Those who are new to binary options trading will need to learn how to analyze price data correctly. The goal is to derive highly accurate price movement predictions that will lead to profits. For novice traders, basic price data charts are the best starting point. These can filter out some of the more complex indicators, while still providing valuable information in relation to price activity. Below are the most important types of data for those who are just starting out.
High and Low Price
There are two types of high and low prices that need to be taken into consideration. One will be the highest and lowest record prices of all time. It is generally safe to assume that the asset price will rarely exceed either of these levels. The other consideration will be the highs and lows for specific times frames that are applicable to each binary options trade. For example, with a one hour expiry, the focus would be on the last four to twelve hours of price movement.
Median or Average Price
This is the price level at which the asset spends most of its time. This data is very important because it shows the area in which the price will try to remain when market sentiment is not strong. When a trend is taking place, traders can expect the price to work its way back to this level once support or resistance levels have been reached or exceeded. With this in mind, the median price can be used to forecast pullbacks, retractions, and reversals.
Current and Past Price Movement
Within a basic chart, the price movement will be shown in the form of one continuous line that moves up or down along with the actual price. This will show how the asset price is moving at the present moment, as well as how it has moved about in the past. Trends and range-bound movement will be extremely easy to spot. Most binary options brokers provide this type of chart, along with the ability to view past movement for 12-24 hours.
Session Opening and Closing Prices
These are the asset prices at the time the market opens and closes for the day. The closing price is of particular importance because it can provide clues in relation to what to expect during early trading when the market opens on the following day. For example, if the closing level set a new record high, the price could be monitored for a pullback when trading resumes the next day. The opening price is similar and also provides the foundation level for the day.
Technical analysis simply cannot be completed without charts. Basic charts are easy to read and should be the first stop for beginner level traders. These should be accessible in most, if not all modern broker platforms. Advanced charts can and will provide more detailed information, but these can be mastered over time after the fundamentals of trading have been learned. While it is true that anyone can learn to trade binary options in an hour or less, traders only become experts by remaining committed to the learning process.