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My name is Martin, from Cape Town, ZA. I'm the Co-Founder and Chief Editor of the growing Traders Community. I've an experience of over 8 years in Forex as a Portfolio manager, Trader and guest writer for many financiel and forex websites such as,... More
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Binary Options that Suck
  • Pick Up On Early Trends With The RSI Indicator 0 comments
    Oct 25, 2012 7:35 AM

    There is no such thing as an unfair advantage when it comes to binary options.Traders should take advantage of every opportunity they have to maximize their chances. A scientific approach is always better than trading based on intuition, and by using indicators intensively, most of the risks are mitigated.

    The benefits of the RSI indicator

    Since it was introduced in 1978 by Prof. Welles Wilder, this indicator has been constantly improved and used on an increasingly high number of markets. The RSI Indicator is a momentum oscillator which focuses on determining the price movements, their speed and the likely direction in which they are more likely to revolve. One of the industry is where this indicator was intensely used, was the Forex which means that it can prove equally useful for those trading binary options. Since one of the underlying assets are foreign currencies, the transition is smooth for those who know a basic set of rules about this market.

    The limits between the RSI indicator oscillates are 0 and 100, but the values that are more important to traders are 30 and 70. When the indicator surpasses the 70 mark it means that it is overbought, while going into the opposite direction and sinking below 30 implies that it was oversold. Since trend reversal is a reality, being among the first who realize that an underlying asset is overbought, helps in predicting the imminent downfall. Instead of riding the trend and buying, those who use the RSI indicator will do the opposite and cash in before the asset plunges into a downwards spiral.

    Equally useful regardless of experience

    One question that is on every trader's mind is whether the RSI indicator is suitable for beginners, or if it is too complicated to read for those who lack experience in binary options trading. Some research is required for understanding the mechanisms behind this momentum oscillator, but the returns are generous. Especially those who use technical analysis in predicting trends, should make use of indicators such as the RSI, because the charts and the role of data is well down their ally.

    A problem tormenting many binary options traders is the inability of picking up on trends in time to extract the most from them. What frequently happens is that a trader becomes aware of an upward or downward trend at the same time as everyone else. This generates the opposite results to expectations, something that the RSI Indicator can prevent by identifying an early trend or signaling its imminent reversal. Before trading binary options using this momentum oscillator, traders should invest some time in their research because misreading it can lead to significant losses.

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