Technical Analysis vs Fundamental Analysis Of Binary Options

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Perfect For Beginners!
    Free Demo Account!
    Free Trading Education!
    Get Your Sign-Up Bonus Now!

  • Binomo
    Binomo

    Good Choice For Experienced Traders! 2nd place in the ranking!

Technical Analysis versus Fundamental Analysis Of Binary Options

Technical analysis vs Fundamental analysis. It’s a highly debated topic with traders from both side claiming their analysis method to be better.

Whether it is to make a living or for just the sake of side income if you have chosen binary options trading, the decision is absolutely right if you have the passion for the same.

There should be a lot of dedication and effort from each and every trader to be successful in this industry.

It is true that many beginner traders with minimum trading knowledge are earning well with the help of auto trading platforms and with the assistance of signals and other indicators.

But the survive in this field for a long term you should have the knowledge about binary options, how trading technique works and also, you will need a lot of market knowledge.

Coupled with knowledge, analysis plays a big role in trading. Basically, there are 3 categories of analysis:

  • Technical Analysis
  • Fundamental Analysis
  • Sentiment Analysis

We will discuss on technical and fundamental analysis in this article. They are the bread and butter of any trader’s trading regimen.

You need to know how these two differ and the role they play in analyzing the market. Ultimately, to trade profitably, you need to perform both. Let us first understand what technical analysis is.

What Is Fundamental Analysis?

Binary Options offers multiple trading asset types. This includes forex pairs, cryptocurrencies, commodities, indices, stocks, and more.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Perfect For Beginners!
    Free Demo Account!
    Free Trading Education!
    Get Your Sign-Up Bonus Now!

  • Binomo
    Binomo

    Good Choice For Experienced Traders! 2nd place in the ranking!

Each of these asset type has hundreds of different types of assets. Each asset has its own market which is influenced by several factors.

Fundamental analysis is nothing but analyzing these internal and external factors to analyze the asset market.

This analysis results in an evaluation of the intrinsic value of the asset. The factors mentioned here are all the factors outside the price movement of the asset.

So what are the factors affecting the price of the asset? It completely depends on the type of asset. Like we previously mentioned binary options offer multiple asset types.

So if you trade stocks, then you will look at the details of the company whose stock you are trading.

Company analysis can include competitive advantage, revenue, growth rate, market share, profit margin, SWOT, Earnings Per Share (EPS), etc.

Generally, there are 3 broad categories of fundamental analysis:

We discussed the company factors above. Economic analysis includes GDP, inflation rate, interest rate, budget, tax rate, demographic factors, inter-country relations, etc.

Industrial analysis includes product analysis, industry growth rate, product competition, tax structure, import and export duties, technological advancement, industry life cycle, etc.

There are other factors such as political, demographics, etc that are also considered in fundamental analysis.

Combining these factors, a trade predicts the future value of the asset. Technical analysis is also used to do the same, but then how is it any different?

Technical vs fundamental analysis

Knowledge is one of the key features to success, in order to become a successful trader you should learn how to control the trading platform, how to follow money management rules for your trading, what kind of strategy you should embrace and most important which analysis method to embrace and trade upon.

On the financial market there are two main methods which traders follow in order to gain money, the technical analysis and the fundamental analysis

What is Technical Analysis?

Technical analysis is the most popular method among traders especially for binary option trading, the general idea of technical analysis is that history repeats itself over and over again, the history is being written as graph charts which is full with patterns, trends and templates,

Technical analysis tells us when is the right moment to hit a trade and of course, it provides an estimation with the best chances for the right direction upon historical data, a trader can prepare in advanced to hit a trade when the market provides a trigger, a pattern or templates that provides signals are called set-ups

So technical analysis is all about charts, historical and current, to optimize and to increase the prediction chances, technical analysis provides mathematical tools that follow the trend and show us another aspect of the prediction, these mathematical tools are known as indicators, you just need to ad them to the chart, most of technical analysis strategies are using indicators in order to trigger better and to increase the chances for a profitable trades.
Some of the most common indicators are: Bollinger bands, Stochastic, MACD (Moving Average Convergence Divergence), RSI (Relative Strength Index) and the most common – Moving average.

There are three main chart types, linear chart, line chart and Japanese chart which is the most popular.

Usually, traders who doesn’t know anything about technical analysis and are making their first steps on the binary option market can only guess the next market move by feeling or sense, it is also very common for beginners to trade on short term options such as one minute contract and 30 seconds options, eventually their chances to gain money on the financial market are low doesn’t go on their favor so they end up with no profits on their account.

What is Fundamental Analysis?

Fundamental analysis evaluates the financial value of an asset at any given time, the price of an asset is set by the overall financial factors, there are so many factors which determine the price that it can be almost impossible to guess what will happen next and here are couple of factor examples:

Bank statements, company revenues, politics, weather, currency rates and many more…

Due to the complexity of overall factors you can only estimate, mostly, the long term movements.
The basic difference between fundamental analysis and technical analysis which is that Fundamental conclude the overall financial factors that is reflects on the price every moment whilst technical analysis looks at the past to get conclusions for future prediction.

The great advantage of fundamental analysis is scheduled events, an event can be a financial key measure that reveals the strength or weakens of the market, sometimes an event can be a statement from one of the financial leaders and sometimes it’s just a statistical measure.

One of the best sites that has an online calendar with all important events is Forexfactory.com

Now the question is, in order to become a successful trader, which one of the methods is a better one to predict the next move of the financial market?

The answer is like any other subjects in life is mixed, as a binary option trader you should learn thoroughly technical analysis, to learn all three patterns, to adopt rules you will trade upon, tech nical analysis can even learn you money management when you create your trading plan.

Still, you should be very much aware for the atmosphere that you trade upon, you should know all about financial event notifications, you don’t want to be in a position where you place your trade and after a while you have been surprised by a sharp move due to some Bank financial statement

Sometimes the market can be deceptive, the price ranges are narrowing down while it seems that there is no sign of volatile move in the near future, if you aware of market atmosphere or financial events you might prepare in advance and not lose your money.

If I had to define the effort for a trader that initiate his steps in the market I’d say 80% to invest on technical analysis and 20% to hear more about the financial world outside.

Just remember that most of the time the news and forecast for near future are already reflected in the price of an asset, also the risk factor, everything is already calculated.

I wishing you great learning and good luck with your trading.

Fundamental vs. Technical Analysis: What’s the Difference?

Fundamental vs. Technical Analysis: An Overview

Fundamental analysis and technical analysis, the major schools of thought when it comes to approaching the markets, are at opposite ends of the spectrum. Both methods are used for researching and forecasting future trends in stock prices, and, like any investment strategy or philosophy, both have their advocates and adversaries.

Fundamental Analysis

Fundamental analysis is a method of evaluating securities by attempting to measure the intrinsic value of a stock. Fundamental analysts study everything from the overall economy and industry conditions to the financial condition and management of companies. Earnings, expenses, assets, and liabilities are all important characteristics to fundamental analysts.

Technical Analysis

Technical analysis differs from fundamental analysis in that the stock’s price and volume are the only inputs. The core assumption is that all known fundamentals are factored into the price, thus there is no need to pay close attention to them. Technical analysts do not attempt to measure a security’s intrinsic value, but, instead, use stock charts to identify patterns and trends that suggest what a stock will do in the future.

The most popular forms of technical analysis are simple moving averages, support and resistance, trend lines, and momentum-based indicators.

Fundamental analysis and technical analysis are the major schools of thought when it comes to approaching the markets.

Simple Moving Averages

Simple moving averages are indicators that help assess the stock’s trend by averaging the daily price over a fixed period. Buy and sell signals are generated when a shorter duration moving average crosses a longer duration one.

Support and resistance utilize price history. Support is defined as areas where buyers have stepped in before, while resistance consists of the areas where sellers have impeded price advance. Practitioners look to buy at support and sell at resistance.

Trend lines are similar to support and resistance, as they give defined entry and exit points. However, they differ in that they are projections based on how the stock has traded in the past. They are often utilized for stocks moving to new highs or new lows where there is no price history.

There are a number of momentum-based indicators, such as Bollinger Bands®, Chaikin Money Flow, stochastics, and moving average convergence/divergence (MACD). These each has unique formulas and give buy and sell signals based on varying criteria. Momentum indicators tend to be used in range-bound or trendless markets.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker 2020!
    Perfect For Beginners!
    Free Demo Account!
    Free Trading Education!
    Get Your Sign-Up Bonus Now!

  • Binomo
    Binomo

    Good Choice For Experienced Traders! 2nd place in the ranking!

Like this post? Please share to your friends:
Guide How To Become Binary Options Trader
Leave a Reply

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: