Weighted moving average binary options’ indicator pays significant attention to the prices which are the closest to the current price. For this reason, in a number of cases it may send the false signals. Work with it is simple, but you have to pay attention to the signals sent by it. If the indicator’s line is directed downwards, there is the descending trend in the market. In this case, a trader can buy the Put option. If the indicator’s line is directed up, the market is ascending, and a trader can buy the Call option. This indicator is simple, but it sends many false signals.
Weighted moving average binary options’ indicator eliminates one of the disadvantages of the simple moving averages,which consists in a fact that the simple moving averages pay the same attention to the prices, regardless of their remoteness from the current price. Thus, the weighted moving average turns out to be the slightly changed simple moving average, which distributes a weight between prices. At the same time, a greater attention is paid to the latest prices.
Weighted moving average binary options’ indicator is a tool that allows weighing oscillations for the certain period of time. However, though this auxiliary tool eliminates a number of the simple moving average’s disadvantages, it has its own disadvantages which will be mentioned below. Currently, there are many moving averages developed, and they can have different settings in order to conduct the calculation of the weighs’ prices.
As for an application of the weighted moving average binary options’ indicator, it is broadly similar to the usage of the Simple moving averages binary options’ indicator. In other words, if the indicator’s line is directed upwards on a chart, then a trader will receive the signal to buy the Call option. In this case, it is meant that the ascending trend prevails in the market. When the indicator’s line is directed down, then we can conclude that the descending trend is working out in the market. In this case, a trader is recommended to buy the Put option.
One of the disadvantages of the weighted moving average binary options’ indicator is that it can send many false signals. This fact, in its turn, leads to losses for a trader. Another disadvantage of this analytic system is in fact that the indicator shows the entry points with a lag. However, the weight is added to the last price values. For this reason, it is more sensitive to the current changes of price.
On a chart theweighted moving average binary options’ indicator is displayed as the line which can be directed both up and down, signalizing which exact kind of a trend prevails currently. Given a fact that this indicator has all above mentioned disadvantages, it can be used in combination with other binary options’ indicators in order to make the received signal as accurate as possible.
Weighted moving average binary options’ indicator can be used as a basic one in different trading strategies. Due to its simplicity, this indicator will suit both professionals and beginners, who have started to trade binary options only recently. The main task is to select those settings that will suit the style of the binary options’ trader, as well as the tool he has selected.