When you start trading binary options, there are several types of charts you will see most often. Before starting there a few points about charts which are universal to all forms of charts discussed below. The Y-axis, or numbers written up and down along the side of the chart, is the price.
The x-axis, numbers along the bottom of the chart, depict the time of day or date. Therefore, all these charts show price movement over time. Please note — here we assume you know the fundamentals of trading with binary options. The tick chart is a line that shows every movement the price has made. Typically these charts only show a few minutes of data since the price is constantly moving.
The price point at the far right is where the price is at now, while the data to left is where the price was at times prior. The advantage of this type of chart is that it shows all the price movements over the last several minutes. Being able to see more data allows you to see if there is a trend a sustained price move in an overall up or down direction , or any chart patterns developing.
On a binary options broker site you will see this type of chart if you click an asset and choose an expiry time that is fairly close, such as 5, 10 or 15 minutes away for example. The chart shows roughly 30 minutes of data, and the black horizontal line represents the current price. The red vertical line indicates when the option expires. Over this timeframe we can see that the overall price trajectory is down, as each move higher is lower than the last, and each move lower reaches a lower price.
The tick chart is also a line chart, except that the tick chart shows you all the price movements since it only shows a short of amount of time.
A line chart does not; this will be explained in a moment. If you want to see more data —such as the price movement over hours or days—then you can use a line chart. Typically you will see this type of chart when you click on an asset and choose an expiry time or date that is further out, like several hours or the end of the week.
Figure 2 shows an example of this. The expiry is not shown since it is a couple weeks into the future. This chart looks very similar to figure 1 the tick chart , but the x-axis has changed so that you can how the price has moved over a longer period.
Something else is very important though. The line chart only reflects the closing price for each interval the chart uses unknown in this case since the brokers typically do not allow you to configure your own charts. The closing price is the last price at the end of defined period, such as 5 or 15 minutes for example. For every 15 minutes or other internal only the close is recorded on the chart, and then each close is linked to each other creating a continuous line.
The drawback is that you may not be trading with all the information you need. Figure 3 shows a different style of chart, which shows more data, called a Candlestick chart. Each bar on this chart represents 15 minutes.
If the bar is green it means the last price in that 15 minute period was higher than the price at the start of the 15 minutes. If the bar is red, it means the last price is lower than the first. If the bar is red, then as indicated before the close is lower than the open. If the bar is green then the close is higher than the open. As you can see, this chart shows more information, and in a more visual way.
I have noted one important distinction on the chart. After the price surged near the middle of the chart, a decline followed it sizeable red bar , which was then followed by another green bar. The line chart makes everything look clean, while in reality this chart shows that the market is typically more jerky. And each of those jerky movements could be the difference between losing and winning. For short-term trading, such as expiries of about 5 minutes or less, use a tick chart.
Ideally though also check out a longer-term expiry so that you can see what the asset has been doing over the last several hours or days as well. The best trades are typically when you can get multiple chart time-frames to line up. For example, you see that the trend over the last several days is up, and the price is also moving up on your tick chart. Sometimes simple is best, but if you want to get more advanced with your analysis you may want to check out candlestick charts.
You must be logged in to post a comment. First — The Basics of Binary Trading Please note — here we assume you know the fundamentals of trading with binary options.
Tick Chart The tick chart is a line that shows every movement the price has made. Figure 1 shows an example of a tick chart.
Final Word on Using Charts For short-term trading, such as expiries of about 5 minutes or less, use a tick chart. Leave a Reply Click here to cancel reply. Read Review Open Account. Free Binary Options Charts.More...