Among the best methods used to determine when and how to purchase binary options is with MACD Indicators. The term MACD simply stands for Moving Average Convergence and Divergence of a securities asset. MACD chart analyses differs from Bollinger band analysis because it does not contain upper, middle and lower bands; instead it uses two bands that when plotted often crosses both above and below each other. It is becoming by far one of the most used indicators there is around today.
How does it work? MACD is used to identify changes in the direction, strength, duration, and momentum of a current trend in an investment assets price.
A MACD line is simply charted by using the difference between a twelve day and twenty six day exponential moving average (current data is given more relevance than past data) of closing prices. Then a charted line of a nine day simple moving average, often termed the “signal line”, is added to identify potential buy and sell instances.
The information the resulting chart supplies is then analyzed on what is called a zero sub level. If an asset is near or below zero sub level then it is said to indicate a bearish market and calls for purchasing binary put options. If this same security asset is above zero sub level then a trader should look to place binary call options.
MACD is thought to be a powerful tool these days when it comes to making binary options market transactions. Many traders are even combining it with other method indicators to experience even greater returns on their investments. So once you learn how to use MACD and learn its strengths and weaknesses, you can become like many other traders and routinely make a return on investment on your binary option purchases.
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