Check out the Carbon FX review to know how to trade using the binary trading software. The software uses technical analysis to analyze and generate trading signals. They look at the support and resistance levels and then trade within the trading range.

 

Trading range

When the price of the asset; bounces on and off from the support and the resistance level, it forms a trading range. Although many charts may not show this range clearly the trading software looks at charts that show this range. If a stock is found that trades continuously within a trading range then it generates trading signals using this opportunity.

 

The stock price could either be channeling or rolling. Here you buy the stock after it bounces from the level of support and you sell it when it touches the resistance level. You should, however, wait for and watch and when you see the price start to change course from the support level only then you should enter the trade. Most traders who are amateurs would try to enter the trade as soon as the price touches the level but this is risky as the price may not respect those levels. But when the trader waits for a confirmation this will let them profit from the trade with a higher probability. Yes, they do miss out on some profit but that is not a concern. As a trader, you should never look to enter the top or the bottom point. All that you have to do is to participate in a stock that has formed a strong trend.

 

Breakout

This happens when the price is within a trading range and then suddenly breaks out from the resistance level. The price then goes up higher effortlessly. So why does this happen? The number of times the stock hits the level of resistance it becomes stronger. But eventually, the level also gets weaker because the traders who are willing to sell form that level have all sold their holdings. Also, there are traders set at that level who are there to buy the stops.

 

Breakdown

When the breakout happens on the downside this is a breakdown. The traders who have held on to the stock will have their stop-loss placed below the level of support. If this support level is broken the trade will be stopped out. The selling volume is also increased and this causes a quick drop and those who are aware of the support point will not be in the stock anymore. This leaves very few of the buyers and the others will wait till price reaches the lower support level.

Comments are closed.

Post Navigation