The Geek Reveals – My Top 5 Newbie Tools and Indicators
Not all tools are good and not all good tools are good for all traders. In trading, as with everything in life, there are entry level as well as advanced tools for trading options. This articles give a brief description of some top strategies recommended for new binary options traders.
One of the biggest obstacle to a new traders success is all the conflicting information and news, what I call market noise. The market is full of noise and there are dozens of tools and strategies that claim to reduce that noise. For a new trader it can be just as hard to choose which tool to follow as it is to use that tool successfully. In order to help newcomers choose a good tool or set of tools I have gone back through our recommended strategies and compiled this list. It includes tools I use every day, and tools I have found to be extremely useful for new traders. These strategies all have a few things in common such as simplicity and reliability, they also provide a good foundation to build a more advanced trading strategy on.
Japanese Candlesticks – The Basics
Japanese candlesticks are the best way for binary options traders to view their financial charts. This system is hundreds of years old and will likely endure into the future for another thousand years or more. Candlesticks provide a way to view price information that jumps of the page. There is no more squinting at charts to see if prices opened higher or lower than they closed, each candle is easy to see and the color coding makes identifying up and down days as simple as black and white. Imagine the difference between watching a cartoon in black and white versus color. You can see a lot more in the color picture I bet, the same is true with candlesticks. If you haven’t begun your education into the subject of binary options trading charts then you definitely need to start here.
Fibonacci – The Nature Of Trading
If you don’t know who Fibonacci was I suggest you learn, the story and theory are very interesting to say the least. Basically, Fibonacci was a mathematician who recognized that nature was ruled by a set of simple ratios. He was able to find these ratios everywhere and in everything. His formulas are so intrinsic to nature that Renaissance artists used them to lay out their masterpieces and those techniques are still used today in art and engineering. Fibonacci numbers are used in several ways to measure the markets, the most simple and useful for new traders is the QuickFib retracement tool. This tool will measure a rally or bear market, divide it according to Fibonacci ratios and provide some very good predictions of support and resistance. I like to use this tool to confirm/deny support and resistance lines I draw on my own.
MACD Tool – Trading On Momentum
Momentum is one of the basic principles of technical analysis and trading. MACD is one of the best tools, and my tool of choice, for measuring momentum. The tools utilizes 2 moving averages and measures the distance between them. When the two averages move closer together they are converging and when they are moving apart they are diverging. This convergence/divergence is displayed in two different ways; the oscillator and the histogram. Both tools are useful and effective means of measuring market momentum, identifying support/resistance and providing entry signals.
TSF – Market Timing Important For Success
The Time Series Forecast, otherwise known as TSF, is the culmination of a very complicated linear regression study. The good news is that this form of linear regression indicator is very easy to use and provides a clear signal for short term trading. The other good news is that when combined with other tools like the ones listed here it becomes even better. The Time Series Forecast uses multiple linear regressions, a tool that predicts likely movement into the future, and provides a sort of moving average of those predictions. In an uptrend a cross above is a signal, in a downtrend a cross below is a signal, simple as that.
The Force Indicator – The Force Of Market Movement
The Force Index is an oscillator indicator created by Dr. Alexander Elder. He is a commodities and futures trader and author of the book “Trading For A Living”. The Force Index is also a type of momentum indicator based on direction, extent of movement and volume. This indicator is another one that I have used for a long time and one that can provide a number of different signals. Force Index analysis can help determine support/resistance, pin point areas of reversal and provides good trend following signals.
That’s it. Don’t forget, even the best binary options Tools and Indicators suck sometimes, so check out school section, join our forum and demo trade to become an expert!