Today we would like to consider what type of market analysis, binary options is the most effective and understandable for traders. Basically, binary options trading is divided into 3 types, which have different bases for making a decision on option trading: Technical analysis Fundamental analysis Financial betting (betting on economic events). Let’s consider the principles of analysis and compare, to determine the best winning option for the trader. Binary options differ from other types of trading in their short-term and quick profits.
Decision Basics : Technical Analysis of Binary Options
Technical analysis shows the price behavior in the past and present. According to the rules of technical analysis, history repeats itself. Traders look for similar patterns, or market behavior, to determine the future. Any assets are subject to the laws of supply and demand. At the heart of all technical analysis indicators for binary options, there are only two parameters: Time and quote (price). With the help of these two indicators, you can calculate the rate of price change. Speed shows the impact of economic factors on the price of an asset. The faster the price changes, the more important the values of the news and the event. To determine the speed, time and price, binary options indicators are used, which are applied to live binary charts. The readings of indicators and oscillators give an understanding of what is happening in the market. Thus, it is possible to predict the movement of the market and the price behavior. Technical analysis takes into account all the factors that affect the price of an option.
Decision Basics : Fundamental Analysis
Fundamental analysis of financial markets, assesses the situation on the market, with the help of micro and macro economic phenomena. News and domestic events affect the market. Each event has its own significance and impact. The relationship between assets helps to understand how a stock or event will affect prices. The accuracy of the analysis is high if you know the news, but if the news is known and assumed by traders, it forms a trend. Which is shown in the graph. The use of fundamental analysis requires knowledge of economics, and constant monitoring of news and events. The main strategies are based on the news. If you trade on the news, you need to take into account all the factors / news that can affect the price of the option. When trading currency options, there are too many factors.
Decision Basics : Betting on Financial Events
This type of analysis (strategy) aims to obtain a mathematical advantage. Trading is like playing in a casino. Bets are made taking into account the management of capital and the number of bets in the strategy. Basically, traders who are engaged in betting on finances will have a good understanding of mathematics and statistics.
[sc:Bot]Technical analysis or fundamental analysis?
As we have already said for technical analysis, it is enough to look at the indicators, decide on a strategy for binary options and you can start trading. This approach does not require knowledge and allows novice traders to start earning from the first days. However, not everything is so simple. It is a fact that most lose their money. For successful trading, you need to be able to properly manage your capital and clearly develop a binary options strategy. To trade binary options using fundamental analysis, knowledge of economics and the index is required. If this knowledge is not there, trade turns into a movement for the masses. For example, people who sell news use the same data as others, so they don’t have an advantage. Therefore, the results are not very high. However, if you properly follow and study specific news, you can reach very high results. To start trading on fundamental analysis, it does not take much time, as well as on technical analysis. The difference is that fundamental analysis does not allow you to trade when you want or have time. Technical analysis allows you to trade at all times. Using aggregate technical analysis, it is possible to achieve results faster without in-depth knowledge of economics. Binary options strategies are more focused on technical analysis, as it is possible to set and automate strategies. The process of automating binary options trading using fundamental analysis is almost impossible or very complicated. Fundamental analysis is more suitable for determining the price behavior of an asset, a particular stock. Since it is possible to find information and draw conclusions. While technical analysis shows the market more globally.
Conclusion:
If we delve into the question: “What analysis is better to use for binary options trading?” we will not find a definite answer. This dispute has been going on for decades. However, our conclusion is simple. For novice traders, it is better to use technical analysis. It will help the trader to understand the basic concepts and trends of binary options trading. With an increase in experience, the trader himself will make a conclusion. But not according to assumptions, but according to the final result of the test. Test strategies and draw conclusions only from the results.
A few tips for choosing binary options strategies:
- Record the results
- Accurately describe the reasons for opening and closing an option position
- Test as many binary strategies as possible
- Study the significance of indicators/indicators
- Look for the reasons for negative trades.
- Learn from mistakes
- Draw conclusions and optimize strategies
