A strategy for binary options based on a heat map of currencies is a table that collects statistics on the movement of currency pairs over a certain period of time and the whole essence of trading comes down to following the trend or, conversely, making trades against it. But is currency heat map trading good for binary options?
The essence and rules of trading using a strategy based on a heat map of currencies for binary options
Despite the appearance on the Internet of strategies based on a heat map of currencies for binary options, it can hardly be called effective or useful in trading binary options. The thing is that the only thing such a map shows is the ratio of the current candle to the previous one on any time frame. That is, if in the table on the crosshairs of currencies there are shades of green, this means that the current candle for this currency pair is higher than the previous candle, and if in the table on the crosshairs of currencies there are shades of red, this means that the current candle for this currency pair pair below the previous candle:
If we talk about the trading rules, which are described in the same articles on the Internet, then for some reason they say that if a certain currency has a bright green color, then it is necessary to sell this currency (Put option) even when it turns bright red color, on the contrary, buy (Call option).
But such rules initially carry additional risk, since then it turns out that trading will be conducted against the trend, especially since heat maps of currencies of 30 minutes and above are taken for signals. And if you consider that the movement can be like this:
It is not difficult to imagine what losses can be incurred when trading in the opposite direction on each candle, since the color on the map will be bright green.
But that's not all. Even if you make it a rule to buy options according to the trend on each candle, based on the colors on the heat map of currencies, you can end up in a flat, which also will not bring the expected profit:
From the above, we can conclude that using a heat map of currencies for binary options makes sense only based on the trend, but for this you need to know and understand what a trend is and how to determine it . If the goal in trading is long-term, then it is better not to trade with the card at all.
Why can you use a currency heat map for binary options?
What you can really use a binary options currency heat map for is for general information, and the higher the time frame, the better and more accurate the information will be.
Various services on the Internet provide heat maps with fixed time intervals, which is not always convenient. Therefore, you can use a special heat map indicator , which will broadcast not only colors, but also the percentage of change in currency pairs:
The advantage of this indicator for binary options is that it uses the currency pairs of your terminal, which means that there will be no discrepancies in quotes that can be observed when using cards from other services.
You can also use other color settings in the indicator:
In addition, in the indicator you can set any time frame for the card, even minute:
And that is why this indicator will be many times more useful than analogues offered on the network.
Installing a Currency Heat Map Strategy Indicator for Binary Options in MT4
There is only one indicator and it is installed as standard in the MetaTrader 4 terminal.
Instructions for installing indicators in MetaTrader 4:
Conclusion
Now, having understood the principle by which a heat map for binary options works, we can conclude that it is not worth using it for trading, but it can serve as a useful informative indicator for analyzing markets.
Do not forget that for profitable trading it is important to work through a trusted broker. If you have not yet found one, then you can familiarize yourself with our rating of binary options brokers and choose the right one.
Download the indicator and template for the Heat Map strategy
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See also:
Pros and cons of trading binary options
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