Trend Line for Binary Options Trading

(trend line) is a simple trading indicator, but is very profitable. This device is one of the most basic trading tools that can still be relied upon. Not only as a trend detector, trend lines also have many other functions that can help binary options traders make profits more easily.

Unlike other trend indicators that seem more "good" because they have a unique appearance and a more complicated application system, this trend line is only applied by drawing diagonal lines from one price point to another price point. Although appearing as a slash at a glance will only function to mark the price trend, there are many signals that can be taken from price movements on the trend line. Two of these are trend lines as support and resistance, and trend line modifications as channels that can play an important role in trading with touch options.


How to Attract Trend Line

Before revealing the two functions of the trend line above, traders need to know how to attract the correct trend line. This is important, because the trading accuracy of the trend line is determined by how the trader determines the position of the trend line on the chart. This indicator is usually installed on available trading platforms.

In general, traders only need to point the trend line from the high point (the axis of the candlestick) to the lowest high. Lowest (for the downtrend), or draw the diagonal line from the lowest (bottom axis of the candlestick) to the highest low (for the uptrend). The greater the slope level, the more trendy the line is. It shows the strength of a trend that is being formed marked by a number of higher highs (highs higher than previous highs) in a downtrend and a higher low (lows higher than the previous low) in an uptrend.



How price action tests trend lines can also be a measure to determine the accuracy of a trend line. There are those who set prices at least 2 times to test the trend line so that it can be declared valid. This is related to the nature of the trend line as a line of support or resistance which when broken can be used as a breakout signal. Briefly, the following are the rules for withdrawing the correct trend line:


  • The trend line for the uptrend is positioned below the price, connecting the lowest low to the highest low
  • The trend line for the downtrend is positioned above the price, by withdrawing from the highest high to the lowest high
  • The more price points that connect the trend line, the more valid the trend line is
  • If the application of the trend line is not formed according to the expected pattern, it is better not to enter the trend line.



Trendline as Support & Resistance

In the uptrend movement, the trend line below the price serves as a support. Conversely, a trend line that is above the price can be a fairly valid resistance limit. Valid support or ressistance are levels that limit price movements in a range. The more often the price tests a support or resistance limit, the more valid the lines are.

In one example of a trend line that acts as a resistance below, a trader can place an option put for each price movement that fails to penetrate the trend line.


The strength of the trend line as the resistance level on the chart shows the function of the trend line which is sufficiently reliable to place the entry position. Traders can combine them with price action strategies to get maximum results.

In addition to placing options according to trends, the trend line limit on prices can also be used as an indicator for trading breakouts. In this case, traders need to pay attention to indications of price movements that have moved through the trend line. Breakout of the trend line is like taking a signal of a break from support and resistance in general. Note that the price breakout of the trend line is usually accompanied by a trading signal in the opposite direction:



Trendline as a Trend Channel

Trend line is not only used to filter open signals from just one line. If a trader can find a convincing trend movement, the trend line can be drawn on both sides of the price to form a channel.

The technique of describing trend channels is almost the same as the trendline withdrawal method. Here, traders only need to draw an additional line above the price (for an uptrend), from the lower high to the higher high. Likewise for a downtrend, a trader can add a trend line to be positioned below the price by dragging the line from the highest low to the lowest low.

In this way, the trader will get both support and resistance limits simultaneously. Breakout prices from one channel can be used as an indication of entry to increase profit opportunities. If the price can maintain its movement and be in the trend channel for a long time, traders can take profits by placing the "call" option when the price touches the bottom channel, or opens the "put" option when the price touches the top channel. This condition can be very beneficial if the channel formed does not point up or down, but is drawn horizontally. This indicates that the price is experiencing sideways, and the way trading options with the above method can be done to take advantage of price movements that are not trending.

If the channel is pointing up or down, option trading can be done more easily because this implies that the price is trending. Expiry time can be determined more freely, by placing the "call" option for each price touching the bottom channel, or opening the "call" option at the beginning of the channel and ending it at the end of the channel. Both of these methods are considered profitable, although taking many options at a time tends to be identical to scalping trading techniques.


The "touch" option can be placed with a price target that is still in the channel range, while the "no touch" option can be placed with a price target outside the trend channel.



Use Trend Line with Other Indicators

Various entry signals that can be taken from price movements against the trend line will certainly be better if accompanied by confirmation from other indicators. Whether technically or fundamentally, additional indications of enhancements will further strengthen the position of an option and improve the quality of trader analysis.

In its application, traders can combine trend lines with various technical indicators. The combination of trend line with Fibonacci can produce a more accurate entry signal if the trend line intersects with one of the Fibonacci levels.

If the trend line is combined with an oscillator indicator, the trader can also get a clearer entry indication, because the "call" or "put" option placed when the price touches the trend line limit can be completed with overbought and oversold confirmation of the oscillator. In addition, the trend line can also be a key area that is valid when price action is formed in the trend line area. For example, the occurrence of a pin bar with an axis that touches the trend line is a strong indication of significant price movements, and is an entry option opportunity with quite good profit potential.


also a component that needs to be observed in the use of trend lines, especially if traders want to take advantage of the price breakout of the trend line. If the price breakout of the trend line is supported by strong fundamental factors, then the option placed on the signal will have a better level of accuracy than when the entry option trader signals a breakout only from the trend line.



Conclusion

Trading binary options with the trend line is one of the many methods recommended for beginners. In addition to its easy application and method of analysis, the trend line can also produce accurate trading signals for entry options in the right direction. However, this does not mean that this indicator is not suitable for more experienced traders. Back to using a simple but powerful indicator can be an attractive trading alternative, especially if a trader can increase its benefits with a combination of other indicators such as oscillator, price action, and fundamental data.

Specifically, the use of the trend line in binary options is not much different from what has been applied to forex spot trading so far. Binary options traders can place the "call" or "put" option when the entry signal appears from a price that bounces back after reaching the trend line, or when the price breaks. On the other hand, the channel formed from the trend line can be an additional tool in trading binary options, especially when a trader wants to use the type of touch options.

Trading by just relying on trend lines certainly doesn't always bring the expected profit. To anticipate the trader can find additional indicators to confirm the signal from the trend line, and use risk management in each option placed. Using a trend line as an indicator is one part of the trading plan to get the right entry position. So, to run the trading process, traders should be advised to consistently complete their trading activities with good exit, management and trading evaluation rules.


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