The main point of any action taken in business or trading is gaining reached through deep understanding of possible movements in cost of different assets. IQ Option offers wide diversity of analytical tools for analyzing of pricing mechanisms together with tutorial notes and video lectures.
Changes in prices of an asset over time can be predicted as by technical as by fundamental analysis that are conceptually different in their performing. First one implies deep researches of external/internal data about asset’s environment. Second one is based on analysis of statistical indicators related to an asset’s price, building of pies and graphs and factors, that could be a trigger for unusual movements. Factors to be considered during such analysis are much more easier for perception, this is why this analysis is so popular among unexperienced traders.
Basic inputs accepted
Main idea used during technical analysis is that assets historical cost for different periods of time and looking for patterns applied for changes of prices. To perform analysis described above It is important to accept three assumptions:
Price set serves as indicator of tendencies in internal and external environment. Prices for different assets are affected by news and announcements, world events, artificial stimulation of purchases and supply constriction and so on. There is no need to make separate researches as fundamental analysis proposes, it is enough to make conclusions on triggers and main factors, that cause price changes.
There is a system in movements of prices, they are not changed haphazardly, but have certain trends to be analyzed and understood.
System is used to be repeated. In general prices are used to react by the same way for the same type of factors. Sometimes the whole cases can be repeated as enough time passed.
IQ Option offers popular and effective tools listed below (list below in not exhaustive):
Moving Average (MA). Simple tool for reflecting price trends. The purpose is to show price extremums smother and update data on a regular basis. It is important to remember that the newest data has the higher priority in analysis.
RSI, that shows the strength and possibility to be changed of the trend.
Bollinger Bands (BB). Fact used in this tool is that prices used to remain in ce rtain ranges of upper and lower amounts. It is represented by three lines, that reflect prices change and it speed in a time (middle one) with respective minimum (lower one) and maximum (higher one) limits. Market assumed to be unstable in case lines are far away from each other and vice versa.
MACD is actually a combination of approaches used in MA and BB.
Any analysis shouldn’t be limited by use of only one tool. The best effect can be reached by combination of tools and correct interpreting of respective results obtained.