Tuesday, March 4th, 2014 by Tim Lanoue
Trading binary options can be one of the most life changing decisions that one person can make. Whether or not you are new to the industry or not the ability to profit and making a honest living through binary options is unquestionable and for many it is their ultimate goal when first coming into the trading industry. The purpose of today’s article is to provide traders with the basics of the Keltner Channel indicator and how to apply it properly into a trading strategy. Moving forward we will cover the fundamentals.
The Keltner Channels indicator is a unique indicator that is similar to Bollinger Bands® and based on the usage of exponential moving averages that are used to measure volatility. One of the unique aspects about this indicator is that it uses an average true rate indicator to set the channels distance. One of the main functions of this indicator is to determine whether or not the asset you are watching is currently overbought or oversold. Not only can it help determine market conditions but it is also a trend following indicator that can help point out possible price reversals and breakouts.
Setting up this indicator is simple and requires only two steps, the first step is to make sure that the time frame used is set between the time frame of 15 and 30 minutes, any time frames outside of this zone will affect the accuracy of the signals generated. The last thing we want to make sure of is that our asset displays a low amount of volatility meaning that it is not prone to change directions drastically. Since this is a trend oriented type of trading style it is important to make sure we have assets that display this characteristic. Some common assets that display this characteristic would be the EUR/USD, USD/CHF and USD/CAD.
Applying the Keltner Channel indicator into a binary options trading strategy is simple and easy to use. It generates high quality trading signals making it an ideal choice for traders of all experience levels to use. In the picture below you can see an example of how this indicator is used in a binary options trading strategy. When it comes to generating trading signals we need to wait for a break to occur in our Keltner Channel and our price level. When our Keltner Channel crosses our price action level in a downward or upward direction it generates our trading signals. If a downward break occurs and we have bearish candles present that act as our confirmation then we place a put trade. However, if an upward break occurs and we have bullish candles present then we place a call trade. This is a rather simple signaling process that be used by new and experienced binary option traders.
The Keltner Channel indicator is a great indicator to use in a binary options trading strategy by itself or in combination with other indicators that focus with trend trading strategies. When it comes to succeeding in the binary options industry every bit of knowledge any experience can be the determining factor that dictates how well you will do. If you have any questions or comments about the basics or implementation of this indicator please feel free to leave them below. As always stay tuned for more articles to come!