How to use a trendline to trade on the Binomo platform


Trendline on Binomo

The Binomo platform offers a very useful graphical tool which is a trend line. You will need to draw it yourself, but I will guide you through this procedure. A trend line follows the movements of a price along a trend.

During an uptrend the trend line joins higher lows. During a downtrend, it connects lower highs.

Thinking about becoming a successful trader you cannot ignore the skill of drawing and using a trend line. This is why I decided to write this article for you. I am going to use an example of an uptrend. Be aware that during a downtrendOpens in a new tab. analogous rules shall be applied.

Essential aspects of an uptrend

First, let’s talk about an uptrend itself. It happens when bulls are in charge of the market. You will see bullish (i.e. green) candles on the chart. The price will move upwards. It does not mean that the price cannot adjust. But if it occurs, it will be just for a short while. Then it will move further up forming a higher peak in comparison to the previous one.

Take a look at the picture below. Although the price went down for a moment (3), peak number 4 is visibly higher than the peak number 2.

Basic uptrend scheme
Basic uptrend scheme

These small adjustments happen because the bears are trying to take over control. They try to lower the price and so the movements down are observable. Nonetheless, price adjustments are temporary and soon after the bulls are back at the steer.

In our exemplary diagram, a price adjustment takes place from point number 2 to 3. This is when sellers try their power to drive the price down. But at point 3 buyers come back and the price is going high up to point number 4.

Price adjusment area
Price adjustment area

Every trend will produce smaller or bigger price fluctuations. During an uptrend, it will be a bearish force that brings the price down. You will soon notice that the correction zones determine the support and resistance levels throughout the trend.

How to trade with a trend line during an uptrend on the Binomo platform

Drawing a trend line on the price chart on Binomo

As I mentioned in the beginning, you will have to draw a trend line yourself. Once you log in to your Binomo account and set the chart for Japanese candlesticks with a chosen time frame, you will need to find the “Chart preferences” icon on the left side of the platform. Click on it and go to the “Tools” tab. There, you will find a tool that is called “Trend line”. Select it, choose the color and thickness, click “Apply” and you will be able to start drawing.

Selecting trendline tool on Binomo platform
Selecting the trendline tool on the Binomo platform

Remember that during an uptrend you have to link higher lows. Take a look at the exemplary chart below.

When you are satisfied with your line, simply click on the “Stop Drawing” button.

When you finish click STOP DRAWING
When you finish, click STOP DRAWING

Opening a buy position with a trend line on Binomo

It is recommended to open buy positions during an uptrend. Check out the next diagram.

Market turning points during an uptrend
Market turning points during an uptrend

During an uptrend here the price has formed peaks 2, 4, 6, 8 and 10. These are the moments when the bears came into action and brought the price down. Although these are temporary price adjustments, you should not enter the trade on top.

Instead, wait until the bulls regain control that is when the price is in points 3, 5, 7 or 9. These are good moments to open buy positions. Nothing lasts forever and the trend will change the direction at some point in the future. That is why it would be a good idea to hold your positions open for a shorter time as the trend progresses. This means that your position should be shorter at point 5 than at point 3. And at point 7 it should be shorter than it was at point 5.

Trendline and accelerated trendline on AUDUSD 5m chart
The trend line and accelerated trend line on the AUDUSD 5m chart

Drawing a trend line is quite simple. Just remember that you have to connect higher lows during an uptrend and lower highs in a downtrend. The trend line is used to verify a genuine trend.

You may wish to practice using it on the Binomo demo account. This is a very helpful feature on the Binomo platform. If you have any comments on trading with the trend line, share them with us in the comments section down below.

Best of luck!

 

 

 

Bart Bregman

Fulltime Day trading, and help Binomo wiki in my spear time to build an awesome platform to help beginners out there. #digital nomad, traveling all over the world.

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