Volumes on binary options, Related News
Volume is highly relevant to binary options traders.
Volume + Price Action Trades
It can help you identify profitable trading opportunities and avoid bad ones. In detail, this article will answer these questions: What Is Volume? How Can I Measure Volume? Binary Options Trading Strategies Video Tutorials Is Volume? The volume defines how many units of an asset changed hands during a period.
For example, when you are looking at a price chart with a period of 10 minutes and the last period had a volume of 1, 1, stocks swapped hands during this minute period.
The indicator for binary options volume (Volume)
The 1, assets could be only one large trade or they could have been 1, separate small trades — the volume would be the same in both cases. Volume measures the underlying asset, not the number of binary options. What matters is the overall relationship between demand and supply, and nothing else. Also, it is important to understand that it only measures traders who buy or sell an asset.
Binary options traders only make predictions about what will happen to the price of an asset, they neither buy nor sell it. Therefore, the volume ignores binary options.
Importance of Volume for Trading Binary Options
Some newcomers try to use this value to understand which assets are popular with binary options traders. That is not what the indicator does. Why Is Volume Important?
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One of them decides to test his luck and places a buy order far below the current market price. The other trader makes the rookie mistake of placing an unlimited sell order.
I took them in an exchange. Each trade has 5 minutes expiry. In all of them I buy contracts in the beginning of the five minutes. All of my trades expired regular in the expiry time except my last trade in which I sold the contract before the expiry. My trades are in the arrows in the chart.
The asset jumps down by 10 percent and switches hands. While the U. The country is doing great, years of prosperity lie ahead. Many traders react enthusiastically and place buy orders. As the market opens the next day, all of these orders create a strong surplus of demand, and the market significantly jumps upwards by 3 percent. In both situations, volumes on binary options market has shown a strong movement.
Volume And Binary Options
In the first example, it jumped by 10 percent, in the second example only by 3 percent. Nonetheless, the second example would offer the better trading opportunity.
- Head and Shoulders Pattern Lets set an example in order to visualize this more easily.
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There is almost no chance that the majority of traders will consider this jump justified. It will conflict with the concepts of both technical and fundamental analysis.
Consequently, the overwhelming majority of traders will invest against the movement.
Why not trade in the direction the big guys are going and volumes are the ones to show the direction, right? Binary Options Volume Indicator However, this does not mean we should not trade forex based on the volumes one broker is showing and actually there is even a strategy for that. One should go on the hourly chart and scroll back in time and look for the last biggest volume candles in both bullish and bearish markets. How to Use Volumes?
They will think that now is the right time to take advantage of a market that has moved too far, which is why the market is likely to reverse and eliminate the original price jump. In the second example, the price jump was the result of many traders doing the same thing.
There is significant support for this movement among traders, and it seems more than likely that other traders will soon make the same investment decision, or that traders who already have invested will invest again.
The overwhelming majority will invest in support of the movement, seeing it as the beginning of something big.
The movement is likely to last for a long time. Of course, most real-life trading situations will be less black and white than this example. But the volume can nonetheless help you understand the importance of each single period.
Share InvestManiacs Volume Based Binary Option Trading One 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.
When a period has a high volume, its movements are usually more important to future price action than the movements of periods with a lower volume.
Even during trends, periods in the volumes on binary options market direction often show a higher volume than periods against main trend direction.
Simple way analysis volume in binary option
By monitoring this, you can understand what is happening.