How to evaluate trends in the market
Binary trading is simple, easy to learn and it sounds fun and easy. However, to make it fun and easy and gain profit as well, you need to invest in your knowledge and trading skills. One of the essential skills for successful trading is evaluating the trends in the market. Your trading decisions need to be based on the changes and situation in the market, and this is why it is important to learn how to evaluate them properly.
Why it is important to evaluate trends
Binary trading is not a game, and every decision should be based on reason. You need to carefully examine and follow the changes and trends in the market, and more importantly – you need to know how to do it to make it relevant. Before you become skillful in market analysis, you can use Brit Method or other trading robot. They base the automated trading on market trends, so you can learn the basics of the market analysis and follow the results of the robot at the same time.
When you base your trading decisions on emotions or lucky guessing, there is no chance of succeeding. Naturally, you may end a few trades in the money, but this kind of trading is dangerous and unsuccessful in the long run. On the other hand, if you analyze the market and observe trends, you are likely to make correct predictions and automatically end more trades in the money. This means that your overall trading success will be much higher, and you will be able to earn more. Also, you will gain useful knowledge you can later apply in other types of trading as well.
How to properly determine trends
Evaluating the trends in the market may not be an easy task if you have no trading experience whatsoever. However, with some learning and getting informed, you too can become successful in market analysis and trading.
First of all, before you start evaluating the trends, you need to know that they need to be observed in real time. In order to make it this way, there are two factors to take into consideration: significance of the market movements and the majority of the movements.
Paying attention to significance means that you need to determine whether the movement you notice is significant for the trend or not. Some movements in the market mean that a major change will arise, while the others are insignificant. As a new trader, you may find it difficult to distinguish between relevant and irrelevant movements. You should choose the minimum percentage of movement of a single bar for the movement to be considered relevant. Generally speaking, if the time frame of your trade is shorter, the percentage is smaller, and vice versa.
Majority refers to the number of bars that undergo changes over a certain period of time. Here, again, you need to determine the number of bars that need to undergo changes to consider them relevant for the trend.
Determining the trends may not be easy at the beginning, since you need to discover and establish the formulas. Therefore, before you are certain of your strategy, practice the formulas you create on free demo accounts or with small investments.