The most important tools to trade Digital Options with Success
Digital Options are one of the hottest ways to trade the financial markets. Right now there is a huge trend around Digital Options. One of the reasons is, that you are able to set a fixed time period aside, trade one specific setup and to leave “the table” for another day. Normally trading requires many hours of analysis and observing the charts. With Digital Options you don’t need to spend a whole lot of time in front of your computer screen. There are even 1 minute, 5 minute and 15 minute options. What are the most important tools to trade Digital Options with Success?
Digital Options are time-bound and also condition-based. This means, that you will need to decide if a certain financial instrument will move x points above or under a certain price level, before a pre-defined time period is over. Digital Options are strongly based on probabilities. As a trader you ask yourself: is it possible that the EURUSD will be higher in 1 hour? This means that you are looking at things like: Volatility, Direction and Timing.
There are some pretty good technical indicators to determine these factors. One of them is the Commodity Channel Index (CCI). If the Digital Options Broker does not offer technical Indicators for Digital Options, than we recommend you a Charting Package (paid or unpaid). You can find free online Charting packages with technical Indicators for almost any market in the world. The Commodity Channel Index (CCI) is based on a formula. This trading tool was developed by Donald Lambert in 1980. Price levels are observed within a certain band and price movements are depicted by an oscillator. The upper band shows if the price of commodity or asset is overbought (therefore a price reversal is probable) or oversold (also showing a probable price reversal in the opposite direction).
The Commodity Channel Index (CCI) could be used to see if a certain asset will move lower or higher. One way to do this is to divide the graphical area into the same time periods that you will use to trade Digital Options. Let’s say you decided to trade the EURUSD and that you will be placing trades within an expiry time of 60 minutes. Now you would divide the graphical area of the Commodity Channel Index (CCI) in 1 Hour time spans. The next step is to observe how long the oscillator line takes to move from the overbought or oversold-area back into the middle level. If this cycle happens in less than 60 minutes, then you have a good chance to take a trade during this time span. If the oscillator is at the upper level (overbought), then you would place a PUT OPTION (SELL) and use an expiry time of 1 Hour. If the oscillator is at the lower level (oversold), then you would place a CALL OPTION (BUY) and use an expiry time of 1 Hour.
This is a very simple trading technique, which can be used by novice traders. It works very well with expiry times that go from 1 Hour to 4 Hours.
Another good technical indicator is a regular Simple Moving Average Line, with a setup of 2 periods, set on the Low or High price of a commodity, asset or currency pair. This will help you to gauge the direction, the momentum and the trend. Don’t use the Moving Average Indicator as your sole source of information. This indicator works well in combination with other indicators (like the Directional Movement Index or the Commodity Channel Index). If you also take Economic data news releases into consideration, than you are on your way to become a consistent and successful trader.
You have another option. If you don’t want to bother with this kind of analysis or don’t know how to setup a Charting Package, than simply order Trading Signals. Our Signal Providers have been tested and are among the best in the Digital Options Market. We only work with the best Digital Options Signal Providers. They will give you specific trade setups. You only need to introduce them into your Digital Options Trading Platform and you are all set. Very easy and quick.
Please have a look at our review site. We also offer a good range of managed account options.