Fractals in Binary Trading
Choosing how to place a binary option trade is a personal matter. Everyone has a different approach and employs a different binary options strategy when analyzing the data in front of them. However, the majority of traders will use fractals to assist them in making a decision regarding the best trade to make.
This leads to the question of what is a fractal?
Fractals appear on most charts as a small arrow or possibly a triangle; they will be at either the top or the bottom of the chart. Many traders see them as an indicator of a price reversal.
When they appear at the top of a chart they are referred to as an up fractal; this indicates a bearish market and should trigger a put trade. Down fractals appear at the bottom of the charts and suggest a bullish market; this is a good time to place a call trade. The location of these fractals can be significant when deciding whether to place a put or call trade.
The fractal is actually part of a candle chart and is generally part of a five candle structure. If the up fractal appears on the middle candle, particularly at the point that it outgrows the surrounding candles, then the market is definitely bearish. Alternatively the market will be bullish if the bottom of the central candle is the lowest on the chart. This may seem complicated; however, it is not something you will generally need to work out yourself. Most trading platforms will display the fractals once you have selected an asset.
A fractal is not a constant, as time progresses a new candle is formed, this shifts the middle candle to the right and can change the position of the fractal. The original fractal is now irrelevant, only the current one is worth regarding when attempting to decide a trade.
The fractal is not complicated, despite the initial feeling, by simply watching the progress of fractals on a chart you will start to get a feel for how they move and the relevance they have to the market. More importantly you will begin to understand that, whilst they are a useful tool when assessing an asset, they are not the only tool. The fractal will change and you should never rush your decision based on this information; the next fractal can paint a completely different picture!
Understanding how fractals can help you decide on the right asset and time to trade will help you to place successful trades; providing this is in conjunction with other technical analysis and even some fundamental analysis. It is worth remembering that a fractual will show you when an asset is about to reverse price; you must ensure that you place your trade in the opposite direction to its current movement!
