All binary options traders should understand how supply and demand work to change asset prices. When supply is low and demand is high, asset prices tend to be higher. When supply is high and demand is low, asset prices tend to be lower. Either of these two market conditions is going to present profit opportunities to those who trade digital options. The key to earning lies in the ability to identify the prevailing market conditions. Charts can help immensely with this task.
Technical charts provide traders with a visual account of both past and present asset price movement. This allows for a comparison of what has transpired, what is currently transpiring, and what might happen in the near future. Price data can be accessed from any major financial news provider. However, charts provide various functions that allow the data to be sorted, while presenting price movement in a manner which allows for quick and easy analysis.
Any time that the price of an asset is moving in only one direction for a period of time it is said to be trending. This type of price action is by far the most profitable for the binary options trader. These trends are directly related to supply and demand. Within a chart, trends will be displayed as either ascending or descending lines (or candles if using a candlestick chart). Whenever an asset price is range-bound, the line will move side-to-side until investors make some move that will send the price either up or down.
Trading along with the trend is always going to be the easiest move, but it’s important to remember that no price can climb or fall indefinitely. Supply and demand play a role in price reversals and help to establish median price areas. The price of every asset on the planet is going to have three important price levels: highest, lowest, and median. By verifying what these are, traders are able to develop a clear vision of what the asset is actually capable. Yes, new records can be set, but this does not happen very often.
Charts are not your only means of identifying the impact of supply and demand. Market news reports will provide this information as well. Among the easiest ways to spot key trade opportunities is to first become familiar with the top market stories of the day. Each broker provides a list of assets that can be used in trades within the platform. Once a strong market mover has been identified, check to see if that asset can be traded with. If so, proceed with more detailed analysis.
Supply and demand creates a pressure that changes the value of assets. Prices are always changing, even when they are range-bound. Charts take a lot of work out of the process of completing technical analysis. Even better, they are typically offered free of charge from various sources online. A firm understanding of what drives market prices combined with the usage of a detailed technical chart will definitely make you a better binary options trader.