Golden Mean is Very Interpretative


In any case in the world people always want to justify things. Especially related to things that can be very suggestive, even magical. So also in trading binary options. Is the Golden Mean, one of the numbers that is often heard in trading activities. The Golden Mean can be treated as a magic or magical number by some traders. However, is this number really magic?

The Golden Mean or often called the Golden Mean is believed to be the ratio that carries completeness. Including, on the financial market. Exactly, in the universe of the Golden Mean, the meaning is the sacred number 1,618 or it can be called 0,618 depending on the direction of the movement. This number is usually operated on triangular objects. Usually this number is multiplied by the height of the triangle to determine the position on the remaining side.

"His name is also magical, Golden Mean in reality does not fully justify the strategy. It doesn't even really have predictive power.

Know the Pattern Before Applying the Golden Mean

In predicting prices in the future, some traders sometimes depend on these magical numbers. They make a triangle pattern on the price chart. Furthermore, at the price level of the widest part of the triangle, they multiply that price by the sacred number 1,618.

To be sure, to apply this magical number traders must recognize graph patterns. Some devices are also needed to support their implementation. Among other things, many traders depend on MetaTrader 4. These tools are very easy to download on your gadget device. You can even request access to this software when you sign up for a demo account.

The next step, enter the triangle pattern indicator into the software and calculate the width of the chart. Increase the number given by 1,618 for the uptrend chart, or 0.618 for the downward trend in the price trend. This calculated number should be the target price according to the Golden Mean method.

Golden Mean is Very Interpretative

The problem, as a Golden Mean tool, is a very interpretive application. That is, in the use of this tool has a lot of flexibility for specific steps that need to be followed. Of course, it requires precision.

The next problem is replication. Which must be a question, do you really apply the Golden Mean method because you find a way of trading that makes sense? That is, if the application runs consistently, of course trading will end with profit. But the problem is, there is no guarantee that the pattern will always end with similar results. The triangle pattern in practice must be interpreted, very interpretive. Not something absolute.

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Success in one trading activity cannot be applied to other actions on the same asset class. The easiest example is trading EUR / GBP currency pairs that do not apply equally when trading in the USD / JPY currency pair. In fact, in static pairs like EUR / USD. That is, what happened yesterday is not necessarily happening again today despite the same pattern being applied. In fact, despite still applying the same magical numbers.

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"Maybe Golden Mean can be applied in a trading period and the right results. However, magic numbers are not always correct as justification in the trading steps. Especially in the situation the price continues to move. There are many other patterns that are easier to recognize and more established to use, "