One of the most common ways to select bear or bull puts on binary options is by watching the volume of the asset that is being traded. People tend to take a good look at this because they want to see what the majority opinion on the market thinks an asset will do. Although this is natural to think and do, it is also not without its drawbacks too.
It is very important when placing binary option puts based on volume that you don’t just look at the volume traded through your broker only; you must look at the volume traded over the entire asset market to establish a good opinion based on volume.
Once you have established that you have the volume trend of the asset market wide then next you should do the following:
Find an existing hourly chart of the binary option you wish to trade and find the last biggest candles in both the bear and bull markets.
After that has been done, then the next step is to average both the highs and lows based on the results of your previously established candles, then draw two horizontal lines that connect the highs and lows of the two candles. You can then base your put or call on the binary option when the market is trending toward either the max or minimum volume near the horizontal lines.
Why is volume important; because volume can be used as an excellent confirmation tool when you are trying to figure out chart patterns and asset trends. This alone makes it one of the most important aspects when making puts or calls based on technical analysis. It is also very important to note that price alterations that are connected to volume highs tend to be more relevant than price alterations connected to volume lows. High volume price indicators on average are more likely to signal a trend reversal then are low volume indicators.
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