Binomo has many technical indicators in its offer. You should learn about them and choose the ones that work best for you. This is quite an individual decision. Nevertheless, there are some indicators that are more commonly used than others. Today we are going to describe shortly the 5 most popular ones.
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5 famous technical indicators on the Binomo platform
Traders use indicators to find the best points to open or close their positions. It is also very common to use more than one indicator at a time to confirm signals received. Below, you will find brief descriptions of 5 favourite technical indicators you can find on the Binomo platform.
Moving Average
The moving average is the most commonly used indicator. It adds all values in a specific period and then divides the result by the number of periods taken into account. Thanks to the moving average, traders can identify the trend and its directions as well as make a buy or sell decision.
There are different types of moving averages. The Simple Moving Average (SMA) is the most popular one, known also as simple. But there are also the Exponential Moving Average (EMA), the weighted moving average (WMA), the smoothed moving average (SMMA), the triangular moving average (TMA), the Welles Wilder’s Moving Average (WWMA), 2 and 3-exponential moving averages, the Hull Moving Average (HMA), VIDYA (Variable Index Dynamic Average Technical Indicator) and the Time series MA.
Stochastic Oscillator
This is a momentum indicator. It measures the price’s location in relation to its range over a period of time. The difference between the lowest and the highest prices is divided by two and then one is subtracted from the result. You will see two lines on the graph. They oscillate in the range from 0 to 100. You can identify oversold and overbought levels with the Stochastic when the oscillator moves below the level of 20 or above 80. The crossovers of the lines and the indicator close to extreme value can forecast the reversal of the trend in the near future.
Relative Strength Index
J. Welles Wilder has invented an indicator known as the Relative Strength Index (RSI). It measures the strength and duration of recent movements of the price. It provides trading signals when it moves below the level of 30 (the asset is considered to be oversold) or above 70 (the asset is being overbought). The trend is expected to change its direction.
Moving Average Convergence Divergence
Another momentum oscillator, which shows the difference in two moving averages. When the short-term moving average rises above the long-term moving average, a bullish trend can be observed. And in the opposite scenario, when the short-term moving average crosses below the long-term moving average, there is a bearish trend in the market. Trend reversals can be identified with the MACD on a candlestick graph and on a line chart as well.
Bollinger Bands
The indicator invented by John Bollinger is a tool that measures the volatility of the asset. There are three lines that form the indicator. The middle line, the upper and the lower bands. They represent two standard deviations from the moving average. A change in the trend direction may be predicted when the price nears one of the indicator’s bands as this is a signal that the asset becomes more volatile.
Summary
Indicators are technical analysis tools that are commonly used by traders. They help in finding the best entry and exit points, predicting the reversal of the trend, knowing when the asset is being oversold or overbought or how volatile the instrument is.
Today, we have presented 5 indicators that are most popularly used on the Binomo platform. Get to know them well but you do not have to limit yourself to those 5 only. Learn about other indicators, even if they are less famous, and find something that suits your personal trading style. You can always practice using them in the Binomo demo account which is offered absolutely for free. It is supplied with virtual cash, and you can stay there for as long as you wish. Remember, however, that you do not risk your money but you do not earn money either. So once you get to know the indicator well, move to the live Binomo account.
Choose wisely!