US indexes had performed badly yesterday, with the Dow being the one who was hurt the most. The price slumped more than 200 points, top tick to bottom tick, as the tensions between the US and North Korea continue to be at high points. Binary options activity had been extremely intense yesterday as the move progressed on the downside.
Latest comments from both US and North Korea officials had fueled the risk aversion as the situation seems that it will escalate further in the near future.
Technical pattern suggests further continuation might follow
Looking at our chart below, the downside move started on September 1st, after the release of the US NFP and Unemployment figure, which came below market expectations. The market then gapped lower since over the weekend news regarding a successful test of a hydrogen bomb by North Korea had been released. A consolidation structure followed after the gap, confirming that the buyers were not eager to fill it and regain terrain.
Following the consolidation period, we see an impulsive bearish leg down, which took place yesterday, which account for more than 200 points. Interestingly though, after yesterday slump we see again a consolidation structure building up, so a usual impulsive vs. corrective move structure, which could signal additional selling might follow.
If the political tensions will escalate further we expect the price to resume the downside and break below the bottom of the current consolidation. Binary options could be placed in case a breakout occurs, so there is a lot of profit potential on the table.
The US equity market is in a very bad technical position and current downside risks might trigger a stronger wave of selling as the prices are still located around all-time highs.
Risk Warning and Disclaimer
Trading binary options on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. No information or opinion contained on this site should be taken as a solicitation or offer to buy or sell any currency, equity or other financial instruments or services. Past performance is no indication or guarantee of future performance.
If you are reading this articles, you most likely want to learn more about binary options. And you want to learn more about this subject because you want to make money. That is the ultimate goal of trading, no matter what market you are involved and it should be yours as well.
However, just saying “I want to make money” won’t get you there and also, this is not the most exact finish line you can have.
Planning is a critical aspect, but before we dig into the actual process of making a plan, let’s first focus on the objectives of a plan: goals. And more specifically, let’s see how you should set them effectively.
As George T. Doran said “There’s a SMART way to write goals and objectives” so let’s see how his method works.
From his point of view, a goal or objective should have 5 basic characteristics:
S – Specific: it should be clear and define exactly what you want to achieve;
M – Measurable: you should quantify it with at least a progress indicator;
A – Achievable: specific to those you want them to become real;
R – Realistic: you should set goals that can be achieved, in an objective way (becoming a billionaire out of binary options trading in less than a year is not one of those).
T- Time: you should also set a deadline for the goal that you’ve set.
By taking into account the aspects described above, you can effectively set your own goals and set them in a way that you could accomplish them.
Knowing exactly what you want and having it all written somewhere, is one of the factors that make a difference between those who are making money when trading binary options and those who don’t.
With that being said, think about what you have done wrong in the past when setting your goals and see what you can improve from now on, in order to be able to achieve great success when trading binary options. In a future articles we’ll discuss in greater detail the planning process, but until then, we hope you enjoyed this one.
As with forex trading, with binary options trading you have a handful of types of orders available. We’ll make a list of them and you should use them in order to fully understand their purpose
Why is it important to know all the type of orders available and not just stick to a few?
Because the market behaves in different ways and by knowing all the types of orders available, you can adapt to different circumstances and manage to profit from unexpected movements.
Also, by knowing all the order types that are available out there, you can use it as a way to choose your broker. Not all the brokers are offering a wide variety of binary options orders so you should focus on the ones who do.
High/low binary option – this type of order requires you to speculate whether a particular asset will be higher or lower. The key moment is the expiration time, that’s when the price should be higher/lower, depending on how you place your order.
Call/ put binary option – one of the most popular types of orders, similar to the one above. Also, another important type is the 60 seconds binary option, commonly used by traders.
One touch binary option – a trader can profit from this kind of order when the price of a particular asset reaches a predetermined level, also known as trigger. It is very helpful when the market is moving impulsively in a particular direction.
No touch binary option – as opposed to the one touch binary option, the no touch order requires that a particular asset won’t reach a predefined level, before the expiration time.
Double No touch / Touch binary options – The same rules apply as above, only this time the option will have two triggers, not just one.
Range binary option – this type of order requires that the price of a particular asset should trade in between a top level and a bottom level, aka range, before the expiration date. If the price won’t break the range before that, you will be in the money zone and make profit.
Short-term binary options – there are a lot of binary options categories included here and the difference between them is the expiration date. 60 seconds, 2 minutes or 5 minutes are the most popular and can be used to speculate small moves of prices.
With that being said, these are the most important type of binary options orders you should know and make sure the broker that you choose will have them available for you.
As an old saying says “When something is too good to be true, so should think more about it”. Since we’ve talked about four advantages of binary options trading in one of our previous material, we want to focus this time on four disadvantages of trading binary options so you won’t be aware of the risks involved in this area.
As a brief risk remainder, so should be aware that speculative investments carry risk and you can lose money, so before jumping into it you should understand both the positive aspects and the negative ones and only then see if it is appropriate to invest your money.
The main pitfalls of binary options trading
- Lack of regulation – since binary options are relatively new instruments, there is no significant regulation around it and because of that there are few agencies who can monitor this sector.
- Poor reward to risk ration – even though you manage to find good trading opportunities, with binary options you will make around 90% profit on a winner and lose 100% of your risk if the market will move against the direction you thought it will go. Having higher than 50% accuracy is a must if you want to generate long-term profits with binary options trading.
- Few order types – call/put options are, in general the only options you have available, since you just have to speculate the direction of the price over a given period of time. No limit of stop order, in comparison with the forex trading.
- No stop loss order – even though you see that the market is going against of your direction, you are not able to close your position, before the option expires. This is one huge disadvantage as being able to close it ahead of the expiration can help you reduce a huge part of the losses. Lately, some of the brokers begun to introduce that option as well.
This are one the most important negative aspects you should consider before starting to invest in binary options. Hope the material helped you understand some key concepts about this subject.
Following recent slump in US equities, generated by the rising tensions between the US and North Korea, which culminated with the latest missile launch over Japan by the communist regime, the Dow Jones managed to find support again around the 21680 and begun to trade impulsively higher.
US fundamentals supporting the recovery
Options trading activity might had been very high lately as the bulls were driving the index upward impulsively. It looks like optimism begins to rise again as economic activity in the US does not seem weak, with the latest GDP preliminary release point towards a 3.0% increase in the second quarter of this year.
Also, corporate gains had been strong, exceeding analysts’ expectations, support the Dow upward current long-term upward leg that begun after the election of Donald Trump as president.
So far the Index found resistance around 21920 area and options trading could be intense there since the area capped the upside on August 23rd as well. If the bulls will manage to overcome that obstacle, the price could continue head towards 22.080 figure, where selling activity might intensify again as the area had been the starting point for the previous bearish leg.
If 21920 will cap the upside, range trading will prevail and the price could head lower again towards 21680, where the bullish leg started.
Also, keep in mind that today and tomorrow there are some new economic indicators due to being released from the US, culminating with tomorrow’s Nonfarm Payrolls and Unemployment Rate, which, as usual will generate high amount of volatility.
The development of the current relation between the US and North Korea could also continue to have a huge impact on the Index price as selling activity intensified each time bad news came out.
To sum up, considering that the Index had been trading impulsively for a few months in a row, we expect buyers to treat every price deep as a new opportunity to get long so the upside trend should continue for the short-term horizon. So far, the Dow had been one of the best performing indexes and it should continue to be that way.
The financial industry developed tremendously in recent years due to the technological developments and alongside with that, new and more complex trading instruments had become available, not just for institutional investors but for ordinary people like yourself.
This material will focus on four advantages of binary options trading and show you what are the key reasons for why you could trade them.
Why is binary options trading so popular these days?
When it comes to these instruments, there are some key features that make them unique. The following traits are four of the most important ones that can make you decide to invest using binary options.
- Fixed risk- since you know from the start how much you can earn and how much you can lose you can develop a proper risk management model that can help you avoid blowing up your capital and manage to attain consistent results.
- Variety in terms of assets available for trading – with binary options trading you have the availability to trade a few thousands of instruments across different markets, allowing you to diversify your portfolio.
- Easy for beginners who just started trading – compared with other assets that are harder to understand when trading (like stocks, for example) trading binary options is easier since it does not require complex knowledge about the financial industry.
- Quick results – with an effective trading strategy and a well-designed risk management system + the discipline to apply diligently the rules that you’ve set up, you can acquire great results in a short period of time.
These are four of the advantages you can benefit from if you choose to trade binary options. However, we would like to emphasize again that trading is not easy, not matter in what market you are investing, so just because use have those advantages, that does not mean you don’t have to work hard in order to achieve great results.
In our next material we’ll focus on some of the disadvantages of binary options trading, so you will know what are the main risks if you choose to invest in this market.