Trading binary options is a real gamble; you’re either going to walk away with something big or leave with your tail between your legs. Because there is no compromise (i.e. no exit strategy), you’re going to need to rely on the best moving averages for trading.
Which strategies, though, would be best suited to your needs as an investor? Should you look at long term moving averages? Use simple moving averages?
Unfortuantely, the answer is never simple.
Because we know that you’re tired of taking so many losses, we’re going over a few of the strategies that are essential to your success as an investor.
Short Term Moving Averages vs Long Term Moving Averages
Choosing a window is a pretty important part of the overall process for any investor, especially when we’re talking about trading binary options.
Generally speaking, a short term moving average is a good bet for someone who is looking to get a quick (and large) return on an investment; short term moving averages allow investors to maximize their profits by follwing a short term trend.
Of course, the downfall here is that short-term moving averages can send false signals due to the fact the window is so small.
Since we’re on the topic of short-term moving averages, we should mention that you’ll also want to know how you should use moving average crossovers to your advantage.
Long-term moving averages, on the other hand, are a bit more accurate than short term moving averages simply because a long-term average encompasses much more data about trends.
Needless to say, the payoff isn’t instant if you choose to use long-run data, but you’ll definitely feel a bit more secure if you rely on long-term data, especially if you consider the fact that there are so many scams which target investors.
Using Simple Moving Averages
Simple moving averages are simple, and we’re not trying to be funny here.
They actually are graphically and procedurally simpler than the alternative we’ll discuss later. They are easy to read and calculate (you literally just take averages), and they are ideal for beginners.
That said, simple moving averages don’t respond well to market volatility, which means that you are taking a bit of a risk (which sounds funny since there is always risk in investing) if you rely on simple moving averages.
If, though, you have some reason to think that more recent data doesn’t necessarily reflect market conditions, a simple moving average might just be what you need.
Using Exponential Moving Averages
Unlike simple moving averages, exponential moving averages require that you do more than do some addition and take an average.
When you take an exponential moving average, all of the data is weighted differently, and the emphasis is put on the more recent price action. That is to say, the most recent price action is weighted most heavily in the calculations.
Proponents of exponential moving averages say that they are superior because recent price action is more significant than older price action.
Needless to say, exponential moving averages are more complex than simple ones and are not a good bet for beginners.
Even With The Best Moving Averages For Trading…
Even if you rely on the best moving averages for trading, there is no guarantee that you’ll see a profit because, at the end of the day, there are no certainties when we talk about binary options.
Still, if you do away with the common myths and consider all of your options, you’ll increase your chances of winning, if only by a little.