Fundamental analysis in binary options trading is of great importance if you invest in options.
Rise and fall of the stock prices depend on supply and demand. Therefore, market fluctuation forecasting based on the actual global events is referred to as “fundamental analysis”.
Traders dealing with currency pairs have to consider the economy and political situation in the country currency of which they trade when they do a long-term forecast. The exchange rate of a currency depends even on the smallest events in thecountry. Investors in securities should follow the news of the companies, stock of which they trade. For instance, such factors as management and staff changes, release of the revenue reports can make an impact on the stock.
Fundamental analysis of binary options
Natural disasters, changes in the policy of a country, strikes, and accidents influence long-term market forecast. Monthly regular small changes help investors do short-term forecasts.
Examples of Events Causing Market Fluctuations
Recently, Toyota suspended production because of explosion at the Japanese nuclear power station and made heavy losses. Also, the company suffered big losses when a large number of finished cars were washed away by a tsunami wave. The losses caused the company stock to decrease. Meanwhile, binary options traders dealing with AnyOption bought PUT options expecting the price to fall. Investing $1,000, they made $850 free of risk or, in other words, an 85% return.
And this became possible just thank to the news.
Apple’s valuable senior employers left the company to join its competitors, Google and Facebook. This caused Apple stock to fall and the competitors’ stock to rise. These events were covered in the news; all knew about them. As you know, price can decline or rise for several days, that’s why binary option investors could put in massive capital and made a 1000% return! They succeeded due to fundamental analysis of binary options.
Such events take place in the world regularly; therefore, staying abreast of them, you can always catch a good moment for a profitable trade.
Bad news makes prices fall, good news pushes them up. Fundamental analysis in binary options trading will help you increase your profit.
Trading binary options, you need to have in mind that there are two directions in fundamental analysis, namely:
Right in time
Long term reaction
Right in time
is an immediate reaction to news which means that immediately after the news release the price either soars or plummets. During this period, you can make a profit on short-term binary options. However, you need to react within 5 to 15 minutes, otherwise you lose the opportunity.
Long term reaction
After the first 15 minutes, you buy a long-term binary option for a period of a day to a week. The first bounce is a result of a traders’ reaction, and then price moves more or less steadily.
Remember! There is no bad or good news from the point of view of a profit. The only thing that matters is news release.
Any news reports can make the price of an underlying security either rise or drop and cause rally on the market. Therefore, you can earn on binary options even during a crisis.
You have to perform your own fundamental analysis of binary options. Generally speaking, each investor has to decide himself whether an event can have an impact on the price of the underlying security he trades.
Deep knowledge of the market and understanding of the fact that fundamental news can cause price fluctuations will help you make a good regular profit.