The VA index (Chaikin’s index) binary options’ indicator is some kind of the alternative tool to the OBV. His developers are Chaikin and Lambert. Technically, this indicator is very similar to oscillators, though it belongs to the category of volume indicators because the volume parameters are used in the course of its calculation. However, in some cases, this indicator can be used as an oscillator too, when the particular parameters are added to it.
Description of VA index (Chaikin’s index) binary options’ indicator
The main point of this binary options’ indicator’s work consists in the fact that when the ascending trend is observed in the market, the closing prices will be always closer to the upper extreme points for the considered period, for example, for a day, a week, or a month. At the same time, a volume has to exceed the average values.
The opposite is applicable to the descending trend. Particularly, the closing prices have to be close to the minimum prices for the specified period. As for the volumes, they have to be above average too.
The VA index (Chaikin’s index) is also designed for the calculation of the money flow. If you apply the particular parameters for a calculation, this indicator can be used as the customary Chaikin’s oscillator. In general, this binary options’ indicator is extensively used in the different fields of trading.
Signals of VA index (Chaikin’s index) binary options’ indicator
The main signals during trading with this indicator are the growth of the indicator’s line together with a price and the decline of a price along with the growth of the indicator’s line. In this case, the indicator shows that there will be a movement in the market due to the growing volumes instead of showing a trend. For this reason, in order to receive such signals, it is better to use the additional indicators for the confirmation of the movement direction.
These can be either trend indicators or oscillators. How to trade binary options in this case? Everything is pretty simple. The used trend indicator or oscillator indicator will show the change of a trend or the continuation of the current movement. At the same time, it will be confirmed by the VA index (Chaikin’s index) binary options’ indicator on the growing volumes.
In order to buy the Call option in this case, it is needed to find the signal which would show the descending trend and necessarily wait until the confirmation from the VA index (Chaikin’s index) proving that the volumes in the market has grown, therefore, the trend will be ascending one for sure. In this case, you can buy the Call option.
The same is applicable to the Put option. It is needed to wait until the signal from the indicator that either the descending trend or the retracement to the ascending movement is forming in the market. After this, it is needed to make sure that the VA index (Chaikin’s index) binary options’ indicator shows the growth of volumes. Only after this, it is recommended to buy this type of contracts.
Also, this indicator can be used to find the divergences with a price. Having said this, you can buy the Call option when the bullish divergence is observed. As for the Put option, it is recommended to be bought when the bearish divergence is forming in the market.
The actual disadvantage of this indicator consists in the fact that it is not recommended to be used separately. This can be called a disadvantage because the majority of the binary options’ indicators is suitable for the separate usage, and it simplifies the trader’s work with them because there is no need to set the additional tools on a chart.