Trading using just the charts provided by the Binary brokers is…madness. No technical analysis can be conducted using those charts due to their lack of tools and depth. A good trader will merge the two types of analysis – technical and fundamental – to get the right sense of market direction. This can only be achieved by using proper charting software and my choice is MetaTrader4. All the tools I talked about in my other articles can be found on this software and although it does take some time getting used to it, you will soon see all the advantages it brings to the table. But first things first: MetaTrader4 (MT4) is a charting package that you can download for free once you open a demo account with a Forex broker that provides it (some Forex brokers offer proprietary charting packages, other than MT4). It was developed by MetaQuotes Software and first released in 2005. Prior versions were released starting in 2002, but MetaTrader 4 was the most enhanced in terms of functionality and reliability. You can also find MetaTrader charting package on some Binary Options Brokers.
Metatrader 4 and Binary Options
We all know that Binary Options are closely related to their underlying instrument, being derivatives by definition. So for us to better determine if we will choose Call or Put, we must analyze the underlying instrument and MT4 is the tool to use. If you want to trade Binary Options on currencies, open a MT4 chart for your selected currency, deploy your strategy of choice and when a good signal occurs, switch to your Binary platform and choose Call or Put accordingly. Of course, for MT4 or any other charting software to be useful to you, you need to be proficient in technical analysis and I won’t go into that as it’s a much too complex subject to be covered in one article. Instead, I will focus on how to plot a tool on MT4, as this will help you in the future with all your chosen strategies, because almost all of them use tools/indicators to help us determine future market direction.
How to Use MT4?
- After you have opened a demo account (it’s free) with a Forex broker (also some Binary Options Brokers), you will download and install the MT4 software and it will look at first just like the picture below:
- Not too impressive, I know, but our customization of the chart is just beginning. Look at the next picture to see some of the options available:
- These are some of the options that I use but you can choose to leave the grid on the chart or to use a Bar chart instead of Candlesticks. Further, if you want to change the background color or the color of the bearish and bullish candles, you can do so by right clicking on the chart and selecting “Properties” (or just press F8)
- Ok, next we need to select the tools we need for our chosen strategy. For this example, I am going to use Bollinger Bands and RSI, although using these two indicators together does not constitute a strategy by itself (this is just for example purposes):
- To get the Bollinger Bands up on a chart, click on Insert – Indicators – Trend – Bollinger Bands. For the RSI, click on Insert – Indicators – this time go to Oscillators – Relative Strength Index (RSI).
- Ok, now I am going to give an actual trade example, using the Bollinger Bands squeeze and another indicator for direction, the MACD (to put the MACD on a chart, use the indications above):
- If you want to know more about using the Bollinger Bands and MACD in trading, read my reviews on both of them. Once you know what a certain tool does, you can use it in different ways, to complete or improve existing strategies. All the great tools that we are talking about can be found as built-in features of the Metatrader 4 platform.
Wrapping it Up
The relationship between MT4 and Binary Options trading is a close one as you can see, because we take our signal to trade from the charts available on Metatrader 4 platform and then we place the actual Binary Option trade on our binary broker’s platform. Once you start using MT4, you will discover other available customization options and also a lot of other tools like trend lines, Fibonacci or Moving averages.
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