The Binary Options E-book

Transcription

1 The Binary Options E-book

2 This E-book is an excellent introduction to Binary Options and strategies that will help you start trading as soon as possible. We hope you enjoy it and we look forward to hearing your feedback.

3 Table of Contents Introduction to Binary Options...6 Binary Advantages...7 Make money in any market condition and direction... 7 Flexibility... 7 Quick Results... 8 Variety of Options... 8 Profitability... 8 Terminology...8 The Platform...9 The Products...10 How to Take a Position...12 Trading Psychology...12 Symptoms of an Emotional Trader Trade Rationally Habits of Successful Traders The 4 Goals of Trading The trap of winning Trust yourself over the experts The Fundamentals Economic Events Taking advantage of Global Market Cycles Taking advantage of news Economic Growth...16 Growth Drivers International Trade Technical Analysis Technical Principles Japanese candlestick chart Trends Support, resistance and Fibonacci numbers Fibonacci Numbers Moving Averages Bollinger Bands Retracements Technical Analysis Trend ranges Creating support and resistance levels Horizontal and diagonal support and resistance Elliot wave theory Relative Strength Index Trend trading Basic price patterns Head and shoulders Double top Key reversal Triangle patterns Technical Analysis Doji patterns Shooting star Morning star Evening star Breakaway white soldiers Bearish engulfing Dark cloud cover Hanging man Hammer Safe Investing Risk Disclosure...27

4 $30,000 for it. Bummer. 6 Introduction to Binary Options 7 While the term Binary Options is very well known, the actual meaning of it is not. The actual definition of binary options is an investment that is set to have an all or nothing structure, so that the investment either ends up correct, and the investor wins, or it ends up incorrect, and the investor does not win anything. Let s delve a little bit deeper into what Binary Options truly are: The term is made up of two words; let s start with a translation of the second word, option. An Option in trading is similar to an option in everyday life. What we mean by an option is where you, the trader, buy a choice. We'll begin with an example. Let s say you re married with three beautiful children. Life s great. The only problem is that you don t own any property. You decide it s time to buy a property. You and your spouse go out driving in the neighborhood and you see a gorgeous property that s for sale. This property seems like the property of your dreams. Everything is perfect. The only problem is that the property is being sold for $30,000 and you only have $3,000 in your bank account. You devise a plan. You tell the property salesman that you will pay them all the money you have in your bank account, the entire $3,000, for the OPTION to buy the property for their current asking price of $30,000in 3 months, which is when you expect to win the lottery. You are not saying you definitely will buy the property in 3 months, but that you have the OPTION to buy the property or not to. Remember though, that buying the option means that you don t have to go through with the purchase of the property; but even if you don t buy it, you end up losing the $3,000 that you paid for the option. This story is a perfect example of what an option truly is. When you buy an option on an asset (which is just a fancy name that includes stocks, commodities, currencies and indexes) you are not buying the asset itself (or the home itself, in our example), but you are locking in a price for the option of whether or not to buy the asset at a later time. Now all we have to define is the word Binary. This is the easy part. All Binary means is two-directional, meaning, you can either win or lose, there s nothing in between. Let s put it all together. Simply put, trading Binary options is when one buys an option and invests in a prediction of whether an asset price will rise or fall. One does not own the actual asset, but the option of whether to buy the asset at a specific price at a later time. The difference between our property example and true Binary Options is that when buying the option for the property, you only want the value of the property to rise, but when it comes to Trading Binary Options, you can buy an option on an asset for a variety of directions and in almost any type of financial market condition. This scenario can work out well or not so well for you. Let s say 3 months down the road, after winning the lottery of course, you decide that you will buy the property. After doing an inspection it turns out that the property is filled with diamonds. Where your property was once thought to be worth $30,000, it now turns out that it is worth $300,000,000. But guess what? Since you bought the option for $3,000 to pay $30,000 for that property, you only have to pay $30,000 for it. In this case you are getting a $300,000,000 property for $33,000 ($30,000 price of the property that you locked in + $3,000 that you paid for the option). Isn t that amazing? Let s think about the flip-side, though. Say you win the lottery as planned, and you decide to buy the property. After doing an inspection, it is found that the property is trash and there are mice living in it. In this situation, even though the property salesman lowers their asking price to $3 for this property, since you bought the option for a value of $30,000, if you decide to go through with the purchase of the property, you would still have to pay Binary Advantages Make money in any market condition and direction You can make money if an asset goes up, down, or sideways. And with some strategies, you can even be wrong on an asset's direction and still make money. Of course, this does not mean you can just close your eyes and make a random choice. But it does mean that, if you understand the market, you can make money in virtually any market condition - even when you're unsure of how the market will perform. Flexibility You can get started in Binary Options with only a fraction of the money you would normally have to invest to own an actual asset. And Binary Options strategies come with a guaranteed limited risk.

5 While buying assets usually involves a more risky investment amount, 8 9 buying Binary Options requires much smaller amounts, often a fraction of asset prices, and there are so many different ways for you to make money. Quick Results With Binary Options you are able to see the results of your investment in as little as 60 seconds. They are a fast and simple way to make returns on investments. Variety of Options There are so many different assets that you can choose from. You can select from a number of Currencies, Commodities, Indexes and Stocks so you are able to make a variety of selections. Profitability If you invested correctly, you are able to profit from yields that are often around 75% or more of the buy-in amount, and you will see the returns almost instantly. Want to learn more? Great! Let s continue. Now, let s say you are so confident in the call position that you took for gold that you want to add to that position, you might be able to Double- Up. Doubling up will increase the amount of money that you have in the position and will also increase your potential payout. While the terminology is technical, we recommend that you review our examples and scenarios so that the terms will make sense to you. You will find that after repeating them a few times your confidence and understanding will grow exponentially. The Platform Here is what you see in the Platform: 1. Asset: The Currency, Commodity, index or stock you want to trade 2. Expiry: The time that your trade will expire and the success of your position will be determined 3. Amount: The amount of money you would like to invest 4. Trader Choice: Where other traders stand relative to this position Terminology Traders buy a call position when they expect the price of an asset to go up and a put position when they expect the price to go down. The next terms you need to know are strike price and expiry. Strike price is the exact price that the asset is at the moment that you take the call position. Expiry is the time at which your position will end and the success of your trade will be determined. If, for example, you buy a call position that gold will increase above its current price by one hour from now, the current price of gold would be the strike price and one hour from now will be the expiry. Now let s say that the hour expiry time for your gold call position is almost at the expiry time, but the price is currently lower than your strike price. This means you are out of the money. If the price is indeed above your strike price but it is before the expiry time, you are in the money. If you are out of the money (or even in the money) you still may have the option to minimize your losses and get out of the deal early, or you might even be able to increase the time until the expiry. Minimizing your loss and getting out of the option early is what we call a Sell. Extending the time until the expiry is what we call Rollover. Keep in mind that a Sell will still be at a loss, albeit a lower one, and a Rollover will decrease your profit potential. 5. CALL or buy option 6. PUT or sell option 7. Payout Percentage: Percent of your investment that you could be paid 8. Potential Payout: Money you receive if correct For All Positions: Once you have Chosen the CALL or PUT option a pop-up screen will appear: Check to make sure the information is correct. If not, click cancel to abort the position. Otherwise, the position will automatically be approved. Once that s done; you are in the trade. You can also see all of your open and closed positions.

6 10 The Products Not only are you able to trade with many different assets, but you are also able to trade using many different products. Depending on how the market is performing, you may choose different products to use. Each product has its own benefit for each type of market. 1. Binary Options: The Binary Options product allows traders to predict if a selected asset price will go up or down within the same trading day. You trade with binary options in order to take advantage of momentum that was generated in favor of a particular asset by current news and economic events. This product allows you to cover the option before the end of the day, thereby receiving somewhat quick results. You can choose from a variety of time ranges and expiry times. 2. Pairs: The Pairs Product allows you to trade one asset against another, by choosing an asset that will appreciate or depreciate compared to the other asset. This product is unique in that you can trade between categories, such as a currency against a stock or a commodity against an index. 3. Long Term: The Long Term Product stands out because it allows you to trade over extended time periods that often range between one day to one year and you can choose to trade a variety of assets Seconds: The sixty seconds product provides fast trading activity in only 60 to 300 seconds. Choose this product when important economic prints will have a strong impact on the market. Pay close attention for a sharp movement by an asset to the down side or to the up side. 5. One Touch: The One Touch product allows you to make a trade when all financial markets are closed, during weekends, holidays, and afterhours. This Product presents traders with a higher payout rate than other Binary Option products as the asset must reach the goal rate before the expiry time. As long as the asset reaches the goal rate by 17:10 GMT on any day prior to the expiry date, you have the position. Keep in mind that the expiry time of the One Touch Product is always the following Friday at 17:10 GMT, meaning that the earlier the position is taken, the more of a chance you have to succeed. 6. Ladder: This product allows you to predict whether an asset's price will be above or below a specific price level. This means that the larger the gap between your strike price and the price level that you choose, the higher the payout. This presents traders with corresponding payouts and a relatively high probability of success. The most suitable time to use this product is when the market is quiet and movements are low.

7 12 How to Take a Position Asset: Select which asset to trade with 2. Expiry: Select when the success of your trade will be determined 3. Investment Amount: Select amount of money to invest 4. Direction: Select in which direction you believe the asset will go Trading Psychology To become a skilled trader you must learn to control your emotions. There will be times that your emotions will try to take over, but you must learn to trust your logic and trading education in order to be successful. In this chapter we ll teach you habits of successful traders and how to gain positive trading psychology. Symptoms of an Emotional Trader The symptoms of an emotional trader all emanate from hope and fear. When one begins trading and loses a large sum of money but then continues to trade, this is hope. Hopeful traders rely on luck and don t evaluate their mistakes. When one feels a heaviness in their chest while trying to take a position, but is unable to trust their trading knowledge, this is fear. Fearful traders will lose one position and will shy away from continuing. Both hope and fear are emotions that are dangerous for traders. They weigh a trader down and this prevents them from becoming emotionally intelligent traders. Trade Rationally The definition of rational is to do something based on reason or logic, and this applies to trading as well. To trade rationally requires one to follow logic and reason. If you have a logical reason to take a trading position then that s rational. A good way to know if you are using logic and reason is to see if you can explain to someone else why they should take the same trade as well. If you are able to then you probably have good reason to take the position. 7 Habits of Successful Traders Now here's a summary of our seven habits of successful traders: 1) They understand the true realities of the markets. 2) They re responsible for their own trading destiny. 3) They only trade with proven methods. 4) They trade in correct proportion to their capital. 5) They understand how to manage risk. 6) They follow long term trend and don t lose sight of the forest. And 7) They keep trading in perspective. The 4 Goals of Trading Before trading it's essential to come up with a list of trading goals. Obviously, we'd all love to be successful, but if making quick money is your only goal of Binary Options, then you need to take a step back and re-assess your motivation. All expert traders have goals and it's important to get into that same mindset in order to ultimately become one. 1. Make it about the climb: The first goal should be to change your goal from being profitable to growing your trading skills. Remember that profit does not come easy, so if you plan on making a few quick trades and making all of the money you'll ever need, you could be fooling yourself. 2. Set boundaries: Come up with rules for yourself and stick to them. You need to decide how you'll enter the market, how you'll exit it, and how you'll manage risk. 3. Not making a trade can be as important as making one: Making a trade is always tempting, but sometimes a trade opportunity is simply not available. If your training and logic are telling you to hold off on the trade, then listen to yourself. 4. Migrate towards simplicity: A mistake many traders make is that they migrate towards more complicated markets and trades. It makes them feel more professional and often causes them to lose money. Stick with the markets and strategies you know and you ll gain more from it. The trap of winning Don t regret winning small amounts. If you stuck to your education and you made a small profit, don't regret that you didn't risk more money on the trade. You stuck to rules and chances are that you ll continue to be profitable. A trap that many investors fall in to is that even though they are consistently winning small amounts, they get used to the small winnings and without noticing, progress towards more risky trades. If you stick to your education and trade with our minimal risk strategy, you won't fall in to this trap. Trust yourself over the experts If your trading education is telling you that an asset is headed in one direction, but you hear experts and read articles of investors telling you the asset is headed in the other direction, trust yourself. If your education is telling you something, this is not just a hunch, but is the correct way to go. The Fundamentals Fundamental Analysis means to take a deeper look at how an asset or industry is performing as a whole. It is looking at an overall financial state of an economy and focusing on factors such as important economic date that are released almost daily. Here are some of the data categories that

8 14 we like to focus on when performing a fundamental analysis: it is rumored that the US Federal Reserve will raise interest rates, this will 15 Economic Events As previously stated, market news is a foundation of fundamental analysis. When trading, it s important to pay attention to what economic data is coming out of each country in order to understand in which direction to trade. Here are some of the important economic events that have a major effect on the market: employment data, inflation data, growth data, and housing data, as well as Central bank press conferences, and monetary policy meetings. Each of these events are made up of many pieces of economic data. Taking advantage of Global Market Cycles The global economy and market always runs in cycles. The advantage of trading with Binary Options is that you receive the flexibility of entering and exiting the market almost immediately. It is as if you see a carousel with a shiny diamond that is on one of the horses and at just the right moment you reach out and grab the diamond and immediately exit the carousel. It is the same with understanding the cycles of the economy. Understand when to get in and when to get out. Taking advantage of news Another fundamental of trading is to understand that current news and events have a major effect on the market. While there are many examples of this, here is just one. People generally like to make safe investments. Investing in the stock market is considered a risky investment because no one can ever predict what exactly will happen, but potential payouts could be very high and higher than interest rates that a bank will offer. If, however, the United States Federal Reserve decides right now that it will start offering a higher interest rate, more people will move their money from stocks, which are risky, to their bank s savings account, which is safe. This would translate into an increase in value of the US Dollar. This might translate into a Binary Options trade by buying a call (up) option on the US Dollar currency. Do you see how it all fits together? Taking advantage of Volatility, Rumours and Sentiment Volatility is when asset prices and futures are producing a lot of movement. When an asset is up sharply or down sharply they are producing volatility. Volatile movements are important for trading because you can either decide that the asset will continue rising and place a call position, or you can decide the asset will turn around and start to fall and thus place a put position. Rumors, while they may or may not be accurate, still affect the market. If inevitably cause stocks to fall and the US Dollar value to rise. Sentiment is a general feeling and emotion surrounding a certain market. If a market has a strong sentiment, we call it a Bullish market. If my market has a weak sentiment, we call it a Bearish market. If I am the President of my country s National Bank and I tell everyone that my market is strong and I show confidence, that is called a Hawkish Tone, but if I say that my country s market is weak and I sound uncertain, I am showing a Dovish Tone. As you have probably deduced already, Hawkish tones usually go with Bullish markets, and Dovish tones usually go with Bearish markets, although not always.

9 16 Economic Growth 17 Economic growth is the underlying foundation of all economies and is defined as a long-term expansion of production. It is what drives most of a country's monetary policy. Growth is important because it helps to reduce poverty, improve living standards, reduce unemployment and it lowers a government's budget deficit. There are many different factors that determine the rate of economic growth, and growth for one economy usually means growth in other economies as well. Growth Drivers There are a few factors that determine if an economy is growing, and these factors apply to all economies, whether developing or developed. 1. Increased stock value. If the value of a company increases, so do its employees. 2. Increased size of the active labor force. If more people are available to work, more companies will hire. 3. Increased labor quality. The better the quality of work, the better product that s in the market. 4. Increased productivity. If there are more products produced then the company will be more available to the world. 5. Institutional stability. When there s a democracy there s a better chance the economy will be stable. 6. Increased Demand. Simply put, the more demand, the greater the amount of trade. The Government's role and credit The largest buyer and seller in any economy is the government. The Government consists of a Central Government that collects taxes, and a Central Bank that controls the amount of money and credit available. The Central Bank controls credit in two ways: by changing interest rates, and by printing money. Credit is the most important and volatile part of an economy. You see, people want to buy items that are more expensive than they can afford, and credit helps to make this happen. When one borrows money, they have to re-pay the principal amount of money borrowed plus interest. When interest rates are high, people will borrow less, and when interest rates are low, borrowing will increase. This transaction, where lenders promise to repay a loan, and lenders lend money on that promise, creates credit. Another name for credit is debt. As soon as credit is created it becomes debt. When a borrower receives credit, he can increase his spending. Credit is the reason why we have economic debt cycles. An economy that produces a lot of credit, also produces a lot of debt. Credit and debt are not necessarily bad. They re only bad when they become too much of a burden to handle, and the borrower is not able to settle his transactions. When economic activity increases we call this an expansion. During an expansion, prices of goods begin to rise. When spending increases, so do prices of goods. When prices rise we call it inflation. The Central Bank does not like to see inflation increasing too much because it causes problems, so in order to keep inflation in order, the Central Bank will increase interest rates and borrowing will decrease. But, if inflation and borrowing rise too much it s called a bubble, and debt starts to rise faster than income. Debt burdens that are too large cause less spending, less income and less borrowing. This is called a recession. International Trade Consider for a minute how much you depend on international trade in your everyday life. Take just your cell phone. Chances are that at least some of its parts were made in China and Malaysia, and it was probably designed in the US or Canada. And this example extends to your car, your food, and even to your clothing. International trade is not just a nice idea but it s an essential component of any economy. Some economies may consume more, while others may supply more, but trade between countries is an integral part of economic growth. A broader name for international trade is Globalization. In business terms, globalization is the process of international integration that comes through an exchange of products. It is the way in which transactions bring our very large world together. While globalization is a modern term, the idea of buying and selling goods internationally is not new. During ancient times traders would travel long distances via camel in order to sell their goods in a distant land. The difference nowadays is that due to modern infrastructure and communication, countries that were previously unable to trade with other countries are now able to trade all over the world.

10 18 Globalization also benefits the consumer. The more choices that are out Technical Analysis there in the market, the lower the cost of the product for the consumer. In broad terms, the greater the supply, the lower the demand and cost. Globalization also gives countries the opportunity to supply its citizens with items that it s unable to produce itself. And there are many factors that affect international trade supply, such as political events. If fighting between Saudia Arabia and Yemen shuts down a Crude Oil port, you can almost immediately expect crude oil prices to increase, because of the decreased supply. Some countries are primarily consumers and importers, such as the United States, and some are primarily suppliers and exporters, such as Japan. These countries depend on their imports and exports, and an analysis of the balance between these 2 factors, gives us insight into the strength of an economy. This analysis is known as Current Accounts. Here's an example of how a country becomes a supplier of a particular item. Let's say country C has a large supply of cotton and can therefore sell clothing for very cheap, but doesn t have a large supply of grapes and can therefore not produce wine at a low price. Country U on the other hand, has a robust grape supply, and can therefore produce wine for a low cost, but does not have a robust cotton supply, and clothing from Country U is expensive. As you can probably guess, Country C will focus its production on Clothing and buy wine from Country U, while Country U will focus production on wine and buy clothing from Country C. This scenario forces countries C and U to have very close economic ties, and the relationship can easily escalate to beyond just trade. Another advantage of International trade is that it encourages investing in foreign companies and assets. When an investor notices that a certain country is the main supplier of a particular item, and the investor believes the demand for that item will increase, they ll invest in that item, and thus invest in the supplying country. Technical Analysis is a method of indicating a markets future performance by evaluating its past performance. We do this by analyzing statistics based on a study of the market history or market trends. 3 Technical Principles 1. Market action Fundamental, political and psychological data are actually reflected in the price of an asset. The basis of all economic and fundamental forecasting is the action of supply and demand shifts. Charts reflect bullish or bearish psychology of the marketplace. 2. Prices move in trends The purpose of charting and price action is to identify trends in early stages of their development & trade in its direction a trend in motion is more likely to continue than reverse. 3. History repeats itself Based on human psychology, which assumes that patterns that have worked in the past will continue in the future. Japanese candlestick chart Technical Analysis is a method of indicating a markets future performance by evaluating its past performance. We do this by analyzing statistics and charts that show us how the asset or industry has been performing. The most popular chart to analyze is called a Japanese candlestick chart. This chart style is so popular because it provides a lot of information and is easy to understand. Japanese candlesticks are also referred to as OHLC which stands for Open, High, Low, and Close, because each candle provides you with that specific information for each asset. The candlestick also displays green if the asset is up, or red if it's down. Trends When you look at any economic chart, you may notice a certain theme. It may look as the asset is headed in a positive direction, a negative direction, or in a steady direction. This theme is known as a trend. Uptrend: An asset with an overall positive trend is called an uptrend. This doesn't mean that the asset will not have any red candlesticks along its uptrend, but when looked at broadly, its highs and lows continue to rise. Downtrend: On the flipside, an asset with an overall negative trend is called a downtrend. The asset may still have some green candlesticks along the downtrend, but a broad picture will show lower lows and lower highs. Ranging Trend: An asset that seems to be staying at the same level is known as a ranging trend, because it stays within a range. In order to determine this type of trend you need to take a broad look at the chart.

11 Support, resistance and Fibonacci numbers 20 Technical Analysis Support: This is the level at which an asset has historically shown not to fall below. It is a basic level at which investors generally like to buy an asset because they believe that the asset will appreciate from this point. The more low points that comprise a support level, the stronger the support. If the asset breaks the support level, a downtrend is expected to occur. Resistance: This is the level at which an asset has historically shown not to rise above. When an asset reaches its resistance level, investors will generally sell the asset because they believe it has reached its maximum price for now and will start to depreciate. The more high points that comprise a resistance level, the stronger the resistance. If the asset breaks the resistance level, an uptrend is expected to occur. Fibonacci Numbers One popular method that is used to determine support and resistance levels is Fibonacci numbers. They are calculations based on the premise that markets will retrace part of their previous movement, after which they will continue in their original direction. These calculations help to determine where an asset might find its support or resistance. Moving Averages Looking at moving averages can make data analysis less confusing, because they make an average from previous data in order to get a clearer picture of how an asset is performing. Depending on how many days of data your moving average is using, you will be able to make a clean chart in order to assess an asset. If, for example, you are using a 10-day moving average, each point on the graph is the average of an assets performance for the previous 10 days. Bollinger Bands Utilizing moving averages, Bollinger bands are lines that show deviations from the moving average. This makes them a measure of volatility or movement. Investors often look at the width of Bollinger bands to predict how volatile a market is going to be. If the bands are far apart, meaning increased volatility, this may signal decreased future volatility, but if the bands are closer together, meaning decreased volatility, this may signal upcoming increased volatility. Retracements Sometimes an asset is headed in an overall positive direction but there are a few minor dips along the ascent. These descents are known as retracements. A downward dip does not always mean that an asset will be headed downward for an extended period of time, but it just might be a slight dip for the short-term. After previously discussing the foundations of technical analysis, we'll now present a basic level of technical terminology and definitions. In this chapter we'll teach you how to extract information about an asset just by looking at charts. And it's not as complicated as you think. Technical Analysis is a method of indicating a market's future performance by evaluating its past performance, which we do by analyzing charts. Trend identification is the most important aspect of technical analysis, and we ll now go through how to identify many different trends from looking at just a few Japanese candlesticks. Please review the previous presentation slides for basic trend terminology that we ll now build on. Trend ranges Trend is a general theme that is noticed when looking at the direction that an asset is headed. We described 3 trend types: uptrend, downtrend, and ranging trend. We will now describe 3 different trend lengths: Long term trend: To determine if a long term trend is occurring, a trader needs to view at-least a 52-week graph. Intermediate trend: To determine an intermediate trend, a trader needs to view a graph that covers a length of 3 months. Short term trend: To determine a short term trend, a trader needs to view a graph of about 4 weeks. Creating support and resistance levels Support and resistance levels are created in 3 ways: 1. Traders decide that this is a good price to buy the asset. 2. Traders decide that this is a good price to increase the amount of this asset that they own, and 3. Traders who are nervous this asset will depreciate, will sell it. Horizontal and diagonal support and resistance When an asset is in an intermediate trend, its support and resistance levels are charted horizontally. When an asset is in an uptrend or a downtrend, its support and resistance levels are charted diagonally. Often times, when a support is broken through it becomes the asset's new resistance level, and vice versa. Elliot wave theory A man by the name Ralph Elliot came up with a theory while analyzing charts, which states that all charts, while their movements seem random, go through a series of similar waves, over and over again. He believed that investor psychology created these waves.

12 The wave theory is interpreted with 5 rules: 22 reliable than head and shoulders. 23 A. every action is followed by a reaction. B. 5 waves move in the direction of a trend, after which there will be 3 corrective waves. This is termed a 5-3 move. C. A 5-3 move completes a cycle. D. This 5-3 move becomes 2 subdivisions of the next higher 5-3 wave. E. the underlying 5-3 pattern is constant but the time span of each may differ. Relative Strength Index RSI is a technical analysis tool to help identify if an asset is overbought or oversold. Basically, the asset's movement is placed on an RSI graph which ranges from The chart contains a horizontal line at the 30 mark and at the 70 mark. 30 represents oversold and 70 represents overbought. Whenever the asset reaches the 70, traders interpret this to mean that it will be selling off in the near future. When it reaches the 30, this is interpreted to mean that the asset will be bought in the near future. Trend trading When trading trends it's important to understand that depending on the time frame you're trading, the time amount on the chart you're viewing will differ. You want to be able to view a trend but not too much or too little time that you won't be able to view any specifics. If trading with a daily chart, view a weekly time frame. If trading with a 4-hour chart, view a daily time frame. If trading with an hourly chart, view a 4-hour time frame. If trading with a 15 minute chart, view an hourly time frame. If trading with a 5- minute chart, view a 30-minute time frame. And if trading with a 1-minute chart, view a 5-minute time frame. Basic price patterns A price pattern is a way of indicating a trend or an asset's reversal, by looking at a limited number of Japanese candlesticks. Head and shoulders This pattern is identified when an asset rises to a high and then declines, then, the asset rises above the former high and declines again, and finally, the asset rises again, but not as high as the second high, and declines again. When head and shoulders is identified, it often signals a trend-reversal. Double top This reversal pattern is identified when an asset rises to a high, then declines, and then rises back up to its previous high. This pattern is generally less Double bottom This reversal pattern is the opposite as double top. It's identified when an asset falls to a low, then rises, and then falls back down to its previous low. It s considered a sign of an upcoming appreciation. Key reversal This reversal pattern requires 3 rules in order to qualify: 1. In an uptrend, there must be at least 3-in-a-row green candlesticks, 2. The length of the apex candlestick shadow line must be at least the length of its body, and 3. The closing price of the apex candlestick must be lower than the closing price of the candlestick before. Triangle patterns Bullish triangle: This pattern is identified where the support line is diagonal, and the resistance line is horizontally upwards. This pattern often signals a bullish breakout. Symmetric triangle: This pattern is identified where the support line is in an upward diagonal, and the resistance line is in a downward diagonal. This pattern often signals a bearish breakout. Bearish triangle: This pattern is the opposite of a bullish triangle. It's identified where the support line is horizontal, and the resistance line is horizontally downwards. This pattern often signals a bearish breakout.

13 24 Technical Analysis In this chapter you ll learn about a variety of advanced technical analysis candlestick patterns, and how to interpret the market movement based on them. The more you learn, the more you'll practice identifying them. And the better you get at identifying them, the more profitable you'll be. Before we begin, it's important to understand that Japanese candlestick patterns can be identified with 1 candlestick but with no more than 5 candlesticks. 3 white soldiers This pattern is viewed over 3 candles, and indicates a bullish trend. It's identified with 3 green candles in a row, where each consecutive candle closes higher than the previous candle s closing. Bearish engulfing This is a 2-candle-reversal pattern that indicates a bearish trend. It's identified when candle 1 is green and candle 2 is red where its opening is higher than candle 1's close, and its closing is lower than candle 1's open. Doji patterns A Doji pattern is identified with one candlestick, and is defined when the asset's opening price is the same as the closing price. There are 3 main types of Doji candlesticks: Long legged is where shadows are long on both sides of the body. It indicates indecisiveness in the market. Gravestone is where the body is under a long shadow. This indicates a bearish asset. And Dragonfly: Where the body is above a long shadow. This indicates a bullish asset. Shooting star This is a reversal pattern that can be viewed over 2 candles. It indicates a bearish outlook. It's identified where candle 1 is green, and candle 2 is red with an opening above candle 1's closing, and a closing below candle 1's closing. Morning star This pattern is viewed over 3 candles, and indicates a reversal. It's identified where candle 1 is a long red, candle 2 is a small red, and candle 3 is a long green that closes somewhere near the middle of candle 1. This pattern shows a reversal to a bullish movement. Evening star This pattern is also viewed over 3 candles, and indicates a reversal. It s identified where candle 1 is a long green, candle 2 is a small green, and candle 3 is a long red that closes somewhere near the middle of candle 1. This pattern shows a reversal to a bearish movement. Breakaway This pattern is viewed over 5 candles, and indicates a reversal. It's identified where candle 1 through 4 are one direction, and candle 5 is large and in the opposite direction. Bullish engulfing This is a 2-candle-reversal pattern that indicates a bullish trend. It's identified when candle 1 is red and candle 2 is green, where its opening is lower than candle 1's close, and its closing is higher than candle 1's open. Piercing pattern This pattern is a bullish candlestick reversal pattern, and it s made up of 2 candles. It s recognized when a bullish candle closes above the middle of a bearish candle. Although the bullish candle doesn t close higher than the bearish candle s open, it s still considered a reversal pattern. Dark cloud cover This pattern is considered a reversal from a bullish movement to a bearish one. It s defined as a 3 candle pattern, where candle 1 is green, candle 2 is long and red but closes below the mid-point of candle 1, and candle 3 is a small red candle that confirms the negative movement from candle 2. Hanging man This is a candlestick pattern that is considered a bearish reversal, and comes at the end of an uptrend. It s defined as a red candle that s open and close are at the top of the candle, and it has a long leg under it going to the down side. Hammer This is a candlestick pattern that s the opposite of the hanging man. It s considered a bullish reversal, and comes at the end of a down trend. It s defined as a green candle that s open and close are at the bottom of the candle, and it has a long leg above it going to the upside.

14 Safe Investing 26 Risk Disclosure 27 After the recession of 2008, investing became very unpopular, and for good reason. Many people lost a lot, if not all, of their investments. But although investing is relatively risky, there are ways to make it safer than ever before. Here are a few tips to remember in order to help you stay safe in an uncertain market: 1. The market has recovered before and will probably recover again this time. Remaining patient even while it may be difficult, might be worth it in the end. 2. Figure out how much of a risk you feel comfortable taking. For this you can also refer to our "money management" video. 3. After you've figured out how much money you feel comfortable investing, spread your money out over a few different assets in order to diversify yourself. 4. Always remember that no asset is a "sure thing" and odds are that your investment will not rise forever. Therefore, it might be a good idea to walk away when you've already gained. 5. Don t invest more money than you actually have. Utilizing these tips is a sure way to keep yourself safe in the market. Binary Option trading and/or Forex trading carries a significant level of risk, and may not be suitable for all investors. Before deciding to invest in Binary Option and/or Forex you should carefully consider your investment objectives and level of experience. You should be aware of all the risks associated with Binary Option trading and/or Forex trading and seek advice from an independent financial advisor if you have any doubts. You should only trade with money that you can withstand losing, and you should never trade under the assumption that you cannot lose the funds you trade with. None of SuperTraderTV.com or any of its officers, directors, employees, other personnel, representatives, agents and/or independent contractors is, in such capacities, a licensed financial advisor, a registered investment adviser or a registered broker/dealer. None of SuperTraderTV.com or its personnel gives investment or financial advice or makes investment recommendations. Nothing contained in SuperTraderTV.com broadcasts, on its website or in its written materials (the "Content") constitutes a solicitation, recommendation, promotion, endorsement or offer by SuperTraderTV.com and/or any of its officers, directors, employees, other personnel, representatives, agents or independent contractors, of any particular security, other investment product, transaction, investment and/or trading. The Content is provided for informational purposes only and it is subject to change at any time without notice. SuperTraderTV.com and/or its officers, directors, employees, other personnel, representatives, agents and/or independent contractors shall not be held liable for any loss or damage, including without limitation to, any loss of funds and/or loss of profit, which may arise directly or indirectly from use or reliance on the Content.

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