Cloud/Kumo Trading in Binary Options
The most essential ingredient to becoming a successful binary options trader is learning the wide variety of different strategies and ways to analyze data. The majority of the binary brokers have tools built into their websites which will allow you to analyze different factors of the market; this will help you to place the right trades. Some of the tools and software options will be easier to understand and use than others; by practicing your different approaches you will be able to assess which ones are best for you to utilize.
One method of analysis which is becoming increasing popular is the Cloud/Kumo; some traders and brokers know this technique as the Ichimoki Kinko Hindu.
The basis of this type of analytical technique is supplying as much information as possible. By providing you with five different signals you will be able to fully assess the market and the asset you wish to invest in. The technique originates from Japan but can be used successfully on any stock market around the world.
There are five different lines to plot on a graph when you are preparing the information under this tactic. Two of these are the boundary lines; this is the high and low of the asset over a given period of time. The longer a time frame which is used the more accurate the information will be. However, the chart will take longer to prepare if you choose a long time period. The boundary lines are made by simply drawing a line through all the lows and one through all the highs. This creates a cloud effect which will show the where price of the asset has stayed within. This is the first signals
You will then need to look at the current price trend; this is the third signal and should be obvious from the data you have produced. You will also be able to see the average price, or even the point at which the price stays steady, most of the time. This is the fourth signal and will leave you studying your graph to see when the asset is most likely to reverse direction; this can be an exceptionally good point to place a trade; providing you read the signals correctly.
The trends have different names on a Japanese chart, they are known as Senkou A and Senkou Span B; these are the boundary positions. You will also see three ‘sen’s’; Kijun, Chikou and Tenkan which cover the other signals.
You have the cloud information in front of you it will be possible to see when the price is above or below the cloud; this indicates that the price is almost certain to change direction. Of course, other market and wider economic factors must also be taken into consideration. Together with the vast amount of information provided by this graph, you should be easily able to distinguish when and where to trade.
You may find it best to practice the trade a few times before you trade for real. This will ensure you fully understand the signals and place successful trades.
