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Binary Options

What is Binary Options?

We all know that fundamental and technical analysis methods, when used in conjunction with each other, provide great results for stock traders.

You will make more good decisions when trading choices are evaluated by both of these criteria. This doesn't mean that they are the only influences on a stocks price, however. Sentimental analysis is a good tool to have in your trading arsenal, especially for short term trades. By looking at what the news around a specific company is saying, you can oftentimes ride on the coattails of public sentiment-even if fundamental and technical analysis is not in agreement with the trade you make.

Public sentiment is created and influenced in a number of ways. New product releases are one example of this. For example, when Apple releases a new product, such as they did a few years ago with the iPhone, consumer sentiment can be affected for a short period of time. This happened just recently with a new version of the iPhone, as well. An unconfirmed report about a new iPhone that will be hitting the markets in a month or so caused stocks to jump up by over 1.7 percent in just a few hours of trading. This might not seem like a lot, but the savvy trader could have made a lot of money with Apple just by paying attention to this rumor.

Short term changes lend themselves very well to binary options traders. This is because binary options offer big returns on small price changes. For example, a binary option might return a rate for a single correct trade of about 80 percent of your original amount risked.

Over the course of a single day, when prices steadily rise, as they did when the rumor of the new Apple iPhone hit back at the end of July, a trader can string together several short term call binary options and see a rather large amount of gains.

Trading the news is tough because news reports don't always affect prices. But by finding a piece of news that does influence a stocks price, you can create a very profitable situation for yourself.

Sentimental analysis is wishy washy at time, but when it works, it works in a big way. This is especially true for binary options because you don't need to see a major gain in the stocks price before you see substantial profits. For example, with a binary option, you get the full rate of return even if the price changes by a single penny. With some news, this might be all the change that occurs. Obviously putting together a string of many successful trades under this condition is not always realistic, but monitoring your trading activity and stopping when prices are stagnant will be beneficial to you. There is a steadfast rule in trading that you should only execute a trade under ideal conditions. This holds true even for binary options. Discipline is important in this profession.

Looking at sentimental analysis wont always be successful for binary options, but it will be often enough to be worth looking into. When you use this method along with fundamental and technical analysis methods, you are creating a much more solid strategy than using any one of these methods of evaluating a trade on their own.

Submitted By Rich

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