With binary options becoming more and more popular nowadays, it is only natural for the traders who hope to make some cash to be in constant search of new and improved techniques to minimize risks and maximize profits.
Varying from simple hedging methods to more advanced risk reversal approaches, the number of different strategies grows each day. Still, no matter how different they are, there is one thing that connects them all: none can be successfully executed without a thorough market analysis.
No one can undermine the importance of knowing well the asset you are trading. Knowing what affects its price and how lays the ground for successful trades!
Here is where the Binary Options Fundamental Analysis comes in handy!
What is the Binary Options Fundamental Analysis?
In simple words, it is the process of examining the real-world factors that can affect the price of the asset you are trading.
This includes both the internal and the external factors. Such factors may be various levels of data, from global events to company information. They include interest rates, financial and political policies, all sorts of macroeconomic events as well as environmental influences.
In today’s world with a 24/7 internet access available on all kinds of devices, gaining this sort of information is rather easy. Still, even though following the news from across the world has never been more simple, it is sometimes difficult to find ways in which the events in the news correlate with the assets and influence their price.
There are certainly some areas that are of greater importance when implementing the Binary Options Fundamental Analysis. These include:
Assets such Corn, Coffee, Soya or Oil can be heavily influenced by the change of weather conditions and natural disasters.
For instance, severe storms can wipe out many corn fields in no time. This cuts the number of supplies available for the market significantly. The demand for the asset is then larger than the supplies available, which makes the price go up!
Many things to do with politics are to be considered.
Wars affect the price.
Also, events such as government change or change of policies can be of an importance, for they influence fundamental areas such as public spending, public borrowing or growth methods.
Different economic releases can have an immediate effect on the direction of the markets.
Data released by some research agencies or some companies can change significantly the price of the asset. Even government data releases are important to keep in mind.
Knowing information about things such as the GDP – Gross Domestic Product, the Unemployment rates and the Retail Sales, can be of great help in the big world of Binary options.
Knowledge has always been the key to success and the Binary options market is not an exception! That is why oftentimes the Binary Options Fundamental Analysis is regarded as the most important method of them all.
The Binary Options Fundamental Analysis is the one thing on which all the successful traders agree: whether you are new in the Binary options world or you have been residing there for a while now, you cannot make money without implementing it!
DISCLAIMER: Futures, stocks and options trading involves substantial risk of loss and is not suitable for every investor. The valuation of futures, stocks and options may fluctuate, and, as a result, clients may lose more than their original investment. The impact of seasonal and geopolitical events is already factored into market prices. The highly leveraged nature of futures trading means that small market movements will have a great impact on your trading account and this can work against you, leading to large losses or can work for you, leading to large gains.
If the market moves against you, you may sustain a total loss greater than the amount you deposited into your account. You are responsible for all the risks and financial resources you use and for the chosen trading system. You should not engage in trading unless you fully understand the nature of the transactions you are entering into and the extent of your exposure to loss. If you do not fully understand these risks you must seek independent advice from your financial advisor.