Causes Of Market Movements

Causes Of Market Movements

Causes Of Market Movements

Although it is not completely erratic and unpredictable, the binary options market fluctuates constantly and as such presents traders with a challenge of predicting trends, ranges and prices. To extract profit from changes which are so vital for this business, you must be aware of what causes these changes in the first place, so that you can prepare the appropriate binary options strategy. Therefore, we will analyze some of the most important factors which influence the market’s movement and show you what needs to be carefully monitored if you want to become a successful trader.

Press conferences

The first thing that may influence your binary options strategy are the press conferences (releases) and economic projections made by the most important banks in the world. These banks (such as the U.S. Federal Reserve or the ECB) issue statements which predict how a market will behave in the foreseeable future and this causes the market to become extremely volatile because traders tend to adjust their strategies once these statements are out. Your optimal binary options strategy should by all means keep track of dates these statements are issued (economic calendars are ideal for that), so that you know when to expect new and relevant information. You don’t want your trade to expire when the market is unstable because chances are you will be left out of money due to huge price surges that happen at this time. Carefully choose your time to make an investment and its expiration time – using Oscillators may help you a lot with that.

Causes of market movements | GDPs

Another important factor on the market is an economy’s GDP which can be released either every month or quarterly. GDP influences currencies immensely, so if you like to trade binary options that fall into this particular category, this is the most important piece of information you must acquire. Depending on how positive or negative an economy’s GDP is, a currency’s strength can rise or fall, so you must adjust your binary options strategy accordingly once you obtain this information. The earlier the GDP, the better because it is the first-released GDPs which have the biggest influence on the market and these releases are what you should be looking for when you’re preparing your binary options strategy. Generally speaking, a GDP is an indicator of an economy’s strength and can thus provide traders with some significant information about the moves a government will make in the future or how a particular industry will behave in the following months. With it, you will have a much clearer picture what to expect in the upcoming months. For more useful tips, join our Binary Winners Club.

Causes of market movements | Conclusion

These two types of announcements are among the most influential factors in the trading business and every decent binary options strategy should take them into consideration. Once they are published, the market becomes very active, so plan accordingly and pick a good time to make your investment. Acquiring this information means having an upper hand on the market because you will be able to predict more accurately how the market will behave in the future.

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FURTHER READING:

1. Market Wizards (J. D. Schwager, 1989)
2. The Greatest Business On Earth: A Simplified Guide To Trading Commodity Options (J. Prince, 2010)
3. The Forex Options Course: A Self-Study Guide to Trading Currency Options (A Cofnas – 2008)
4. The Age Of Turbulence: Adventures In A New World (A. Greenspan, 2007)
5. Information-Based Stock Trading, Executive Incentives, and the Principal-Agent Problem  (Qiang Kang,  Qiao Liu-2010)

 

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Author: Ben Prescott
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