked using quantized horizontal lines known as pivots. Using these pivots, you can identify trading breakouts. This is done by analyzing candles breaking through pivot points.
If you wish to trade smart, here are a few important steps to take as you trade breakouts –
You must at all times be well-informed on the stock trends and be ready to act quickly and take risks.
Stock inactivity for a prolonged period of time means there is an opportunity for trade breakouts. The number of times the particular stock touches the pivot point without crossing it determines the point’s strength.
If you identify retracement of points that consistently go higher, you can see how many times the particular stock has tested resistance levels. This will give you a clear picture about the stock’s buying pressure. This pattern is a reliable signal that will tell you if the stock you are considering has the potential to break upwards. After predicting that the stock value is set to rise, it is time to place your money on the asset.
Similarly, selling pressure can be identified if testing of pivot levels with entrancement points is low on a consistent basis. It is easy to predict here that the asset price is all set to fall. At certain times, key levels are rammed through by the price action as the selling or buying pressure is already forceful. The chart below shows this particular action:
Resistance and support levels are shown here by the pivot points. Testing of R1 levels has been done consistently and you can also see that before going back up, prices of the asset do not get back to where they started at S1 at the beginning of the day. This is a clear indication of buying pressure that has broken through R1.
When price is tested for R2, we find that retracements never get back to the previous retracement or central pivot points. This again indicates enhanced buying pressure shown by the bullish candle that went on to breach R2 and R3.