Pocket Option Trending Breakout Method

We have dealt with Fractal Chaos Indicator and the ADX, which are free to use in the Pocket Option Platform. 

The Fractal Chaos indicator plays a significant role in technical analysis for traders. Here are a few of its key functions:

• Identifying Market Trends: This tool aids traders in determining the overall trajectory of market trends, contributing to more strategic trading decisions.
• Spotting Potential Price Turnarounds: It’s useful in pinpointing potential points in the market where price trends could switch direction.
• Understanding Market Volatility: This indicator can offer a snapshot of the volatility of the market. Periods of high fractal values may suggest extreme market volatility, whereas low values may point to a more tranquil trading environment.
• Deciding Trade Timing: By signaling potential trend shifts, it assists traders in determining optimal times for trade entry or exit.
• Aiding Risk Management: Given its ability to provide insights into market volatility and potential price turnaround points, it can be employed as a risk management tool. Traders can tailor their investment strategies based on these insights to mitigate potential losses.

The Average Directional Index (ADX) is a crucial tool in forex trading for the following reasons:

• Evaluating Trend Strength: The ADX is used to gauge the intensity of a trend, though it doesn’t indicate the direction. A high ADX value (usually above 25) signifies a powerful trend, while a low value suggests a weak or non-trending market.

• Distinguishing between Trending and Ranging Markets: An ADX value below 20 often implies a ranging or weakly trending market. Conversely, an ADX value above 20 typically signifies a trending market.

• Guiding Trade Selection: ADX can assist traders in selecting the most suitable trading strategy. Trend-following strategies are preferable in trending markets, while reversal or range-bound strategies are more effective in ranging markets.

• Influencing Trade Entries and Exits: The ADX is frequently used alongside directional movement lines (+DI and -DI). A cross above +DI can indicate an optimal time to initiate a long position, while a cross below -DI can suggest an opportune moment to take a short position.

• Assisting in Risk Management: Understanding the trend’s strength via the ADX allows traders to manage risk more effectively. In a strong trend, traders may decide to increase their position size or expand their stop loss.