Learn Binary Options

Global Equity Markets rallied hard to open the week.  This follows the G-20 meeting of Governors in which there was universal commitment to keep liquidity flowing until a sense of self sustaining economies return.  This was preceded by the U.S. dismal Unemployment Rate print of 10.2% on Friday. In the U.S today the DJIA was up 203 points to finish the day at 10,226.

On the commodity front Gold showed no signs of letting go of its torrid rise.  Intra-day high for Gold touched 1,111.20 before settling back down to 1,104 a gain of nearly $6.  Oil was up as well today, gaining $1.86 to close at 79.29.

The Dollar was offered broadly across the board today.  The DXY had an intra-day low below 75, but closed the day just above 75.  A close below 74.85 would be a strong bear signal for the greenback and with prices at pivotal handles right now across the G-10 we could see a major dollar slide.

A lot of data due out for Tuesday and aside from CPI in the EUR zone not much is going to firm the dollar.  Although we heard a lot rhetoric from Central Banks last time FX markets were at these levels in attempt to slow the Dollar slide, I do not think CB’s will flood the market with strong dollar talk this time around.

Upcoming Forex Events for November 10, 2009

EUR    German CPI (MoM)   Actual  0.10% Forecast  0.10%  Previous  0.10% 

GBP     Trade Balance            Forecast  -6.20B  Previous  -6.20B    

EUR    German ZEW Economic Sentiment Forecast  55.00  Previous  56.00 

AUD    Westpac Consumer Sentiment           Previous 1.70%  

Research by http://www.ufxbank.com

EUR/USD:

The EUR now looks poised to continue its breach of resistance and head north to 1.5265.  One of the factors that we consider when looking for technical entry and exit points is the speed at which price is moving.

Graphically speaking you can eyeball this by examining how steep a slope is or how long the bars are over a period of time relative to other bars over a similar period of time.  The Relative Strength Index (RSI) is one very common momentum indicator that essentially measures the velocity of price over a period of time.

In the graph below the RSI (lower chart) is considered over bought above 70 and oversold below 30. Between 55 to 70 and the RSI moving up would be an indication of a strong trend.  While the RSI headed down between 45 and 30 indicate a weak trend. Notice on the Chart that the green vertical lines highlight RSI crosses above 70 and they were subsequently followed by a retrace in price as apparent in the upper chart.

I liken this to elasticity.  If you immediately pull a rubber band backwards or forwards it will shoot the opposite direction at a speed in accordance with the pressure you exerted.  However, if you slowly stretch the elastic it can with stand a greater force exerted on it without the need to snap in the opposite direction.  Price behaves in a similar fashion.  Following most significant violent moves in the market there is usually a correction that takes place.  Price was pulled to hard to fast.  This has not been the case with EUR thus far which is why it has been able to use a simple moving average for support.

We have noted on several occasions that the EUR is using the 50 day MA as support for its move upwards.  On November 3rd we once again bounced off of the 50 day MA support and we have also retraced the move down after breaking 1.50.  This is another notable, once a psychological level, like 1.50 on the EUR, has been broken it becomes less of an obstacle to price appreciation the next go round and sometimes even acts as a spring board for price.

Analysis by http://www.golearnforex.net

Equity Futures are mostly negative tonight suggesting a slightly lower open.  This weekend saw the board of governors from the G-20 assemble.  Although a number of important topics were discussed there was agreement amongst the board that economic stimulus should not be removed until further signs of a steadied economy are present.

We closed out last week with a bang as U.S Unemployment printed worse than expected to 10.2%.  This obviously concerns investors that if unemployment does not at least bottom it could derail the already fragile economic recovery.

There was a slightly quieter week this week on the data front.  We will be watching the Canadian Housing Starts for October.  Although we do not expect any surprises here, nonetheless the CAD is quite volatile these days.

Upcoming Forex Events for November 9, 2009

CAD   Housing Starts            Forecast    155.00K    Previous  150.00K

JPY     Bank Lending (YoY)              Previous   1.60%        

GBP    RICS House Price Balance     Forecast    29.00%    Previous  22.00%

AUD   NAB Business Confidence                                Previous  14.00

Research by http://www.ufxbank.com

USD/JPY:

The Dollar Yen has been relatively volatile as of late.  On the chart below there are levels of support and resistance indicated by the bright green horizontal lines.  We have now tested 89.90 twice on the close.

Additionally, the 50 day MA is closing in on that level.  If an entire candle sits above the 50 Day MA then we would expect price to move towards the next resistance level at 92.00.  However, if the price closes below 89.90 then we would expect a further drop to the next level of support at 88.00.

Lastly, one additional chart to look at is the correlation between the DXY (which is an indexed weight of the dollar, based on a basket of currencies) versus the Yen.  What you see since April is that as the DXY has depreciated the JPY has appreciated. If you have a negative dollar bias than you will want to go Long the Yen as we approach S&R.

USD/CAD

The Canadian Dollar is in a very vulnerable position at this juncture.  Fundamentally, the CAD has come under pressure from its own Central Bank as well as recent poor economic data.  It completely retraced its mover lower towards Dollar parity.

I looked at the CAD over a number of different tenors from a 4 hour to a Daily to a Weekly.  On each of those charts there were technical indications that the CAD maybe in trouble.  I will focus on the weekly chart, although I do not trade from a weekly but rather use it for confirmation of trends.

Based on the chart above there are 3 points that get my attention even before we look at any additional oscillators or indicators or the like.  1) The red rectangular box shows levels congestion or S&R for the CAD. 2) The red lines that make up  the ‘v’ shows a complete retrace of the previous move 3) In the square red box you have a “Hammer” shaped candle (although it more so resembles a mallet).  A trader who purely uses candles would have closed out his Long CAD position after the formation of the Hammer on a weekly chart. 

Looking at the daily chart the CAD is also closing in on the 50 day MA.  It is very possible that on poorer than expected economic news from Canada or a firmed greenback that the CAD will touch 1.10 this week.

Analysis by http://www.golearnforex.net

There are several types of binary options that you can use to trade in the stock markets. These options provide you with a wider range of trading opportunities that you can make use of according to your preference.

The first type of binary option is the one touch binary trade. This refers to the situation where the trader sets or predicts the rate at which the specific stock or currency will trade, as well as the amount of profit to be made from the trade. In this type of binary trading, you already know the extents of how much you will gain or lose, that is, your potential payout and your loss respectively. 

The second type of binary trade is the no touch binary option. This is where you as the trader decide that you will make a profit if and only if the rate of the currency or stock does not reach your specified optimum, which is also called the trigger, before a specified period of time. If you choose a trigger that is further away from your option rate, your payout potential decreases because there is a higher chance that your currency will not reach your specified trigger. This type of option requires experience and intuition.

The third type of binary trade is the double one touch option, where you choose two different triggers and set your payout if one of them reaches your set price. This type of option is used when you are trading in a market that is very volatile and you cannot guess which direction it will take. This increases your chances of making profits from such markets. 

The other type of binary trade is the double no touch option, which is the direct opposite of the double one touch trading option. This is because the double no touch is used when there is an expected outcome in the market direction, which is the case in range bound markets that are much less unpredictable.

With these types of binary trading also come the types of binary investors that are usually found in the assets markets.

The long call investor is one who predicts that the stock’s underlying assets will increase, and therefore buys the right to buy that asset at the market price, based on the strike price, that is, the price at which the asset closes in the market. This can be practiced as part of the one touch binary trading option.

The short call investor is one who predicts that the underlying assets will decrease in market value and therefore can sell the assets at the strike price. This is the opposite of the long call investment, whereby in long call one buys the asset while in short call the investor sells the asset.

There is also the long put investor who bets that the asset will decrease but chooses to buy the right to sell the asset at the fixed market price. The short put investor does the opposite in that the short put investor predicts that the asset will increase in value.

You can combine any of these types of binary trading options to suit the type of market that you are investing in and maximize your chances for making profits.

Binary options are the type of trading option that can give you only two outcomes: you can either gain or lose. This characteristic of binary options makes them easy to use and understand, therefore giving you a chance to make money in the stock market. This characteristic also gives binary options several different names, such as digital options or bungee options, because their outcomes are only two.

Before using binary options trading, you should first and foremost study the markets that you are interested in. Keep a record of the trends of the particular stocks that you want to invest in, and do not bet on them until you are completely sure that it is the best thing to do.

Binary options trading operate in a straightforward manner. First of all, you will need to set aside some amount of money that you intend to trade with. The choice is yours depending on your financial ability. Avoid getting into debt at all costs especially if you are entering into binary options trading for the first time.

Next, you can choose the binary options trading company of your choice. This can be easily done online by searching for active binary options trading sites. This is beneficial because you can trade from the comfort of your own home. Select the most trustworthy site for trading to ensure that you will be trading securely.

You can proceed to purchase the binary options that you want to trade with. Here you will need to know the types of binary options available to you, the type of underlying assets that are present, and how long the stock will be active for. This requires you to know and understand the binary options terms, such as put, call, in the money, out of the money, one touch, double touch, and so on. You will need to study them before investing in binary options trading.

After purchasing your binary options, keep an eye on the stock markets to notice the trends in your chosen stocks. This will help you evaluate whether your prediction or bet was worth it, as well as be able to estimate or calculate your returns. You will need to note down the changes in the stocks and determine whether your binary options will end in the money or out of the money.

If your bet ends in the money, you will be entitled to your payoffs as stipulated in your purchasing contract. On the other hand, if your bet ends out of the money, you will lose the capital you had placed on the binary options. This is the reason why binary options are also referred to as ‘all or nothing’ options, since if you win, you take everything, but if you don’t, you lose everything. This is a risk you will need to be aware of before trading in binary options.

That is how simply binary options trading works. You can use binary options trading to make profits from the stock markets and improve your financial status.

Trading in binary options will only be successful if you have the relevant information, the relevant training, a killer instinct, and if you have and know how to use different binary options trading tools. The binary options trading tools have been developed over many years by people who used trial and error and they are designed to give a binary options trader the ability to trade quicker and more accurately.

 A must have tool for a binary options trader is a trading calculator. Trading calculators can be difficult to use and for this reason, there are different calculators for experienced traders and learners. A popular trading calculator is the Simple Probability calculator. This helps the binary options trader, and traders in other options, to calculate the probability of an option closing in-the-money. Another popular trading calculator is the covered call writing calculator – this helps the binary options trader in figuring out the different rates of return.

Another of the important binary options trading tools is the index work bench. This tool is designed for beginners and learners and its main purpose is to educate on how to manage different types of risks. Another purpose of an index work bench is to show beginners and learners how they can increase their returns. An index work bench is used by traders in other options and traders in other financial instruments as well. If you are a binary options trader, you will learn all about options contracts, equity options, etc. You will learn through charts, but also thorough theory and other methods.

 Volatility data is an important tool for a binary options trader. Volatility data is volatile, meaning it is past and present data on the options. With volatility data, you will be able to determine which options are the best for you – you will make this determination based on your observation and analysis of the data, meaning you need analytical skills and intuition. Volatility data also helps you predict the price movement and to know the underlying assets that are underpriced and overpriced.

Virtual trading tools are very important for beginners and learners. Without this tool, the only alternative would be trading using real money. This is risky because the binary options trader will not be in a position to make consistent profits.

 Another important tool when trading in binary options is an expiration calendar. This calendar shows you the expiration dates for different underlying assets. It is an important tool because you will avoid you will avoid making mistakes when buying and you will know the about holidays, you will know when the dates for LEAPS conversion, you will know when relevant info is about to be released, etc.

 All people trading in binary options should know how to interpret charts. The analysis will help you make good investment decisions. Charts usually have all the information you will need for success in trading in binary options because you will get call/put ratios, profit/ loss strategy charts, option price charts, etc.

 A binary options trader needs a symbol directory for ease in interpreting symbols and for the ability to tell the strike prices for some wrap symbols.

Gold does it again setting a new high to 1,097.72.  Oil also broke back over $80 a barrel to an intra-day high of $81.06.  Gold advanced following India’s tremendous purchase from the IMF yesterday while Oil strengthened on the back of the Oil Reserve Reports indicating reserves were down in the U.S.

Global Equity Markets were in the black for Wednesday which of course spells trouble for the greenback.  The dollar gave up over 1% today to 7 of the G10 currencies.  Adding to the dollars troubles was the FOMC announcing that they will continue to keep rates on hold for the foreseeable future, thus enabling the U.S Economy time to rebound.

It will be another busy day on the economic data release front for Thursday.  In Switzerland, CPI is set to print while in Australia Trade Balance figures are due out.  However, the 2 releases that will garner the most attention are the rate decision from both the ECB and BOE. Although, both are expected to keep rates on hold it will be the accompanying statements that potentially provide the market volatility.

Upcoming Forex Events for November 5, 2009

USD    ADP Nonfarm Employment Change  Actual  -203.00K Forecast  -190.00K  Previous -227.00K

USD    Interest Rate Decision  Actual  0.25% Forecast  0.25%  Previous  0.25%    

NZD    Unemployment Rate   Actual  6.50% Forecast  6.40%  Previous  6.00% 

JPY     Monetary Policy Meeting Minutes

EUR/USD:

The EUR is still seeking some direction having just bounced off of support of the 50 day MA.  In the daily  EUR Chart below we once again are looking to our Fibonacci levels in search of some key handles.

I believe if we surpass 1.50 as a non-event after having tested that level and broken through it, then entering a small Long EUR position may be in order.  If we break the Fibo 76.4% level currently at 1.5162 then I would look to increase the Long EUR position.  On the other hand should a EUR candle be contained entirely below the 50 day Moving Average then a Short EUR position could easily be entered into with stops just above the 50 day MA.

USD/CAD

We may continue to see the CAD strengthen against the greenback.  Up until a week and half ago the Loonie was on course for dollar parity.  If you recall the BOC came out sharply against its own currency essentially causing the CAD to tank.

The daily CAD chart below shows that we have bumped along the 1.0850 handle 7 times since the end of May, and most recently just a couple days ago.  If it were not for fear of more BOC market interference this would be a great time to enter a Long CAD position with a stop at CAD support of 1.0850.  Additionally, if we see CHF break or hold dollar parity that will bolster CAD strength as it rides the tailwinds since the Canadian economy is substantially less soft than the U.S.  If Oil continues to strengthen, that will also add further support to CAD’s continuing firming.

Gold surged ahead again today making new highs after hitting 1,088.50  India’s Central Bank bought 200 metric tons of Gold from the IMF.  That purchase equates to roughly $6.7 billion, a highly uncommon move by a Central Bank.  Oil advanced on the day as well.  It is currently holding at $79.50 a barrel.

Global Equity Markets were down Tuesday, although the Dow Jones finished the day nearly flat after giving up 17 points to close at 9771. Futures are mixed heading into Asia and London sessions.  Warren Buffet announced today that his company, Berkshire Hathaway would purchase Burlington Northern for $26 billion in a show of confidence in the U.S economy.

In the Forex Markets the Dollar was mixed with the DXY holding steady above 76 for the moment.  The RBA raised rates by a quarter point as expected to 3.5%.  The AUD was unchanged for the day as the move was already priced in.  A number of key data releases are set to print tomorrow in the U.K, New Zealand, and the Euro-zone.  However, probably none will be more watched than the Federal Open Market Committee’s interest rate decision and accompanying statements.

Upcoming Forex Events for November 4, 2009

USD    MBA Mortgage Applications              Previous    -12.30% 

USD    ADP Nonfarm Employment Change   Forecast    -190.00K              Previous  -254.00K 

USD    Interest Rate Decision            Previous  0.25%          Forecast  0.25%  

NZD     Unemployment Rate              Previous  6.40%          Forecast  6.00%