Binary Options Indicators
The binary options platforms are mostly web-based, and do not contain the conventional indicators that forex platforms contain. However, it is possible to use the same indicators that are used in the forex platforms to analyse trades and adapt them for use in the binary options market, thus converting them to binary options indicators. In addition, traders can create custom-made indicators specifically for analysing MT4 charts and getting signals for use in the binary options market.
Default Indicators
The default indicators refer to indicators like the Stocks oscillator, the MACD indicator, RSI and others found on the indicator list of the MT4 platform. These indicators have various uses and work in different ways. When adapting them for analysis of assets to be traded on the binary options platforms, it is necessary to adapt them based on the trade type the trader has in mind. The following is a list of several binary options indicators and what trade types they can be used for:
- Bollinger bands: Will work well to trade the range binary options when combined with an oversold/overbought indicator.
- Stochastics oscillator: An oversold/overbought indicator that can be combined with the Bollinger band for the range options, especially when the asset is range-bound.
- RSI: The relative strength index shows the strength of a trend and so can be used to trade the Touch/No Touch trade.
- Parabolic SAR: used to detect market reversals. On its own, it picks signals quite late so must be combined with an indicator such as ADX or even reversal candlesticks.
- Pivot calculator: Although a custom indicator, it can be widely used with other default indicators to detect signals for the range binary options, Call/Put options and Touch/No Touch options.
- MACD: Very good for detecting price divergence. Will work typically with Call/Put options with long expiry times/dates.
There are other indicators which can be used. It is up to the trader to detect the use of the indicator and try them out with different trade types to get the best mix.
Custom Indicators
Traders can create custom indicators specifically for use in detecting trading signals on the charts of the asset to be traded in the binary options market, using the MT4 platform. This is possible because many forex brokers are now adding assets from other markets such as gold and silver from the commodities markets, and stock indices. A few have also added blue-chip stocks to their instrument portfolio. All these changes go to serve the binary options trader very well because it makes it possible to broaden the base of assets that can be analysed with the custom indicators on the MT4 platform.
Most of these indicators are used to detect Buy/Sell market opportunities on MT4, and so it is a lot easier to use them for the Call/Put digital options. This is the easiest option type to trade and is most easily understood by newbie traders. Other binary option types are more complex and require complex analysis.
Traders can decide to purchase indicators from the internet or get an MQL4 programmer to do the job for them. Either way, the outcome is that a trader can have an indicator which provides visual signals and sound alerts that can then be used to trade the asset on the binary options platforms.
