Binary Options Trend Lines Strategy
The phrase The trend is your friend is rather popular. Im sure you have heard it from many people. But in fact the major part of these talks do not have any ground as those gurus dont understand themselves what this phrase means and cannot explain it to their listeners at all. Though it is really possible! Now be ready to receive a piece of information how to take advantage of a trend and how you can identify it in proper way. Also, you are to understand that you shouldnt choose a single tool or indicator as a base for your trades. But the first thing we should do is to understand the way to identify the trend.
First of all, lets see what an uptrend is and what a downtrend is.
The Higher Highs and Higher Lows are the terms of an uptrend. It is not so difficult to remember. The price is tending to move up and each peak will be higher comparing to the previous one.
A downtrend can be characterized by so called Lower Lows and Lower Highs. It means that each following peak is lower comparing to the previous one. As you can guess it is opposite to the uptrend.
The next step is to learn drawing trend lines, as it can become a rather useful tool for analysis.
Trend lines: If drawing a trend line in a downtrend, you need to make a line connecting two or more low points. If drawing a trend line in an uptrend, you need to create a line connecting two or more high points. Pay attention: uptrends mean connection of Lows and downtrends mean connection of Highs.
The more points we have used the more valid the line is. Now you are able to estimate an overall direction of a chosen asset and you are ready to trade.
How to Combine the Trend Line and the Japanese Candlesticks:
Pinocchio (or Pin) bar can be considered as a useful tool for active traders. Here is a good example of a reversal/rejection candle. Everything is easy and earning money is not difficult if understanding the Trend, which is considered to be the best friend, and with Pinocchio.
Japanese candlestick is very easy to identify, so we have an opportunity to trade any formation of this kind which came the closest to the first two Lows.
How to Combine the Trend Line and Divergence
Here weve got Hidden Bearish Divergence, as the trend line is touched the third time. If this occurs the Put is highly effective with a price instantly coming down.
How to Combine the Trend Line and Fibonacci
Glad to see you, dear Fibonacci! The bounce from the trend line was supported by a test of the 61.8 Fibonacci level. So weve got another example of the profitable friendship with a trend.
In Which Cases This Strategy Fails?
Starting the trades we should understand that market operates in such a way as to disturb our beliefs, spoil the discipline and trick our money out. It may change in a way we wouldnt ever even imagine, and no trend line, no tool or indicator could help with these irregular movements which may take place. In fact we can do nothing with this. We can just take into consideration that such things happen, and our best friends can sometimes fail and get us into trouble.
In Which Cases This Strategy Doesnt Fail?
Trade in the prevailing trend direction and you will be sure that your prospects of success will obviously increase. Dont neglect help from such tools as Fibonacci, Divergence, or Japanese candlestick. They really help to turn the trend line into your devoted friend.
Lets Sum Up: Trend is Really Your Devoted Friend!
I hope that with the examples above I managed to prove that the trend is a powerful tool when used with tough-minded thoroughness. Be sure, to be in trend is a reliable way to get profit. I made an effort to demonstrate the real examples of implementation of such a principle as The trend is your friend. I wanted to show how to embody its real meaning. Take the advantage of a trend, and your profits will obviously increase.