Introduction
Binary options trading has become a popular way of making money online. It is a simple and fast way of trading financial assets, but it can be risky. One of the most popular trading strategies used by binary options traders is the Ichimoku Kinko Hyo. In this article, we will discuss how to trade binary options using Ichimoku.
What is Ichimoku?
Ichimoku Kinko Hyo, also known as Ichimoku, is a technical analysis tool used to identify potential trades in the market. It was developed by a Japanese journalist, Goichi Hosoda, in the 1930s. The Ichimoku system is based on five components, including the Tenkan-Sen, Kijun-Sen, Chikou Span, Senkou Span A, and Senkou Span B.
Tenkan-Sen and Kijun-Sen
The Tenkan-Sen is a moving average that measures the average price of an asset over the past nine periods. The Kijun-Sen is a moving average that measures the average price of an asset over the past 26 periods. These two lines are used to identify the short-term and long-term trends of an asset.
Chikou Span
The Chikou Span is the lagging line, which is plotted 26 periods back. It is used to confirm the trend identified by the Tenkan-Sen and Kijun-Sen lines.
Senkou Span A and Senkou Span B
The Senkou Span A and Senkou Span B are two lines that form the Kumo, or cloud. The Senkou Span A is calculated by adding the Tenkan-Sen and Kijun-Sen and dividing the result by two. The Senkou Span B is calculated by taking the average of the highest high and the lowest low over the past 52 periods. These two lines are used to identify support and resistance levels.
Trading Binary Options with Ichimoku
To trade binary options with Ichimoku, you need to identify the trend of the asset. If the Tenkan-Sen is above the Kijun-Sen, it indicates a bullish trend. If the Tenkan-Sen is below the Kijun-Sen, it indicates a bearish trend. If the price is above the cloud, it indicates a bullish trend, and if the price is below the cloud, it indicates a bearish trend.
Entry and Exit Points
To enter a trade, you need to wait for the price to break through the cloud. If the price breaks through the cloud from below, it is a bullish signal, and you should enter a CALL option. If the price breaks through the cloud from above, it is a bearish signal, and you should enter a PUT option. To exit a trade, you need to wait for the opposite signal. If you entered a CALL option and the price breaks through the cloud from above, it is a bearish signal, and you should exit the trade. If you entered a PUT option and the price breaks through the cloud from below, it is a bullish signal, and you should exit the trade.
Conclusion
Ichimoku is a powerful tool for binary options traders. It can help you identify the trend of an asset and enter and exit trades at the right time. However, it is important to remember that no strategy is 100% accurate, and you should always use proper risk management techniques. With the right mindset and strategy, you can make consistent profits trading binary options with Ichimoku.
