There are many different strategies used in the analysis of technical charts to figure out how to make potential binary options trades. Some of these are more complicated than others and different traders have different ones they like to use. One of the stronger and more widely used analysis factors is that which uses what is called ‘fractals’.

What exactly is a fractal? Fractals are considered to be a key indicator of a potential price reversal. They are plotted on a chart through the use of placing arrows or small triangles above or below an analysis chart candle.

If they are placed at a top of a candle they are considered an up fractal (the market is thought to be bearish here and you would place a put call option) and when placed at the bottom of a candle are considered a down fractal (the market is thought to be bullish here and you would place a buy on a call option); so the arrow or triangle positioning becomes very important in helping you determine whether to place a put or a call when making your binary option trade based on fractals.

Fractals are made of five candle formations. A fractal is considered bearish if it is formed when the highest part of the center candle is higher than both the candles that precede it to its left. A candle is considered bullish if its center candle low is lower than any of the other four candles. This may seem complicated at first, but most online trading programs will automatically display fractals if you have them selected.

Fractals are known as constantly being ‘repainted’ on an analysis chart. This is because the next candle in the time frame being used can create a whole new fractal which makes the previous one obsolete.

Once again this may seem a little confusing until the method is used a few times to get the hang of reading the fractals and what each one represents. A trader must also be aware of not being too hasty to make a decision based on a fractal until the time period of the fractal has come to an end; otherwise repainting could take place and you will have made a trade based on what could be considered faulty information.

Again, overall when fractals are used properly, they are a very useful tool in helping a trader make a successful trade based on predicted price reversals.

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John Miller

Author at 7 Binary Options

John Miller is the main author of content here at 7 Binary Options. He’s also the brand’s lead investment consultant. He’s been working for 7 Binary Options since April 2014 and brings a wealth of knowledge and experience to his role. He’s played a crucial part in developing the site and helping it grow. In his role as writer and consultant, John’s keen to help others get ahead in the ever-changing world of binary options and forex trading. He’s always happy to advise others, whether it’s complete beginners learning the ropes or more experienced traders looking for some hints and tips.

John certainly knows what he’s talking about. He graduated from California State University in 2008 with a Master’s Degree in Investments and Securities. Since entering the world of work, he’s continued to put his degree to use. He’s spent over a decade working in the investment banking sector and thanks to his foresight, skills and education, he’s in a prime position to offer help to others looking to start investing.

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