Learn Binary Options

Nowadays more and more people are investing in the foreign exchange and stocks market as a result of the kind of profits many have reaped in this kind of trading. For one such a person about to venture into trading in this kind of market, familiarity with the numerous ways in which trade can be carried out is paramount to maximization of utility of one’s investment.

Cutting edge information and keeping oneself at par with current affairs in the trading sector are of so much essence to a successful investor. Recently there has been adoption of emerging technology in trading of commodities whether stocks, bonds or options, whereby the traders are able to transact over the internet. Trading of options over the internet has now come to be known widely as digital options trading or binary options trading thus bringing to light the concept of bungee options trading online.

All the stringent procedures of options trading are adhered to when trading binary options. First of all, as an investor, you have to identify the particular security you are interested in buying from available alternatives that could in fact be provided online. Next identify a suitable and needless to say reliable trader of the security you want to purchase, the same way you would want to identify a broker when trading in stocks.

Secondly, to avoid the trader from exploiting you, it is safer if you would research and find out factors that will be used to arrive at the option price which is the payment you have to pay the trader in order to enter the digital option trade agreement. If the option price is acceptable you will of course pay immediately through appropriate means although for online trading the mode of payment preferred is electronic funds transfer. A word of caution here is that until you are sure you are in a legitimate transaction then and only then should you allow making a payment.

After this the trade can be considered done and it’s up to the buyer to live up to the expiration date or not since even digital options do not put the buyer under obligation to buy the security within the expiration time agreed upon. At this juncture the investor or buyer must analyze the trend of his security in the market in order to make a profit .For instance if the market price of the security exceeds the strike price or goes below the set price, the investor can evaluate whether buying or selling the security as per the binary option agreement will result in a profit or a loss for him. Therefore as a binary options investor, one has to horn up their analytical skills.

A very important aspect to note for a bungee options investor is the currency in which he undertakes his transactions. As it is, world currencies have different values and depending on the foreign exchange activity in each country, the value of a particular currency varies from day to day and therefore before transacting one should choose a currency that will maximize gains for their security.

Finally, as is with any form of trading, it is common than an investor makes loss on several occasions and a wise thing to do after such episodes is not to stop investing but to find viable and advancing techniques that will propel him to standing a better chance of gaining in the next round of investment.

Trading in bungee options is one of the best choices an investor can make given the high expectancy of gain involved. It is therefore imperative to learn the language and have the know-how of this trade.

Generally there are two categories of options. The first one is a call which enables the buyer of the option to have the right to buy a particular asset within a certain period of time. A call is synonymous to the long position when dealing with stocks. Here an investor buys a call with the hope that before the option expires, the stock will have increased substantially. The second category of option is a put which confers on the holder the right to sell an asset in a particular period of time at a certain price. This is similar when dealing in stocks to having a short position such that the buyer of the put hopes that there will be a fall in the stock price before the option expires.

Those participating in options market will therefore be one of four categories: buyers of calls, buyers of puts, sellers of calls or sellers of puts. Those participating as buyers of options whether calls or puts are collectively termed holders while the sellers are called writers. Holders are said to have long positions whereas sellers or writers are said to have short positions .In other words holders are under no obligation to buy or sell and thus can choose to exercise their right. On the other hand writers are under obligation to buy or sell and therefore are required to honor their promise to buy or sell.

An underlying stock can be sold or purchased before the expiry date at a price referred to as the strike price. In order to exploit a profit, the price of a stock must be exceed the strike price for call options and the price of the stock must go below the strike price for put options. For call options if the share price goes above the strike price, the option is said to be `in the money’ .The same is said of put options if the share price goes below the strike price. The amount by which a share is in the money is referred to as the intrinsic value.

The total cost of an option is determined by analyzing factors such as the strike price, the time value or time remaining to expiration, the stock price and volatility among others. This total cost is therefore the price of the option and in options trade is referred to as the premium.

Depending on the country, there exists national options exchange and any options traded in such an exchange are called listed options. Listed options have fixed expiration dates and strike prices. Also each listed option represents a contract (100 shares of a company). Notably, the national options exchange comes in as a third party but there are other options that can be between a company and its employees without any third party. These are called employee stock options.

Armed with this information, an investor can safely venture into trading in bungee options although it is highly recommended that one takes absolute care and conducts thorough research especially because this field of investments is considered the playground of experienced investors.

Successful business people today have ventured in a variety of investment opportunities that have expected gains and also a fair share of risks. You can also join this wagon by having a good understanding of how these investments work.

Common investments today are mutual funds, bonds, stocks and many more plus yet another form of security called an option that is mainly familiar to sophisticated investors.

Some investments are however more versatile than others in the sense that they are likely to pay off in a very short period of time and also expected gains are enormous. This category is best characterized by options, also contemporarily referred to as bungee options maybe in synonymy to the large heights bungee divers cover in their short time of flight. Traders that deal in options are veteran in the field of investment and therefore most people would ordinarily find it quite difficult to grasp the precepts behind it , but here would be a good start.

Options are a form of contract that gives a right to a trader to buy or sell a certain asset at a particular price on or before a certain date. This right to trade the asset is not an obligation, meaning that the trader can let the date go by and thus the option expires and becomes worthless. Since an option is a binding contract between two parties, it is commonly referred to as binary option and it also has its own terms and conditions that are strictly defined. For this reason options are equally a valid security just as are stocks and bonds.

To illustrate binary options trading, we can use a hypothetical situation where you are interested in buying a certain car (the underlying asset in this situation) with a price tag of 5000dollars. However for one reason or the other you are not ready or willing to spend this amount of money in the next six months (or you probably don’t have this amount but you anticipate having it ready in six months time). You approach the seller and agree to buy the car not later than six months time for 5000 dollars. For your option trade you will pay the seller an amount agreed (your investment in the option or option price) say 100 dollars.

Supposing one month down the line it is discovered that the car is a high tech prototype and is being sought by a manufacturer at a price of 20,000 dollars, since the seller sold you the option, he is obligated to sell the car to you at a price of 5000 dollars on or before the last date of the sixth month period.

Now suppose you discover within the six month period that the car is a counterfeit that the government has black listed for crushing an thus you consider it worthless, since you bought an option, you will be under no obligation to go through with the sale. In this case you will let the date go by in which case you will have lost 100 percent of your investment (100 dollars).

In a nutshell trading in binary options or bungee options is the way to go for an investor-to be who is daring enough to venture and exploit all available areas of investment

Key Levels of Support & Resistance

EUR, GBP, & AUD

As the market continues its sideways movement it is a good idea to keep cognizant of important key levels of S&R as well as the 50 SMA and 100 SMA.  When markets move sideways for an extended period of time ensuing price action on a breach of major S&R or an MA can be quick, therefore you want to be in a position to execute.

AUD key levels of Resistance are as follows; .9300 , .9500, and .9650.

AUD key Support levels are the 50 SMA which is currently at .9038.  The next support level is at .8890 which was the prior low and also represents the 76.4% Fibonacci Retrace level going back to July of 2008.

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The EUR is in between 2 key levels of Resistance with the lower level handle at 1.4870 and the near term Resistance at 1.5055.  If we break near term Resistance at 55 then we expect the 76.4% Fibonacci Retrace level from July 2008, at a handle of 1.5165 to stand as the next key Resistance level.  Looking north just a bit further  1.5345 would represent R4

A candle appearing below the Support level of the 50 SMA would signal a Short EUR entry. A very strong Short EUR signal would be a close below 61.8% Fibonacci Retrace level from July 2008, which is perfectly in sync with the prior low at 1.4621

GBP is sitting between 2 near term Resistance levels.  We have R1 at 1.65, R2 at 1.66 and R3 at 1.70. the 100 day MA is sitting at 1.6404 and in line with the important Fibonacci Retrace level of 38.2% from November of 2007.

When a 100 SMA is above a 50 SMA, as it is with the Cable, it is usually indicative of a falling price environment.  A close below the 50 SMA,currently at 1.6340 would generate a near term Short Pound entry.  The next level of Support at S2 is 1.6130.  A breach of S2 would more than likely send us south of 1.60.

The longer price spends consolidating between 2 points the more price action we expect to see when a breakout finally occurs. It is analogous to a spring placed in a box.  The longer the spring and the more coils one forces into a confined space the more resistance the spring builds.  Conversely, a short spring in the same space has less potential energy.  Break open the box and the larger spring is going to move quicker and further than the smaller spring.  Therefore the longer we consolidate price into a range the more price action we expect to see when it finally breaks key levels of Support and Resistance.

Analysis by http://www.ufxbank.com

Global Equities Market futures are pointing slightly higher for Wednesday’s open.  The DJIA finished lower after a mixed day on Wall Street, losing 17.24 points to close at 10,433.71.  The Fed conceded in minutes released yesterday that a weak dollar may be fueling unwarranted speculation in the markets and that the weak dollar needs to be monitored for fear of creating inflationary conditions.

The DXY was mixed as it responded to the equity market’s whiplash.  The Gold rush of 2009 continues at it made new intra-day highs bouncing off 1,180.20 before closing at 1,169.40.  Oil gave up some ground to close at $76.45 a barrel.

We are expecting lighter than normal volumes today ahead of the U.S Holiday on Thursday although there will be a lot of economic data published tomorrow.  Headline data prints will focus on U.K GDP and in the U.S; Crude Oil Inventories, Initial and Continuing Jobless claims, and New Home Sales.

Upcoming Forex Events for November 25, 2009

GBP    GDP (QoQ)     Forecast  -0.30%  Previous  -0.40%

USD    Core Durable Goods Orders (MoM)  Forecast  0.80%  Previous  0.90%

USD    Initial Jobless Claims Forecast  500.00K  Previous  505.00K

USD    New Home Sales        Forecast    408.00K  Previous  402.00K

Research by http://www.ufxbank.com

Positive economic data released today pushed Global Equity Markets higher once again.  In Canada, a better than expected print on Retails Sales moved the CAD higher as well as month over month figures that published at 1%.   In addition, last month’s print was revised upwards as well.

In the U.S., Existing Home Sales month over month came in at 10.1% versus expectations of 2.3%. The DJIA moved ahead 132.71 points to 10,450.95 marking a high for year.  All of this was bad news for the Greenback as the DXY dropped to 75.125.  The CAD was the big gainer against the Dollar, up 1.4%.

Gold continues to make new highs striking 1,174 before settling back to close at 1,165.20, a $14.60 gain for the day.  Some analyst are concerned about Gold’s appreciation and see it as the next asset bubble to crash, however, other say the move is justifiable and that higher Gold’s price will prevail.  Oil clawed its way back from a recent lull to hit an intra-day high of 79.92, before closing the day at 77.68

Economic data releases due out tomorrow include GDP in the EUR zone as well as in the U.S.  Case Schiller Home Price Index will print tomorrow as well as the U.S Consumer Confidence numbers.  Today’s Home Sales print and the prior day’s Retail Sales figures in the U.S beat expectations. This may dampen the effects that the U.S Consumer Confidence figures and Case Schiller Price Index have.  Normally these can be market movers but sales figures right now are in the driver’s seat.

Upcoming Forex Events for November 24, 2009

EUR    German Ifo Business Climate Index  Forecast  92.50  Previous  91.90

USD    GDP (QoQ)   Forecast    3.00%  Previous  3.50%

USD    FOMC Meeting Minutes

AUD   Construction Work Done (QoQ)        Forecast  0.10%  Previous  -0.10%

Research by http://www.ufxbank.com

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AUD, NZD, CAD

Commodity Linked Currencies:

Most majors have been range bound for the last month and some even longer then that. If you play support and resistance then your entries points are relatively defined. However, what do you trade when handles are in between S & R?

The first assessments a trader should make are what currencies have recently retraced the most and why. Secondly a trader needs to assess current market conditions. Let’s apply these 2 rules. Through last week, the Commodity Linked Currencies were down the most versus the Greenback. The reason these pairs were down was due impart to Oil losing some momentum and a firming of the Dollar on risk aversion.

A brief assessment of current market conditions has the Dollar on its heels and Oil moving higher. Additionally, EUR & GBP are currently near resistance levels so unless one thinks the EUR or GBP will finally break resistance one will need to look elsewhere for the best trade.

The AUD, NZD, and CAD are among the Commodity Linked Currencies.  These pairs are currently the furthest away from resistance and therefore have the best risk to reward ratio. Couple that with a weak Dollar and overall strong commodity prices and you expect these pairs will move the most. Chart A above displays the movement in the price of Oil against the AUD, NZD and CAD. From this Chart you can see the positive correlation in price action.  As Oil appreciates so do these currencies and vice versa.

The bar chart below displays percent gainers and loser against the Dollar for November 23^rd.  You will notice that the NZD, AUD and CAD are in the top 4. Add this analysis to your repertoire and it provides another venue for trading in these market conditions.

Analysis by http://www.golearnforex.net

GBP/USD:

Range bound trading continues.  It is especially obvious when MA is moving horizontal.  Notice on the daily Cable chart below that the 50 SMA has been horizontal since late July while the 100 SMA turned horizontal in late September.  The 100 SMA is above 50 SMA which is typical of a falling price environment. Additionally, the last time a complete candle appeared below the 50 SMA price fell an additional 4.54%.

If you have been trading support and resistance then you have been very successful recently. The yellow rectangular area indicates upper level resistance. Those who trade pure reversals would look to make short entries there.

Point “A” defined our first high in the range.  We make Point “A” the first level of resistance, R1.  Points “B” & “C”encroach but never breach R1.  These would become Reversal Trades 1 & 2.  Point “D” breaches R1 before retracing. Points “E”, “F” and “G” look similar to  “A”, “B”, and “C”.  Point “H” breaks resistance before retracing its gains.

For Points “B, C, E, F, and G” if you were trading straight S&R you would have fared very nicely.  However, for Points “D & H” indicated by the red arches you would have mostly likely been stopped out before picking up the reversal.

With proper risk controls traders will minimize their max loss on every position.  A forex trader cannot expect to win on every trade so choosing the best trades and entry points is essential.  With the use of Candle patterns, Momentum indicators and Oscillators a trader can time the entry where the lull in momentum begins (blue vertical lines) which may signal a reversal.  The Chart below uses the MACD with a histogram to demonstrate falling momentum. The histogram more clearly reveals the convergence of the MACD with the Average.  If you wait for 3 full bars with lower highs (red arrows) to form and ensure that price is still at the point of resistance you can avoid tripping a stop loss and possibly end up in another winning forex trade.

Analysis by http://www.golearnforex.net

EUR/USD:

The EUR is sputtering once again after failing twice to gain momentum after breaching 1.50.  We are closing in on some very pivotal handles on the EUR.  Moving Averages are important not only because what they represent but also because they are very closely monitored by forex traders.  The implication of investors all buying or selling based on a particular occurrence is that price will move substantially, such that significant PNL can be generated.

On the Chart above 4 technical points need to be highlighted.  1) The EUR has not had a single candle appear below the 50 day MA since April 22^nd, 2009.  As we have mentioned many times before the 50 SMA has acted as support for the EUR. 2)  The current EUR Spot today sits a mere 150+ pips from the 50 SMA. 3) The EUR is in the process of completing a double top which may signal a near term reversal. 4)  A slightly lower high was just completed as the EUR failed to break 1.5063 set back on October 26th .

The following price action scenarios would prompt us to enter a EUR Short. In order to enter a Short EUR position we need to see a complete candle below the 50 SMA.  We would increase the Short EUR position if price closes below 1.4725 which would be a lower low. Each of these price action moves would be the first phase of potential near term EUR weakness.

As for opening a Long position, we would consider opening another Long EUR position as price approaches the 50 SMA.  The reason behind this logic is simple.  Price has bounced off the 50 SMA over 15 times since April and fundamentally speaking there is currently no change in market dynamic to suggest the Dollar is rebounding.  Rather, current EUR weakness is due to monthly cyclical ebbs and flows, or supply and demand.  If price approaches the 50 SMA statistically speaking we expect the same occurrence of support at the 50 SMA to hold again. If we are incorrect in our assumption then you exit the trade with a Stop Loss just south of the the 50 SMA. 

Analysis by http://www.golearnforex.net

Non professional forex traders often take the plunge into trading forex before taking the time to learn forex and equipping themselves with the knowledge necessary to find success.  Forex trading is business and not like approaching a roulette table and putting everything on red.  Without proper preparation however, many amateur forex traders find themselves in the same sticky situation as a risk-loving gambler at the roulette table.  That is why proper forex training is imperative for attaining lasting achievement in the forex market.

There are a plethora of options for those seeking forex training, however finding the one that is most suitable to you and your training needs may not be simple.  There are a few criteria that a forex training program should offer in order to fully reap the education necessary to truly learn forex.  We will share with you what you should look for in a training program.

There are two kinds of analysis that each trader should implement into his or her daily updates before opening a trade.  A decent forex training program should teach you both the fundamental and technical aspects of trading forex.  Fundamental reports show all of the outside factors that can affect the market, such as politics, economic announcements and many others.  Technical aspects revolve primarily around the interpretation of the data that can assist traders in accurately predicting future trades.  If one of these elements is missing in a forex training program then you should pass as it is not complete.

Along with understanding the different reports available for forex trading, there are a few other aspects that you should take into serious consideration.  Traders must learn money management.  If a trader’s personal finances are in disarray you can’t expect to make intelligent, thought out trading decisions that are free from an emotional connection. Emotional balance is also pertinent for forex trade.  You need a training program that teaches you how to separate emotion from trading and to maintain self-control.

Once you have found the forex educational program that can train you with the necessary skills, then you need to decipher which trading system is the best fit for you.  Find a reputable system and do your research.  Don’t just rely on ads you see online or on the television, find out what other traders are saying about the quality and consistency of each trading system.

Deciding to trade in forex is a lucrative decision that is available to everyone.  Don’t fall into the common pitfalls of many traders, and take the time to educate yourself and prepare for the forex journey ahead.