Volume is one of the most disputable aspects of trading in the financial markets. However, we recommend paying attention the Williams’ Accumulation/Distribution binary options’ indicator. This indicator was initially designed to work in the stock market. But today, many traders manage to apply it in the Forex market successfully. Therefore, this indicator perfectly suits for binary options too.
Description of Williams’ Accumulation/Distribution binary options’ indicator (WAD)
As we have already mentioned above, this indicator had been created to work in the stock markets, but, as a result, it became successfully applied both in Forex and in the binary options’ trading. This indicator is a perfect tool to determine change of prices and volumes. It is assumed that when a price in the market grows, then the majority of closing prices are located near the upper extreme points.
Apart from that, when a trend grows, it is joined by the new market players, and it results in the volumes’ growth. The same can be applied to the descending trend. The closing prices are striving to the minimum extreme points, but, at the same time, a number of deals in the market grow, which results in the growth of the deals’ volumes.
Therefore, it turns out to be that the Williams’ Accumulation/Distribution binary options’ indicator works with the market volumes directly. If the deals’ volume is high, the market’s oscillations have an impact on the indicator’s showings. And each bar makes a contribution to the indicator’s calculation. In other words, a volume is either added or deducted from the indicator’s showings.
If a price is growing towards the maximums, the value is added to the indicator’s showings. And the closer a price to the upper extreme points is, the larger volume is added. Conversely, if a price decreases, the bar’s volume is deducted from the indicator’s showings. And, the closer a price to the bottom extreme points is, the larger volume is deducted.
Trading signals for Williams’ Accumulation/Distribution binary options’ indicator
This indicator is one of the simplest in terms of interpreting its signals. In order to determine trading signals using this indicator, it is needed to follow the indicator’s showings and the price’s behavior carefully.
The indicator’s chart duplicates the price’s chart. In other words, if the indicator shows new minimums and the price updates its low values, then there is the strong descending trend in the market. In this case, it is recommended to buy the Put option. The same can be applied to the situation when a price updates its upper extreme points and the indicator’s chart shows the growth and update of maximums. In this case, you can buy the Call option.
But there is another type of signals of Williams’ Accumulation/Distribution binary options’ indicator
These signals can appear on the chart of indicator and price. The fact is that many people have probably heard of the divergence term. It is relevant in this situation too. So, if the price’s maximums continue to update, but, at the same time, the indicator’s line shows that the maximums are declining, you can buy the Put option because this situation is the bearish divergence. If the minimums on the price chart continue to grow, but, at the same time, minimums of prices grow, this situation is the bullish divergence. In this case, you can consider a purchase of the Call option.
But when you work with this indicator, it is important to understand that divergence may not always work out at the time of its appearance. For this reason, it is preferable to wait until the time when the price will reverse in the direction of divergence and only then buy contracts.