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Getting In on the Right Side of the Market

Get the Right SideEven short term binary options traders need to pay attention to fundamental indicators. This has become very apparent recently with the jump in the value of the U.S. dollar against several other currencies. There’s only one major reason why this has happened, and it is a key fundamental indicator. The private sector jobs report was released for the end of 2013, and it was much better than originally estimated. The employment rate–especially in the private job sector–is usually seen as a very good measure of how strong a nation’s currency is. More jobs means more money being pumped into an economy, and more of that currency being put out into the marketplace. And with the economy looking like it’s in better shape than at first thought, traders are beginning to take notice.

Obviously there are a lot of things like this that influence currency prices. Job reports are just one piece of a big puzzle. When the employment forecast looks good, the Fed is able to make decisions that will ultimately favor the dollar in the world marketplace. More jobs means that less stimulus money needed, and a big part of this is seen by the increase in interest rates. Higher interest rates imply that the dollar is worth more than before. The less effort that the Fed puts into fixing the economy, the stronger the economy is perceived as.

Call it fundamental analysis (which it is), or trading the news (which it also is), things like this can give you information about certain assets without having to go through all the trouble of reading complex charts and mathematical equations. However, the effect of news-based trading moves is usually short lived. A situation like this one, though, might last as long as a few days before the market corrects itself back to a more efficient pricing system. Even then, long term trades should still be profitable. A week from now, it is very likely that the dollar will be priced higher than current levels.

This is even true of the world’s most popular binary option, the EUR/USD pair. Over the course of Wednesday, the Euro lost almost half a percentage point against the dollar, something that was definitely not expected. This pair hasn’t exactly been steady as of the last several months, but the Euro had been viewed as gaining in strength over the last several weeks. While this may not yet be a game changing event, it does mark a significant turnaround in the dollar’s slow decline.

On that note, there are some important things happening over in Europe that may affect this relationship into the future. The European Central Bank has flagged some concerns about the stagnant inflation of the Euro, and this might change how EUR/USD trading takes place down the road. Again, it doesn’t matter how you view this, but when the changes do occur, they will happen in a manner that allows short term traders to make big profits. If you are going to trade with this information in mind–and you should–remember that your timing is more important than anything else. All the information in the world will not help you if you place your trade order at the wrong time. Things like this happen all the time with various assets. Your job is to narrow your search and focus on a few assets that you can learn well, and use the knowledge you gain for your advantage. The point is, there is more than one approach to gauging the market with accuracy and good results. If you are making a profit, your methods actually don’t matter. Trading isn’t about a certain methodology, it’s about end results.
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