Technical price charts provide an abundance of information to those who trade binary options, or participate in various other forms of trading. Although these charts may appear to be quite complex to the new trader, in their more basic form, they can provide easy to read, helpful information which can be used to make investment decisions. All brokers will provide at least a basic chart, with some offered more advanced options. There are also plenty of free online charts which can be used to evaluate price movement.
What should you be looking for within these charts?
Several things, actually. One will be the highest and lowest prices for a period of time. These will tell you the top and bottom levels that the asset price has reached within a specific time frame. Knowing what these levels are will provide you with a boundary, or range of price movement. This is not to say that the price cannot exceed these levels, as strong sentiment within the market could cause this to happen. However, under normal conditions, the price is likely to remain within this range.
The median or average price should also be determined. This price is very important due to the fact that it represents the level that the price is most likely to hover near. Even when sentiment sends the price climbing or falling for a period of time, it will at some point begin to move back towards its average level. This knowledge alone can provide you with plenty of winning trades when the price shifts strongly and then begins to revert back to the median level.
Some charts will show price fluctuations for specific periods of time. You may be able to select periods of hours, or a day, week, month, or longer. This type of chart view is excellent for locating a price trend, but it can just as easily show when price movement is volatile, or flat. When performing analysis, specific time-frames can be selected and studied in accordance with the expiry time that will be selected. A shorter time may be studied for a short-term trade, with a broader picture of movement needed for more extended expiry times.
Market opening and closing levels will tell you how an asset moved during a session. Closing levels can be of particular importance, as these can tell you what to expect when the market reopens for trading on the following day. Since some markets do impact others, closing levels for a market in one time zone may foretell how a connected market may perform upon opening. Even for the novice binary options trader, these connections should quickly become apparent.
Lastly, there is forecast data. This is not provided within every chart, but when it is, it can be used to hone in on various opportunities. There is some question about whether or not to trust this information when it is being provided by a binary options broker. However, there is no harm in viewing in and then performing additional analysis in order to verify whether or not the forecast may indeed be correct. Should this information come from a source outside of the broker platform, it should be reliable.
Charts are by far the most important of all technical analysis tools. The aforementioned information relates to basic price data for new traders. There are many other viewing options and indicators to consider as well. It only makes sense to start with the basics and then move on to more complex charting options. As with all things related to education, it is wise to establish a solid foundation first, adding in new skills as experienced is gained.