Volume Based Binary Option Trading


Volume Based Binary Option TradingOne off the most important decisions a binary options trader must make is whether to place a bull or a bear put. Understanding this is an essential part of making the right decision and placing a successful trade. One approach, which will provide an excellent guide as to what the majority of people involved with the market expect to happen, is to look at the volume of a specific asset. This is not the volume of the asset in total; it is the quantity of an asset which is being moved between people. An asset which has one hundred units and ten of them are being traded does not suggest a market which expects something to happen to the value of the asset. However, in contrast if ninety or the entire one hundred units are being moved then there is something worth looking at.

It is important to remember that the volume of an asset is across the entire market, not just the amount being traded by your binary options broker.

If you believe you have located an asset which is being traded in volume across the market then you may want to join in and make your own trade. The first step is to locate an hourly chart which shows your specific asset. You will then be able to see the candles on the chart, showing the highs and lows of the asset. The last candle for a bear and bull market should be looked at more closely. You will need to calculate the average for the peaks and the troughs of the asset. Once you have completed this draw a horizontal line through the lows of your candle and the highs of your candle.

You will then have created your boundaries, the majority of assets will not move outside of these lines. If the asset you are looking at is very close to one of the boundary lines you should consider placing a trade which is the opposite of the current trend. Alternatively, if it currently near the middle but moving in one direction you could place a trade with the asset movement.

Volume is an important technique to confirm the way you are reading the chart and your gut instinct. If there is a large amount of movement on the market then many traders have picked up n the upward (or downward) trend of an asset and are attempting to make a good return trading its trend. By combining the volume with the highs and lows on the average price candle you should be able to predict the turning point. You can then place a trade which goes against the majority movement in the market and you should see a correspondingly high return as your trade seems more risky than going with the market.

It is vital to consider your trade carefully before placing it; if the volume movement is high; and you have calculated the highs and lows correctly, then timing is crucial. You need to trade just before it peaks and reverses; this will allow you to make the maximum possible return, and, provide a great sense of satisfaction!

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