Types of flats

Types Of Flats

Types Of Flats

If you already have some experience in trading binary options, then you know that identifying flats can be of great help to you. However, these moves come in a variety of shapes and sizes, so we decided to take a look at some of the most common types of flats you can come across. Do remember that it takes some experience if you want to implement the things we will be talking about here correctly, so if you’re new to the world of binary options, we recommend an article from our Binary Options for Beginners section. If not, let’s get started – there is much to discuss.

Types of flats | Basics

This is not the first time we’re discussing this issue. Our regular readers will remember that we talked about Flat Patterns in another article, but there we focused primarily on the so-called normal flats. These types of flats require the b wave to retrace more than 61.8%, but we’re not going to talk much about that here because we don’t want to waste your time by repeating ourselves. Let us just say that these flats can be independent or complex (a part of a bigger correction), so it’s important to study your chart carefully. We should also mention common flats in this part of our article, moves that have all three parts almost identical. However, there are more useful types of flats you need to know about, so read on and learn all about them.

Types of flats | The importance of the c wave

In a flat, wave c is often the most important one and can tell you a lot about future market movements. For example, we have normal flats ending in triangles, which are flats whose c wave is the longest wave of the formation, often going over 138.2%. Time also plays a major role here, since the c wave usually lasts as much as a and b waves combined. This can help you a lot in Choosing your expiration date. On the other hand, if the c wave is so weak that it can’t push beyond previous retracement and hovers between 38.2% and 61.8%, you can expect a strong countermove in the near future. Therefore, you should either set short expiry times or start trading in the opposite direction when these types of flats appear.

Types of flats | Conclusion

As you can see, there are many types of flats and recognizing them can tell you exactly what follows once the corrective move on the market is over. Therefore, all experienced traders must know how to recognize and interpret them. Without this knowledge, you can’t make the step towards being an expert trader. However, like we said at the beginning, some experience and knowledge will be necessary to master this subject, so try to work your way gradually towards it. Read more of our educational articles and keep investing in yourself as a trader and you will be profitable in no time at all.

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FURTHER READING:

1. The Alchemy Of Finance (G. Soros, 2007)
2. Investing For Dummies (E. Tyson, 2011)
3. Information-Based Stock Trading, Executive Incentives, and the Principal-Agent Problem  (Qiang Kang,  Qiao Liu-2010)
4. Responsible Excellence Pays! (Fussler, Claude-2004)
5. Encyclopedia of Chart Patterns (T. Bulkowski, 2005)

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Author: Ben Prescott
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