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Big Week for the Fed

Let's See What HappensThe week of the Ides of March has a ton of economic information ready to be released. But unlike Julius Caesar, traders don’t necessarily need to beware. Retail sales info from February is coming out, as are the housing numbers, the inflation report, the Consumer Sentiment Index, job numbers, industrial production, and more. Watching these numbers might be a little tedious for those that are heavily involved in technical analysis, but the information that will be revealed will give us a thorough look at the U.S. economy’s overall state of health. This will be a huge help when it comes to deciding the overall tone that trades should take on for the coming month.

The first place to look is at what the best analysts are predicting ahead of time. Typically, these predictions are already taken into account in the market’s tone. If things proceed right at the analysts’ thoughts, little to no changes occur. However, when things start to deviate from the predictions, wild swings in the market can occur, and this leaves open opportunity for traders to take advantage of. If you aren’t paying attention to the reports and what’s expected from them, then you are leaving yourself open to unnecessary losses.

The Federal Reserve has a policy meeting beginning on Tuesday, March 15th, and what comes out of this will be likely to set the tone of the markets for the rest of the month. Until a statement is released at the conclusion of this meeting—most likely on Wednesday—traders are likely to be very cautious. As you start looking at binary options setups for the week, keep this in mind. Cautious tends to equal sideways motion, and for most binary traders, this is a clear warning to stay out of the marketplace until some sort of decision is reached. No news does not equal good news in this instance. If you do trade, be sure to limit the time before expiry and perhaps even be ready to scale down your risk per trade. Sideways markets can still be profitable, but the uncertainty factor goes up dramatically. Looking for ranges, and then taking advantage of them, is the clearest way to stay ahead of the game here, but even this can be risky if you aren’t paying attention to the news. Gravitating toward other markets where more information is currently available, such as the Forex marketplace, is a good idea for some. You can trade currencies through binary options, but the upcoming news will also affect the price of the U.S. dollar, so be sure that you have timely updates.

The other thing to be on the lookout for is if the Fed raises rates again. This is unlikely according to many, because if they do, volatility will increase dramatically. This is what happened after the December rate hike, and a sense of stability is just beginning to appear within the marketplace—three months later. Raising rates again would create further issues with the stock market, and many investors are not prepared to handle this. It’s very unlikely that the Fed is too concerned about individual investors, but the confidence levels in the market are something that they do consider, and the evidence points to the fact that this is only now just beginning to rise. Still, paying attention to the Fed’s decisions will be vital to your success. However, if long term stability must be bought at the cost of short term volatility, the former will always be chosen by the Fed, and for this reason, something unpredictable can happen. Having a plan for that, just in case, is a must.

Risk Disclaimer

Watching the Dow’s Volume

Indices, like the Dow Jones Industrial Average, do not have a trading volume, per se, mainly because they are measures of a group of stocks, and not an actual asset themselves. Derivatives of indices can be assets, and these can have volume, such as you see with ETFs, mutual funds, and binary options that rely on the price of an index for their worth, but the index itself cannot have a volume. This can make it hard for index traders to gauge momentum when it comes to an asset’s changing value, but luckily, there are ways to get an accurate idea of where things are headed without this concrete number.

We bring this up because right now, there is a ton of focus on the Dow. Almost every trading day in 2016, the Dow has started out with plummeting prices, only to try and drag itself out of the hole it has fallen in later in the day. [Read more…]

Gold Trading Volume Rises

A recent report has revealed that gold coins are selling at a furious pace in the United States. The last time this happened was right at the beginning of the financial crisis back in 2008. There is market volatility right now, but much of the uncertainty that investors see is based upon guesses and speculation of what might happen in the future. [Read more…]

Oil Crashes 8% and Looking Lower

Now that oil has crashed 8 percent, is it really the worst that the crude industry will see in the United States? This is what many experts believe, but is it realistic to base your trading of this commodity off of this information? This is the worst selloff that crude has seen in about five months, but a barrel is still about $10 off of its six year low. While many believe that the worst is over for oil, others believe that there’s still a lot more downward pressure and that there’s a chance it will test the six year low and fall below $42. [Read more…]

Backing it Up With Binary Options

Right now, the U.S. stock market is being torn by two different types of sentiment. One group of people believes that the market needs a breather and that a correction is right around the corner. The other group believes that there are stocks that will keep going up at the ultra fast pace that we’ve seen over the last couple years. There just might be enough of these people trading to help boost prices artificially for some time still. If you are able to pinpoint where these opportunities are, you can use that information to your advantage and increase your profit rate a little bit more. This type of trading approach requires a lot of research, but it will uncover areas of opportunity that not many others are cashing in on.

First, be warned that a lot of the stocks that have the biggest upside potential also have the highest amount of risk. They typically take the form of cheaper stocks; those priced at under $5 per share. Depending upon how you trade these, there may not be much of a reason for you to venture here. Some stocks have restrictions on how you may trade them. For example, it’s currently not legal to sell short penny stocks. This immediately removes half of your choices when it comes to making money. In other words, the trader that is going to be successful consistently in any market is limiting themselves if they take this approach.

Trading the DirectionInstead, you need to focus on bigger stocks. Again, you will find yourself limited, though. In order to make a profit day trading, you need to be able to front tens of thousands of dollars at a time in order to overcome any sort of variance that might occur. It is not something that the average person can do, or even wants to do. And, it is something that limits your profitability.

This is why binary options have caught on so quickly. They allow you to day trade, but with small amounts of money. They do limit your available stocks to just the biggest companies, but most traders would already be in this situation for reasons listed above. You can use all of the same evaluation strategies, but a lot of the technicalities that need to be overcome in the stock market are simplified here. It’s certainly not the same because of the trading platforms, but it’s a great starting point for smaller traders. As the industry grows, many pros are finding that they prefer binaries, even. Binaries are improving a lot, and traders are finding that they are more profitable than ever before.

The beauty of all of this is the fact that although the six year old bull market is gaining more doubters every day, there’s no need to let this hurt your trading potential because of self imposed limitations on what you can and cannot do. If you take a position on a stock, and the markets begin to drop, there may be limitations placed on selling short on a more comprehensive level, such as what happened after the 2008 financial bubble. Then, selling short was completely banned for a few months. If this were to happen in the stock market today, many traders, including hedge fund managers, would be in a rough spot. Binary options present you with an opportunity to keep these alternatives open and gives you room to make money on your own terms as they are independent of the stock market regulations for the most part. At the very least, having this as part of a backup plan opens doors that were not there before.

Risk Disclaimer

Improving Analysis for Better Profits

Reactionary trading is usually not a great recipe for success in the traditional markets. There are a few reasons for this, but first, we must correctly identify what reactionary trading is. It is executing trades after information has already been acted on. If there is data out there that the price of gold will begin to drop, reactionary trading involves selling off future contracts after prices start to drop. Data has come out, the market has begun to react, and the reactionary acts once it is clear what is happening. There will be solid gains when a great trader uses this method, but they will always be smaller than they could be.

The reactionary could be profitable if three stipulations are met. First, the reactionary must act as early as possible. They must hop on a trend as close to the beginning as they can in order to ride the profitable waves for as long as possible. Second, they must have a good and reliable method of telling when the trend will end. And third, the [Read more…]

Riding the Bull

U.S. businesses are in a definite bull market right now, meaning that the overall trend for stocks is decidedly upward. And according to many finance professionals, this is still in the beginning stages. Since mid-2009, stocks have been creeping upward. On Monday, the S&P 500 closed above 2,000 points for the first time ever, highlighting this fact. Some experts think that this could go on for as long as another 15 years, which means that jumping into the markets now might still be a good idea, even though many indices are at record high prices. Just because they’re there now does not mean they are ready to come back down.

There are some issues with this theory, of course. Businesses are doing well, but the average American is not. There is a distinct dichotomy between these two things, and whether or not it can continue is debateable. Can businesses keep increasing in price if the average consumer cannot keep participating in the businesses themselves? [Read more…]

Real Life Affects Asset Prices

Political environments have a direct impact upon the financial markets. The effect can be more severe than others–depending upon the instance–but politics go hand in hand with the economy, and understanding this relationship can only lead you to making more money down the road.

Trading TimesLet’s look at a recent example so that we may see just how these two separate facets of life interact with each other. You’ve probably heard in the news about the Malaysian airline being gunned down over Ukraine. The threat of a war in this area has negatively influenced assets all throughout Europe. The European stock markets have dropped over the last week or so, and assets considered to be safer to Europeans have gotten stronger. Gold, the Japanese yen, and government bonds have all risen in popularity over this time. But because the Pro-Russian separatists have recently handed over the black box of the plane that was shot down–a signal of cooperation between different political beliefs in the area–the European stocks on Tuesday went up in rebound fashion. [Read more…]

Prepping for a Downturn in the Market

Recently, a team of U.S. regulators warned major banks about a potential for an increase in the amount of defaults on home equity loans. If you remember correctly, this is one of the big things that happened right before the recession that began in 2008. Housing markets crashed, largely because of the fact that loans were being made that were not being paid back. Before, the loans were not being paid partially because of the fact that the practices in which the loans were made were less than reputable. Tighter restrictions have been made since then, but borrowers are still seeming to have difficulty making payments.

It might be tough to understand at first. The stock market is doing better than ever right now, so why are there so many economic problems at the individual level? [Read more…]

Why Hedge Funds are Losing Out

Hedge funds have long been seen as an investment strategy reserved for the rich, something with a strong likelihood of making these elite investors even richer. In reality, all that a hedge fund actually is a loosely regulated investment fund, one that is legally allowed to trade different types of securities and use non-traditional trading methods, all for the purpose of creating a profit when other markets are struggling.

In that light, it doesn’t make much sense that many hedge funds are struggling in today’s economy. With Wall Street hitting record highs on a routine basis right now, why would an investment tool that is designed to outperform the stock market be losing money when stock indices keep going higher and higher? [Read more…]

Taking Advantage of the Post-Holiday Boost

The rest of the world seems to be very optimistic about the U.S. economy right now. For U.S. based traders, this is something that you should be taking advantage of to the best of your ability in order to max out the amount of profits you are making.

It really doesn’t matter if you are based within the U.S. or not, though. When the U.S. economy is doing well, the rest of the world tends to follow along, too, since this is the world’s most active and biggest economy. When the U.S. is healthy, so is the rest of the world. But the fact is, there are fewer obstacles and more doors are opened for trading opportunities when you are based in the United States. Even if you live in China or somewhere else, odds are you can be just as successful. [Read more…]

What Does the Beats Acquisition Mean for Apple?

Apple is close to buying the headphone maker Beats Electronics, reports are now saying. This isn’t exactly a surprise to those that are tech savvy, but for short term traders, what does this mean? Beats has made a big name for themselves over the last few years by manufacturing trendy high quality headphones, so it makes sense that Apple wants to take advantage of this, and there’s no reason to think that they would do so if it wouldn’t make a long term profit for them. The big question that remains, though, is: how should this action–if it happens–be treated by those who want to trade Apple’s stock over the short term?

There are two approaches to figuring this out. First, what does a buy out like this financially for Apple? To do this, you need to look at the reports and papers involved. Right now, Financial Times is saying that the purchase price will be around $3.2 billion. [Read more…]

The Coffee Affect When Trading

There is a direct link between stocks and commodities, although at times it’s not always that obvious. For example, when oil is selling well, companies like Exxon see profits go up. That’s an easy one to understand. But what about when something else happens, something a lot less obvious? To better understand this, let’s look at a current example that you might not have thought of before.
Coffee Trading on the Binary Market
It’s easy to imagine why oil is the world’s most popularly traded commodity, but did you know that coffee is number two on the list? The raw beans that are roasted and ground up to become the drink can only be grown in certain areas of the world, but the demand for this beverage is worldwide and immense. There is little supply (relatively) and a huge demand, thus driving the price up for this crop. However, a large number of publicly traded companies rely on coffee for their survival. So when coffee is cheap, these companies can charge less [Read more…]

Same Event, Different Actions

It’s no secret that the banks all throughout Europe are having difficulties. And it’s also not a secret that elections all throughout the EU take place next month. There is reliable speculation that governments throughout Europe will be approving a bunch of bank reform laws quickly in order to get them out of the way before the elections take place. Political reasons for this aside, this could have a profound impact upon both the euro’s price in comparison to other major currencies and the prices of stocks of the major European banks.
Taking on the EURO
First, you need to expect the impact to come in two different parts: immediate and long term. The immediate impact will be based upon how the public reacts to these changes, and this will largely be determined by what the media says. [Read more…]

Riding on the Coattails

The big news of the day is that the NASDAQ Composite Index went down well over 1 percent on Monday, mostly because of the sudden and huge decline of biotech companies. As of 2 PM Eastern Time, eight of the nine companies that declined in value the most were either pharmaceutical or medical research companies. The healthcare field and related industries are usually a pretty safe investment since this is a service that will only go up in demand over time. The combination of a growing population plus the need for ongoing medical and scientific advances will always make this industry grow. So, why the big decline all of a sudden?

The first thing to note is that companies may come and go. [Read more…]