Why Use Volatility Indicators For Options?
Binary options traders can profit from volatility indicators more than traders of conventional assets. There are two main reasons for this statement:
Some Trades Win On Volatility Alone
Traders of conventional assets are unable to win a trade on volatility alone. Stock traders, for example, can use volatility indicators as one factor in the decision-making process, but volatility indicators say little about whether an asset’s price will rise or fall – they only predict that it will go somewhere.
Volatility Indicators Can Find New Trades
Binary options traders can also use volatility indicators to create trading signals. When the market is moving towards a Bollinger Band, for example, you know that it will likely turn around. This is a prediction that you can trade.
Similarly, when the market has broken through the middle Bollinger Band, you know that it is likely to continue its movement until it reaches the outer Bollinger Band. This knowledge provides a clear indication for how far the market will move, which is a prediction you can trade, too.
This is unfortunate. Volatility indicators are one of the few types of indicators that can provide clear predictions, but they are insufficient to win stock traders a trade, robbing them of the possibility to create a simple, mathematical strategy.
For binary options traders, however, knowing that the market will go somewhere can be enough to win a trade.
Market XVolatility /
is an indicator that analyzes and visualizes momentum and price strength. The MXV is a confirmation indicator that analyzes buying and selling pressure by looking at price movements and whether volume is falling or rising.
Therefore, the MXV is used by trend-following traders who want to know if a trend is strong enough to enter and by counter-trend traders who look to fade trends.
silver color in up
A silver color means that there is indecision in the market and that price moves are relatively small and volume is also decreasing. Here it is important to understand that a trend can still go on for quite some time, but the buyer-seller dynamic is changing and not as many traders are entering new positions.
lime color in up
A lime color means the market and that price moves are relatively big