Understanding Time Frames and Trends in Binary Trading

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In Binary options trading, it is usually very hard to grasp the essence of time frames and trends. Trends and time frames are amongst the most valuable and highly significant trading strategy and every binary trader receives a recommendation to understand it thoroughly. But the primary question is…’what is a trend?’. Well, defined in simple terms, a trend is primarily a direction in which something shows development or movement (in other words, it could be termed as a growth pattern). When it comes to financial asset trading; the trends are usually measurable entities pointing towards the price direction (up or down).

Generally, there could be several trends operating within a specific time frame. To make sense of trends and their types we may broadly categories them into secular trends for longer duration, primary and secondary trends for shorter duration etc. Thus, making sense of trends can seem like an impossibly twisted ordeal to most and the factor of timeframes simply add up to the complexity. Something that you may be able to identify at a time frame, may not be that obvious in another one.

Trend analysis is focusing on the precise direction of market and predicts the probability of an upcoming market trend. So, in this guide we are discussing all about timeframes and trends to help binary traders make sense of these overly confusing concepts.

These are among the strongest and primary trends for binary traders to get familiar with. The beauty of secular trend is that it reflects the prevailing economic circumstances and may last anywhere from 7 to 15 years.

To grasp the concept of secular trends, we must also discuss types of markets that are available to you; i.e. secular bear and bull markets. In secular bear market you would see a downward-sideways trend for a time period that is measured to be in years. While a secular bull market shows the market trends to move in upward direction for a period of years. Moreover, in secular bull markets one of the likeliest things is to see the bear markets (the short-term ones) returning to bull markets, instead of turning into drastically major corrections. A similar shift of trend would happen for secular bear market but in reverse direction. If you are interested in observing such trends, you would consult a trend chart of ten years or more; you may make use of the monthly closing to add a focal point to the chart.

In a secular market, the price movement that happens to be the largest measurable amount is always a primary trend and it often lasts anywhere from 3 to a period of 5 years (depending on the overall trend strength). Often, you might come across a pattern where within a secular market, you would see quite a few primary trends that may end up with a final bull trend that may break the secular bear market top range. However, it is only an example scenario and the trend patterns could emerge any other way as well.

This is the type of analysis many binary options software and signal providers utilize in their systems.

One of the key points to note in a secular bear market is that the bear-market primary trends are a lot stronger and stays for long, in comparison to that of bull market primary trends (and vice versa for bull markets).

Secondary trends can be observed within the primary trends and are usually ‘near-and-short-term’ dips and rallies that are powered by various events or news. These are the type of trends that holds great interest to the binary traders because they are focusing on monthly and weekly expiries.

Why Should You Conduct a Trend Analysis at all?

Well, as a binary trader we all are primed to think critically and question every other strategy and technique in order to sift through the unwanted techniques in the market. When someone brings up an elaborate and exhaustive trend analysis, it is very natural to be quizzical about it because trend analysis is a dedicated and time-consuming process. So, let’s discuss why is it so significant for binary traders to conduct a trend analysis and set their goals accordingly.

One of the most important reasons to go for trend analysis is to facilitate the understanding about why a certain trade opportunity would be more profitable than another. In case the market is showing a lower trend in the primary trend segment, then, it is more likely for a bearish play on the secondary trend pattern to work (as opposed to a bullish one). Similarly, in case of a signal in a secondary trend that offers confirmation for the primary trend, there’s a greater profitability chance than attending to a secondary signal that is basically counter to a primary one.

A key strategy to enjoy a thriving trade business is to have ample time frame options. Most often, a secular trend is way too long to be able to hold the interest of binary traders, however, you can get started with a primary trend and move on a secondary one, then the near-term trend options. All in all, when you consider all three trends in synchronization, it improves the chances of success for a signal substantially.

With this guide you should be able to get started with tweaking around the trends in binary market with a more confident footing and holistic understanding. So, do your thing as a binary trader and do share how did it go for you! Comment below.

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    Making sense of trends and time frames is an often confusing task. At any one time, in any given time frame, multiple trends can be at play. There are long term secular trends, shorter term primary trends, still shorter term secondary trends and yet shorter still near and short term trends. Adding to the confusion of trends is the time frame. What may be easy to spot in one time frame may not be so easy to spot in another. This article will help to make some sense out of trend and time frame for binary traders. This is an important aspect of trading and one that I highly recommend everyone master regardless of their chosen strategy. The old saying, “the trend is your friend, trade with your friend” is as true today as the day it was first spoken. Likewise, the saying “a rising tide lifts all boats” is equally apt.

    A trend is defined as a general direction is which something is moving or developing. In the case of trading financial assets a trend is a measurable direction in prices, usually up or down. Trends can and do exist in every time frame and understanding how they work is one key to avoiding frustration. Imagine this, the tide is rolling in and each wave that comes onto the shore is a little higher than the next. All of a sudden one wave pulls way way back, looking as if the tide may have turned. Is it more likely that the next wave will meet or exceed the previous high water mark or less? This is the essence of trend analysis, determining the direction of the market tide and the probability that the next wave will be higher or lower than the next.

    The Secular Trend

    The first, and strongest, trend for traders to be aware of the secular trend. The secular trend is one that last anywhere from 7 to 15 years and is usually in synch with underlying economic conditions. A secular bear market is one in which the markets trend down to sideways for a period measured in years. A secular bull market is one in which the markets trend upward for years. In a bull secular market it is more likely for shorter term bear markets to meet support and return to bullishness than they are to result in major correction. The same is true in reverse for a secular bear market. This trend can be observed on a chart of 10 years duration or longer as shown here. I use monthly closing to help focus the chart. Within the secular bear market labeled here there are periods of up and periods of down markets, these are the primary trend.

    The Primary Or Long Term Trend

    The primary trend is the largest measurable price movement within a secular market. These trends tend to last from 3 to five years depending on strength. You can see that within the secular market I have market there are at least five discernible primary trends ending with the final bull trend that broke the top of the secular bear market range. Take note that during the secular bear market that the bearish primary trends are much stronger and of longer duration than the bullish primaries. This same phenomenon will be true in reverse for secular bull markets. In order to analyze the primary trend I drill down to a 3-5 year chart of weekly closing prices, whichever is needed to include the entire movement. This next chart shows the final primary trend of the 1999-2020 secular bear market. We can see again that on this chart that there are shorter bull and bear markets within this trend but that the underlying primary is in control. Bear markets are not as deep as bull markets are tall. Trades made in this time frame would have an outlook of weeks or even months.

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    The Secondary Or Short Term Trend

    Within the primary trend are secondary trends. These are the near and short term rallies and dips driven by news and events. They are also the trends of most interest to me and other binary traders focusing on weekly and monthly expiries. To view the secondary trends I move down to charts of daily price action like the one below. Signals on this chart would have an outlook of a few days to a week or up to a month. There are even trends within this trend driven mostly be fears and expectations and less by actual news or events.

    Why Is Trend Analysis Important?

    It is important to understand trend for several reasons but most importantly to help understand why one trade is more likely to profit than another. If the market is trending lower in the primary trend then it is less likely for a bullish play on the secondary trend to work than a bearish one. Likewise, if a signal in the secondary trend confirms the primary trend then it has a higher chance of profiting than a secondary signal that is counter to the primary trend. One way to line up a great trade is to have as many time frames in confirmation as possible. The secular trend is really too long for binary traders but you can start with the primary trend and move down to the secondary trend and then the near term trend. A signal taken with all three trends in alignment has the most chance of success.

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