Candlestick Signals in Binary Options Trading
It is possible and often profitable to use Japanese candlestick signals in binary options trading. In fast moving markets the fundamentals are often not clear and technical factors often drive prices. Those who are adept at the use of the Doji, the Three Black Crows, the Bearish Engulfing Signal and others can often use these candlestick signals to their advantage in binary options trading. Candlestick signals in binary options trading are useful in predicting price movement of the underlying equity.
What Are Japanese Candlesticks?
Japanese candlesticks are simple visual means of seeing price action on a given day or, for that matter, any time period. A candlestick is a rectangle, the body of the candle, and two lines extending above and below, the shadows. The body of the candle shows the opening and closing price of the equity for the day and the shadows show the high and low trading for the day. The candle is white for an up day and black for a down day. Candlestick trading arose when rice traders in ancient Japan saw that certain price patterns tended to repeat themselves and that knowing this fact led to profits. This was a precursor to the technical trading of today. Today this system can be applied to stocks, commodities, and options. Using candlestick signals in options trading can be a useful means of spotting and taking advantage of opportunity.
Where Do Candlestick Signals Fit in Binary Options Trading
Many traders use technical analysis to help them successfully anticipate the next move of the stock market. Binary options traders can take advantage of these easy to use signals. Anyone trading binary options will want to have a firm grasp of the fundamentals of the equity underlying the options trade. However, the stock market can move fast and investor sentiment may diverge from what the fundamentals might suggest. By using candlestick signals in binary options trading it is possible to obtain a profitable view of changing market sentiment and trade accordingly.
Profiting from Indecision with Candlestick Signals in Binary Options Trading
Here is an example of a Japanese candlestick signal and how to use candlestick signals in binary options trading. The Doji signal is a single candlestick, very flat, with shadows of varying lengths. It tells the trader that the opening and closing prices of the equity in question were very close although trading throughout the day may have ranged higher and lower.
When this signal occurs in a well established up or down market trend it is often an indication that the market will reverse. For example, you have been following the SPDR and it has been steadily rising. Then there comes a day when opening and closing prices are very close. If you are using Candlestick charting you will a very clear signal, the Doji. This signal alerts you to the strong possibility of a downturn in the market.