Binary options are a form of options contract in which the payoff is exclusively reliant on the outcome of a yes/no proposition, therefore the term “binary option.” The proposition frequently pertains to the market worth of an asset and whether it will rise above or fall below a predetermined value. A trader has no control over the behavior of a binary option once it is obtained since everything happens automatically from the moment the trader receives it. A trader has no right to buy or sell the asset to which the binary option is connected.
Various online trading platforms allow you to trade in binary options with varying strike prices based on the probability of the results. Smart traders have figured out the various strategies required to become successful binary options traders, and a tool that helps in this endeavor is the candlestick chart. Once you get a grip on how to understand and learn how to predict next candlestick, you will be able to determine whether the market is favorable or not.
This article will help you get an in-depth idea about candlesticks and help you read candlestick charts.
Methods Used to Predict Candlesticks
A candlestick chart has long been affiliated with binary options trading. These charts were extremely popular in Japan, and have just recently made their presence known in the Western market. While veteran traders would know all about them, newbies would not be as aware.
Among all the various analytical tools used to observe and predict the market, candlestick charts are probably the most trusted and widely used by traders. Their extremely intuitive and user-friendly approach to trading helps traders predict the movement of the market and make informed decisions about their investments.
Candlesticks are extremely effective at providing traders with a visual overview of market movements. They do this by condensing the market movements of various timeframes into a single candlestick representation.
The various features of the candlestick chart help traders predict when the market might be bullish or bearish. These include the patterns that emerge due to the candlestick’s size, position, and volume.
A candlestick provides a pictorial representation of the asset that you choose to analyze in a specific period. The maximum and minimum price of an asset is depicted in the form of the wick and shadow, with the high points being the green-colored candles, and the low points representing the red ones. These patterns help traders in deciding when to invest and when to sell their assets.
Rising Three Methods
This is one of the easiest-to-spot predictions on the candlestick chart using the rising three methods since the pattern is very prominent whenever it occurs. The pattern follows five candles, with one candle that needs to be in proximity to the final candle for it to be valid.
The first candle has to be white closed near the unshaven or shaven top, with 3 white or black small candles with spinning tops comprising the following three. The fifth candle originates from the lowest point of the first candle, and compared to the other 4 candles, it has the highest close value.
Tatsuki Gap
As the name suggests, the characteristic feature of this pattern is a prominent gap between two candles. As with the Rising Threes methodology, the Tatsuki Gap also comprises five candles, and the gap in between signifies either favorable market propositions or negative ones.
The direction of the gap along the market prices is what helps traders predict when the market is down or on the rise. For example, if the gap is formed when the candles are trending in an upward direction, the market is high. Or if the gap is formed when the candles are falling, the market is down.
Side By Side Lines
The side-by-side lines method comprises two white candles adjacent to each other. While this is a generally easier method as the pattern is quickly spotted, it also has a very high rate of fruition.
Due to the candle’s good volume, which indicates an appreciable price rise, near the day’s end the first candle will always be higher than the following one. This indicates a positive trend since the second candle will always start neck to neck with the first candle and gradually rise as the day progresses.
Conclusion
Candlestick charts are extremely useful for traders since they provide a comprehensive overview of the market. In binary options, there are several methods for predicting the next candlestick. The three strategies mentioned here can assist you in forecasting market trends and in making educated decisions about when to buy and when to sell.
