The Adaptive Stochastic Oscillator binary options’ indicator is someway similar to the standard Stochastic oscillator. However, it has some differences from the classic tool. These indicators look the similar way, and we can note that they have the similar functionality. At the same time, these indicators don’t substitute each other, so they are both useful in work in the financial markets.
Description of Adaptive Stochastic Oscillator binary options indicator
This binary options’ indicator appeared in 1992, it was developed by the US trader Tushar Chande. As any other oscillator, this binary options’ indicator determines the trend’s strength and shows the potential of the market’s reversal. Professional traders suggest that the best time to open the positions to work with the Adaptive Stochastic Oscillator binary options’ indicator is when it is located horizontally or moves in the opposite direction from the current price.
Considering the second situation, the most profitable decision would be to open trading positions according to this indicator, but the binary options’ traders have many issues here. Given a fact that the Adaptive Stochastic Oscillator binary options’ indicator is the leading indicator, the best thing to do is to wait until a price reverses, and only then buy binary options. However, the Forex traders who don’t have an expiration time can work preventively and be successful.
The Adaptive Stochastic Oscillator binary options’ indicator has many peculiarities, which bring this indicator out. Firstly, the width of range used to carry out the calculations of this tool depends on the market volatility greatly. In other words, if the market movements are more intensive, it is necessary to increase the indicator’s sensitivity.
Signals of Adaptive Stochastic Oscillator binary options indicator
Considering the signals of this binary options’ indicator, we can mark the strongest ones of them. It is natural that this oscillator, as any other oscillator, shows the state of the market in the overbought and the oversold terms. Therefore, one of the signals is a purchase of the Put option at the peaks and a purchase the Call option at the low spots of the market.
When a price is located in the overbought zone, it’s necessary to be to prepared to buy the Put option. If a line is located in this zone, it means that the reverse will occur in the market soon. For this reason, you can buy the Put option after this reverse has already occurred.
The same can be said about the Call option. When a price is located in the oversold zone, you can prepare to buy the Call option. To prepare does not mean to buy right away. The point is that the currency tool or other tool can be located in either overbought or oversold zone for the particular time. For this reason, it is desirable to wait until the trend up appears, and only then open a deal.
It is important to remember that the Adaptive Stochastic Oscillator binary options’ indicator, as any other oscillator, has one very serious disadvantage. It consists in the fact that the indicator sends the right signals only when a price stays within a range. Therefore, if a trend begins in the market, and this trend finally exceeds the range, the indicator will start sending the false signals. Unfortunately, this flaw is peculiar for many oscillators. For this reason, it is recommended to check their signals carefully.