Indicators and signals of binary options are very popular among novice traders in their deceptive simplicity: Traders think they do not need to study the market and the theory. They just open the position when they see an arrow up or down and think that is all they need. In most cases, this only leads to a quick loss of the deposit and all beginners should understand that they can't trade without thinking, analyzing the market and understanding what is the forex market is. market . Only that trades who have a trading strategy can win on the binary options market.
Posted by bynaryost at Nov 4, 2017
The indicator RSI is an oscillator, and therefore it oscillates in a certain zone, limited by the maximum and minimum values. The index of Relative Strength is set on a scale from 0 to 100. It works best, reaching areas of extremes. The criterion for evaluation is two lines drawn at the level of 30 and 70. It is believed that overbought zone is above 70, and below 30 is oversold. Therefore, when the value of the Relative Strength Index reaches and rises above 70, there is a threat of a drop in prices; movement below 30 is perceived as a warning of a near rise. Some analysts advise accepting 30 and 70 levels as boundaries only with side trends, and 20 and 80 with clearly expressed bullish and bearish.
Of course, exceeding levels 30 and 70 does not mean that you need to immediately begin making deals. After all, the market may be in a state of overbought and oversold for a long time, and the oscillator, warning about a change in the trend in advance, does not explain when exactly this can happen.How to choose the optimal period? The fact is that for different timeframes of the same currency pair, it will be different, so it will not be possible to use once successfully selected indicator period on all time scales of the pair you need. As a rule, the smaller the timeframe, the longer the period should be and vice versa. It is not difficult to find the optimal period for the RSI indicator - you need to consistently look through the periods and look at the overbought and oversold zones. As soon as the main highlights (reversal, key) highs and lows on the price chart begin to be reflected by the indicator in the overbought and oversold zones, and the rest will be (at least most of them) outside these zones, consider that the optimal period is found.
Many traders do not like classical indicators and even indicators in principle. I believe that they simply do not know how to cook them.