How to Trade Twitter Options using Binary Options

How to Trade Twitter Options using Binary Options

Submitted by adil on Wed, 07/23/2014 - 17:30

When's the Best Time to Trade Twitter Options?

The major question in every trader’s mind regarding Twitter options is to figure out the most suitable time to buy it, because it is very difficult to anticipate its movement in a short period of time during which they are traded in the binary options market. This is the reason why traders find it hard to predict the appropriate time in which they can trade call or put options. However, if they are able to resolve this issue and know when to trade Twitter options, they will be in a very good position to earn profits no matter how the stock market will perform. Some of the techniques that enable traders to trade effectively by recognizing the right time to trade the Twitter options are discussed below. These techniques can also be used for other stocks, currencies and commodities.

Relative Strength Index

It is a technical momentum measure to match the immensity of latest profits and losses in order to find out the oversold and overbought state of the underlying asset. The Relative Strength Index, also known as RSI, is used to determine the suitable time when prices reach the overbought and oversold conditions. It can be measured on a scale of 0 to 100, where numbers close to zero represent the oversold market price and numbers close to 100 represent overbought stock. It is favorable to trade the call options when the Relative Strength Index is at 20 or less than 20. However, if it is at a scale or 80 or above, a trader should consider trading put options. A more aggressive trader can choose to trade call options at 30 and put options at 70.

Moving Average Cross

Moving Average Cross is a well known basic method, and it works efficiently in short time duration. If you look at the Twitter stats of the past few months, you will see that its prices were showing a declining trend. Therefore, it is not wise to choose a long time period for trading. A trader should ideally use a short time frame, such as, 60 minutes trading time or 30 minutes trading time.

Let’s take an example of two moving averages, one of which is for 10 periods and the other one is for 20 periods. A reasonable time to purchase call options is when the moving average of 10 periods traverses above the moving average of 20 periods. But when the moving average of 10 periods cut beneath the moving average of 20 periods, a trader should buy put options. This technique is useful for traders to define profit targets on either side of the market, and is sure to provide a few profitable trades.

Moving Average Convergence Divergence

This Moving Average Convergence Divergence, also known as the MACD, is used to evaluate the brief momentum in the binary trading market, and focuses on the difference between two different ‘exponential moving averages’ so that it can be identified when the price patterns are strengthening. Being a trader, you can use a crossing point of the MACD higher or lower than the signal line. Although, it is a risky technique, yet, you can increase the likelihood of producing profitable trades by using the zero-line cross to show the opportunities of call or put options trading.