Monthly Archives: December 2017

Floor And The Ceiling Price In Technical Trading

The binary trading software lets you trade automatically. This means that you do not have to sit in front of the computer every second to spot a trade. The binary trading software makes use of an algorithm to generate trading ideas.

 

The trade plan is fed into the software by an expert and this is what is called the algorithm. The software takes trades after it follows this algorithm step by step.

 

Support and resistance

 

Support and resistance is an important part of trading and when trading using the binary trading software it is good if you know these terms. Find to more what support and resistance are all about and how it works.

 

You would hear the terms support and resistance being used a lot when you read about technical analysis. These are used to find out the entry and the exit points of the stock. The entry and the exit of a particular trade are determined based on the reaction to price. These are important levels that are used extensively in technical trading.

 

Understand S/R

 

To understand support and resistance think of a floor and the ceiling in the room. Imagine a ball that bounces from the floor after it hits it. It drops down after it touches the ceiling.Support is the floor and resistance is the ceiling. So when the price hits the support it will bounce up and when it hits the ceiling it will drop down. Price thus moves between these two levels.

When the price of the stock or any asset falls to a level where there is an increase in demand the price will start to increase and the buyers will be dominant. This is the floor or what is called in technical analysis as the support level.When the price of the stock reaches a level where there is a decrease in demand, at this level the owners of the stock will start to sell and lock their profits. This is the ceiling or what is known as the resistance level.

 

So how do these levels get formed? These levels are formed by traders who have memories. Those who follow just a particular asset or a particular stock remember the price from which it has bounced in the past and the price from which it had dropped. They keep these prices in mind and when the price again reaches these levels they repeat the same action. It is, however, important to know that the support and the resistance levels will not be fixed but there would be breakouts and breakdowns from these levels as well.

Increase the Odds of Profiting From the Binary Trading Software

The binary robots let you trade manually as well as using the algorithm. It is good if you know the basics of trading because it will let you increase the probability of profiting from the trade.

The trading software uses technical analysis and this lets them generate trading signals. The best part of technical analysis is that the same concepts are followed in all the asset classes. Thus unlike financial analysis, you can apply the same rules to every asset be it stocks, commodities, or currency.

Understand the charts

Support and resistance is an important part of technical trading. It is thus important that you understand ways to identify the support and resistance levels. You need to understand the charts and be able to study them to find out the support and resistance levels.

The support is a level to which the price falls a number of times but does not go below the point. When the price rises to a particular point but does not go above that then this is the resistance level. However, it is important to know the strong support and resistance levels because not every level is strong to allow the price to bounce or fall from that level.

Spot the S/R level

You thus need to know how to determine the strongest support and resistance levels. The number of times the stock either bounces from or falls from the level, the stronger is the support or the resistance level. The number of times this happens it is bound to happen again. The more this behavior gets repeated the stronger is the level and thus the traders get more confident about these levels. Some stocks find it really hard to break out from this range.

Find out more about how to use these support and resistance levels. These levels are used to enter or exit a trade as well as to place stop losses. The support level is where the trader will get into the trade. The stop will be placed below the support level. The resistance is the point where the trader will sell. It is also the level from where a trader will short sell in the market. In case the short sells then the stop loss will be placed above the resistance level.

Stop loss is important because investors know that historically these price levels have worked out. However, in case the price level is violated then the levels are now broken and thus the trader gets out of the trade with a small loss. So once the stop gets triggered the price chart makes a new support or resistance level.