The exponential moving average is one of the lines’ types of the binary options’ Moving average indicators. Its essence consists in a fact that is allows trading the short-term binary options. This line sends more sensitive signals which can send many false signals in the long-term perspective. It is recommended to buy the Put options when the exponential moving average is directed downwards. If it is directed upwards, it is recommended to buy the Call options.
Overview of Exponential moving average indicator
As mentioned in the article regarding the Moving average binary options’ indicators, the exponential lines smooth the price’s oscillations and, at the same time, allow determining the current trend in the market. It is especially useful in the markets where the wide price’s oscillations are observed. The exponential moving averages focus on the outside prices and pay less attention to the long-haul prices. But the attention that is paid to the prices depends upon the period set for the lines. The shorter a period is, the more significant attention is paid by the Exponential moving average binary options’ indicator to the outside price. It provides an opportunity to react to the current market’s oscillations more lithely. It is necessary to accentuate that during the estimation of this moving average’s type, all price levels for the time of their plotting are used. At the same time, significance of later prices disappears in shorter periods in a due course. If we look at the chart of the Exponential moving average’s binary options, the line of this auxiliary tool looks very similar to the simple moving average. However, the difference exists here. It is believed that the exponential moving average reacts to the change of the prices in the market better if other conditions stay the same. This is because when the recent prices appear on a chart, the value of the later prices starts to decrease in the exponential way during the removal from the older prices. The choice of the moving average depends up the particular style of trading, as well as the tools (market’s assets) used by a trader during his trading. Of course, the Simple moving average may reflect the situation in the market not in the most accurate way, but the Exponential moving average may react to the current changes in the market much too strong.
Usage of Exponential moving average indicator
Many traders prefer to use the Exponential moving average indicator for the short-term trading. Thus, they may see how the quick changes occur in the market. On the other hand, in order to trade binary options in the long-term (with the expiration time from one month and more), the Simple moving average can be used. Furthermore, a work with indicators depends up the exact kind of an asset a trader uses for his trade. The indicator’s choice directly influences the number of false signals. The more sensitive an indicator is, the higher amount of false signals it will send. Trading using this indicator is fairly simple. If it is directed up, it is recommended to buy the Call binary option. When this indicator reverses down, the Put binary option is recommended for a purchase.