So far this year, most investors have been crushed by market panic, China’s economic slowdown and a commodity crunch like few others in history. But when storm clouds gather for investors worldwide, binary options traders can have a field day. It all depends on the trading strategy that traders will pick, the time span they pick for each position they open, and their ability to react to sudden changes. To do this, binary options traders will need to read the markets well, which under the present circumstances, is surprisingly easier.
Basic Market Trends
Since the bears took over financial markets all over, reading the markets has become a function of choosing and asset and understanding when people are going to sell. The key concept for binary options traders right now, is precisely short selling. There is a lot of it going on right now, much of it related to commodities and many of the currencies that depend on strong commodity prices. Some consumer goods stocks have also been hit, so it is worth taking a good hard look at those as well.
Keep in Mind
There is no doubt that there are no investment gurus out there that can tell you exactly how to invest, but there are key players who can indicate how a given asset is going to move. The great advantage in binary options trading is that you can open either a put or a call position on any asset, just as easy. That means you can profit when the market comes down or when it goes up equally. Binary options traders who can adjust their strategy according to the overarching trends of the market and the asset class they want to invest in, should be having a field day right now with the markets heading into the red.
Binary options traders should also take into account that there are short recoveries and rallies in bear markets. That means that reading the overarching market trends properly, will provide a great advantage, and since we have established that bear market trends are relatively clear, half the job is already done. It is still necessary to study each position thoroughly before investing, to get the details and the timing right. It is also important to have a binary options risk hedging strategy.
Social Trading can Provide Valuable Hints
In order to calibrate the specific moves and their timing, binary options traders can take a look at how the most experienced traders are exploiting the bear market. This can provide valuable information to add to their analysis and could improve success chances if used correctly. Remember that trading has a great psychological component and understanding the trend means understanding where people are moving. This being said, market behavior so far this year is clearly bearish. At points it seems that there is an asset fire sale going on out there and people are getting crushed. So make sure you take that into account to adjust your binary options trading strategy, because one investor’s misfortune can be a huge boon for the savvy binary options trader.