Trading with Keltner Channels in the Binary Options Market
Getting started with binary options trading can be one of the most life changing decisions for you. Compared to other trading markets, binary options offer extremely high rewards for those who are able to make successful trades. However, it is the successful trading part that is often the trickiest to master. With the right strategies and given enough practice and knowledge, you can easily win most of your trades in this market. For all these three, there is one thing you need to have right: the perfect chart tools.
One of the most useful chart tools that can be used in the binary options trading market is Keltner channels. This tool helps traders in determining how strong a particular trend is going, where the reversals are expected to occur and the general movement of the market as a whole. The Keltner channels are pretty simple in their working. These are volatility-based indicators that work by creating a channel around the commodity prices you are observing. As the price moves, the channels around it also move accordingly, based on the calculations of a moving average applied to the price and an Average True Rate multiplier.
Once you understand how Keltner channels work, your next focus should be on how to interpret them in the right way. After you have applied the channels to the price, most of the price actions will fall within the channel bands. It is when the price is about to reach the lower or upper bands that you need to focus on it. A price action that is moving towards the upper channel band usually indicates that market movement is strong. This means that if currently the trend was up, it would continue that way; and if it was down, it would now move towards an uptrend.
On the other hand, if the price starts moving towards the lower channel band, this indicates that the current market movement is weak. Hence if the market was moving downwards, it will continue to do that; and if it was going upwards, it will most likely start its downtrend. Based on these observations, you can easily decide whether to make your trade or not and in which direction. However, there is always the middle line or the moving average to consider too, especially as it can indicate some key facts about the price movements.
If there is currently a downtrend in the market and the price stays near the middle line, not showing much movement, consider this a confirmation that the downtrend would continue and there will not be much buying interest for that trading asset. Similarly, if the price stays near the moving average during an uptrend, the selling interest would be low and the uptrend would prevail strongly. Due to the simplicity of their use and interpretation, Keltner channels are one of the most used tools in the binary options trading market by both new and experienced traders.