Binary Options trading with Bollinger Bands

Bollinger band analyses are one of the important Binary options trading strategy. This was established by John Bollinger. They are typically plotted two standards deviations apart from the simple moving average. Read this analysis in this article of Secured Options.

Bollinger Bands aim to show assets volatility by the location of the bands. Is the Bollinger band move away from the average it shows increase in volatility of the market for the asset is increasing in market fluctuation and if the Bollinger band moves closer to the averages then it shows a much less volatile trend?

How volatility can be used as a technical indicator for call and put binary option buying? Volatility is often associated with risk and directly refers to the measure of uncertain risk about the range of change in underlying asset’s value. Higher the volatility the most likely it will spread out over a broad range of values. This simply means that the price change of an asset is likely to change very dramatically in a short period of time upwards or downwards. An asset that has low volatility does not change that much and remains stable.

How does a trader should make a decision whether to buy put or call on binary options from this information? When there is uptrend in the market, most investors will buy call options and when the market is going downwards, they buy put binary options.

Bollinger bands help traders to capitalize on oversold conditions by spotting asset prices that go below the lower Bollinger band and then trend back toward the Bollinger band center. If this correction is forecasted at the right time it can be very profitable for an investor to make a successful trade.

While it is cautioned that as always there is no sure thing when it comes to predicting market trends, Bollinger bands are becoming one of the most popular technical tools used and one of the important Binary Options trading strategies to spot potential extreme short term price changes in a security asset.

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Created on Dec 31st 1969 18:00. Viewed 0 times.

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