Expert investors are noticing a distinct trend for the early portion of February. Right now, many traders and investors are taking their cash out of stocks and putting them into bonds of various lengths of time. This is mostly do to the very rough January for many stocks. However, the binary options trader really doesn’t have this as a choice since bonds are not offered in this trading format. Instead, there is a very obvious solution that will help you to make money because of this occurrence. Let’s look at this in a bit of detail so that you can more easily formulate your own plan.
What happens when stocks are sold, on an economic level? If you remember the law of supply and demand, you will know that selling something shows that your demand for it is low. low demand equals lower prices. So a mass sell off of a stock makes prices go lower. And this makes long term stockholders very worried. So instead of buying and holding, you need to take an alternate approach, and this is where binary options become superior. Here, you can trade the down side of things with put options at no extra cost to you. Since there is no ownership involved in binaries, you can profit just as easily when a stock goes down as you would when it goes up.
This is a lot easier said than done. For one, how do you assess this in real time? If you are just a passive reader of the news, you are probably learning about this several days too late in order to take advantage of the situation. However, you don’t have to put yourself in this situation. One easy way to see what’s going on in the markets is to follow the big traders. That means the institutional traders such as major banks and fund managers. Keeping tabs on these big players in the game will let you know exactly what the most educated professionals in the financial industry are doing and where they are putting their money. The residual effect is that even if they are incorrect--and they sometimes are--the huge amounts of money that they are moving will inevitably change prices to some degree, even if it is not long-lived.
These are powerful methods at market predictions, but the problem is that they are only at their most effective when you are executing very short term oriented trades. Luckily, this is a perfect scenario for binary options traders. The bounce that occurs here effectively makes it so when institutional money is pumped into a stock, the demand goes up, thus driving up prices. However, this doesn’t happen for long sometimes. Only the very best day traders can make a good living off of chasing this steam. But that can be very expensive, and mistakes are costly. Binaries eliminate a lot of this risk and make it much more accessible to the general public and the small time trader.
Furthermore, you can be a bit more choosy with your trade placement when you’re doing binary trading. For example, you don’t have to throw money at a small company that might not do anything. You have fewer choices in a binary options broker, but honestly, this can be a good thing. Instead of having virtually a limitless array of possibilities, you can choose from just the biggest and most popular companies and indices. It narrows your scope, but it also forces you to choose only the very best trades. If you use this limitation right, it can help you much more than hinder you.