Best indicators for binary options: review, rating, trading strategy example

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Even the best binary options indicators and price chart templates are the cornerstones of trading. Developers and brokers have not reached a consensus on the best technical tools, oscillators, and the analytical system in general, which assess the market conditions of an asset and accurately predict the next direction of price movement. However, the experts did an extensive review of the oscillators and momentum IDs most widely used by successful traders. Since the selection criteria depend on the strategy or analytical methods of the broker, only those technical tools that have been proven effective for determining and predicting the next direction of the market movement will be reviewed.

Below is an overview of the very best binary options indicators to help you improve your trading style. In general, technical tools are often used in short-term trading to help a trader determine:

• Movement range (how much?).
• Direction of travel (in which direction?).
• Turn duration (how long?).

Because such parameters are subject to temporary decay, the retention period matters. A stock trader can hold a position indefinitely, while a binary options market participant is limited to a short duration determined by the option's expiration date. Given the time constraints, momentum tools that tend to identify overbought and oversold levels are the most popular among option traders. We can say that these are the most effective indicators for binary options.

Relative Strength Index (RSI)

The Relative Strength Index is a momentum indicator that compares the magnitude of recent gains to recent losses over a period of time to measure the speed of security and change in price movements, in an attempt to identify overbought and oversold conditions. RSI values range from 0 to 100, with a reading above 70 generally seen as overbought and below 30 as oversold.

RSI is best suited for binary options, as opposed to indices, as they exhibit the above performances more frequently than indices. Options on highly liquid and extensive assets will allow you to organize excellent short-term trading based on RSI. Many experts agree that thisthe most accurate indicators for binary options. As already noted, it will help in identifying categories such as overbought and oversold (RSI chart). Overbought is a condition in which an asset gets much higher from its normal level and we might have a downtrend. Oversold is the opposite condition. The asset ranks much lower than normal levels and you might have a market up.

Zig Zag indicator

This indicator is very simple and you can find it in the MT platform in a built-in form. It can help traders see clearer highs and lows in the market. However, it cannot be argued that this is the best indicator for binary options, since it only displays general data.

Barry

"Barry" is a simple indicator that displays the level of support and resistance. Drawing these lines is "mandatory" for trading, but many beginners have difficulty doing so. So this tool can help them and find out where the support and resistance levels are at the moment. Some claim that this is the best basement indicator for binary options, but this is a moot point.

You don't need to do anything complex and voluminous to get started. Just install this indicator on your platform and then move it to your chart. You will immediately understand that the red lines are resistance and the blue lines are support. Of course, this indicator cannot determine future S&R levels. Hejust gets data on how it happened under similar conditions.

Bollinger Bands

Very useful and effective indicator created by John Bollinger. It helps to identify support and resistance levels. There is a simple moving average, usually 20 periods, and two bands (up and down) that can act as S&R levels for the price. Undoubtedly, this tool is included in the list of the best binary options indicators for scalping and some other strategies. This is explained as follows.

All options traders understand the importance of volatility, and Bollinger Bands are a popular way to measure it. Price bands expand as volatility increases and contract as volatility decreases. The closer the price is to the upper band, the more overbought it will be, and vice versa, the closer the price is to the lower band, the more oversold.

A price move outside of the band could signal that conditions for a reversal are ripe and option traders can position themselves accordingly. For example, after a break above the upper band, you can initiate a long or short call position. Conversely, a break below the lower band represents an opportunity to use a long signal or a short strategy.

Also keep in mind that it often makes sense to sell options during periods of high volatility when prices are rising, and buy during periods of low volatility,when they get cheaper.

Daily Turns Indicator

A simple indicator that calculates and shows you daily Pivot levels in the market. This is very important because the support and resistance line changes many times many times at these levels. Undoubtedly, this is a good binary options indicator for MT4.

Harmonic Pattern Indicators

Harmonic patterns are the cutting edge of technical analysis, so a trader should definitely take the time to learn how to draw them. There are tools that automatically build harmonic patterns, such as ZUP.mq4 or KorHarmonics.mq4.

Fibonacci

This is one of the most important indicators. It is recommended to use it every day for many reasons, but mainly to detect failures and rollbacks. You can find it in the MT4 platform in the drawing tools. The levels available for adding are: 38, 2, 78, 6 and 127. All other important levels already exist in the default settings. This is one of the best indicators for binary options.

Intraday Index (IMI)

The Intraday Momentum Index is a good technical tool for option traders who want to bet on intraday moves. It combines the concepts of candlesticks and RSI, thus providing a suitable range (similar to RSI) for intraday trading, indicating overbought and oversold levels. Using IMI, you can identifypotential opportunities to initiate a bull trade in an up market on an intraday correction, or start a bear trade in a down market on price fluctuations.

The trader can choose the number of days to settle, but 14 is the most common time. Similar to RSI, if the resulting number is greater than 70, the stock is considered overbought. And if the final figure becomes less than 30, the asset is considered oversold.

Money Flow Index (MFI)

Money Flow Index is a momentum indicator that combines price and volume data. It is also known as RSI with volumetric weight. The MFI indicator measures the inflow and outflow of money into securities over a certain period of time (usually 14 days) and is an indicator of "trading pressure". A reading over 80 indicates the market is overbought, while a reading below 20 indicates it is oversold.

Because of its dependence on volume data, MFI is better suited for options trading in stock markets (as opposed to indexed ones) and long-term trades. When the indicator moves in the opposite direction to the stock price, it can become a leading indicator of a trend change. Thus, this is the best indicator for binary options of the long-term type.

Call Transfer Rate (PCR) Indicator

The put-call ratio measures the trading volume in put options versus call options. Instead of the absolute value of the coefficient, changes in its value indicateto change the general mood of the market.

When there are more marks than signals, this ratio goes above 1, indicating a bear market. When the signal intensity is higher than the set volume, the ratio becomes less than 1, indicating an increase. However, traders also view the put-call ratio as the opposite.

Open Interest (OI)

Open interest indicates open or unsettled option contracts. OI does not necessarily indicate a particular uptrend or downtrend, but it does give indications of the strength of a particular move. An increase in open interest signifies new capital inflows and hence the persistence of the current trend, while a decrease in it indicates a weakening trend. This is not to say that this is the best arrow indicator for binary options, but it can be of great help to the trader.

News Indicator

Many people pay much more attention to the technical part of trading, but it is necessary to spend some time on the fundamental side as well. That is why you should constantly look for useful information in the news, because an informed trader is the best player in the market. For this purpose, the best indicator for binary options is the News Indicator. It displays all the data that becomes known during the day, showing many different events. The best part is that it even has an alarm that goes off 10 minutes beforethe actual release, and thus prevents you from missing important information. Even though this indicator does not show a clear direction using colors or arrows, it is still a great tool.

Without it, your data may not be complete. For example, you make a trade that looks purely technical, but in doing so you missed some important news, and the price suddenly moved against you. Thanks to the News Indicator, all important events will be displayed directly on your chart and at least you will be able to stop trading until a certain point.

How to install a new indicator?

You must remember how to install a custom indicator on the Meta Trader 4 chart. The steps for this should be the same as for other custom tools: download the indicator from the web page and copy it to the appropriate folder on the Meta Trader platform 4. The full path should look something like this: C:\Program Files\your broker name_MT4\experts\indicator. Once this is done, close and reopen your MT4 platform and then click "Insert - Indicators - Custom - Indicator_Name". Now you need to do a few extra steps before you can use them.

On the example of News Indicator, setting up the indicator for binary options is as follows. After you follow the steps above and click on News Indicator, a window will pop up with some settings that you need to make. The first and most important thing you should do is check the "Allow DLL imports" option. If you do not, the indicator will not work.

Now we'll move on to the "Inputs" tab, where you need to take care of two things. The first one has to do with font size. For many, the default sixth size is too small, so it's worth setting 10 or even 15 to avoid peering at the monitor, guessing what the next event will be.

The second thing you need to decide is the source of the data you want to display. It is better not to use the resource that is installed by default. So just set it to false. To do this, scroll down, click true, and a dropdown menu will appear, select false. The other data source will then be used automatically.

What else can be noted?

In addition to the above technical indicators, there are hundreds of other tools that can be used for various trading options (eg stochastic oscillators, average true range and aggregate tick). In addition, there are variations with the methods of smoothing the resulting values, averaging principles and combinations of various indicators. What is the best indicator for binary options? An options trader should choose the instruments most suitable for his own trading style and strategy after careful study of mathematical relationships and calculations.