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The Fed Makes a Change

Fed ChangeJanet Yellen is very likely to become the first female head of the Federal Reserve today. This in itself isn’t a likely market influencer, but her policies and beliefs might very well have an immediate impact upon how the U.S. stock market and other financial areas react, especially over the coming week.

The implications actually go pretty deep. Yellen needs to be confirmed by the Senate before she is able to be appointed to the office. This is very likely since she was appointed by Obama and the Senate is controlled by the Democratic Party. So in all likelihood, her policies will probably be right in line with the Democratic philosophy toward the economy.

This is a concept that often goes ignored in the world of binary options, but that doesn’t mean that it’s not helpful. Understanding how politics plays a role in the economy can give your trading a big boost, both long term and short term. And for fans of long trades, the prognosis is very good. Yellen has been at the forefront of economic recovery since the housing market crashed in 2008 within lower posts in the Fed. It has taken several years, but right now the stock markets are performing better than at any other point in history. Long term traders that focus on fundamental analysis are very likely to realize this and take the appropriate actions by buying stocks and bonds very shortly after the appointment. This means that an immediate boost in prices is very likely.

The increases will not be uniform. Some assets will go up more than others. In the world of binary options, though, this doesn’t matter. If an asset goes up in value and you have a call option open on it, it really makes no difference if it goes up $1,000 or $0.01. You still will realize the full benefit of the investment.

Trading the news like this, however, is certainly no replacement for researching the markets. But it does make things a little easier and more obvious. If you are already an established trader, it is information that you can use to help determine future trades on your niche of the market. If you are new to binary options, it can get you poised and positioned for your first few trades.

Yellen’s appointment will bring some long term problems though, and these are things that will be very difficult to overcome. The stimulus package that the Fed is utilizing right now cannot last forever and some sort of exit strategy will be necessary. This is probably not going to be popular amongst traders and prices will go down across the board when it does happen. This is in the future though, and short term binary option traders do not need to worry about this fact for the time being.

For those of us that focus on a few very high quality trades per day, this news does need to be acknowledged, and if we analyze it right, we can see good results. News like this does affect the marketplace, and when it’s general, over-arching news, it will affect many different sectors and types of assets. Stocks and indices will be affected the most dominantly, but U.S. based currency pairs will also see changes because of this. Commodities will to a much smaller degree because these are typically internationally based. Strong U.S. centered commodities will be affected more severely than others. For example, corn futures will see bigger changes than crude oil. This is where your financial expertise steps in. If you have knowledge of a few specific assets, you can use that to guide how you use this information more successfully. Risk Disclaimer

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