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FOREX VS INDICES FOR BINARY OPTIONS

USD/MXN 19.871 17:00 24.02
WELLS FARGO 57.525 17:00 24.02
USD/CHF 1.00555 17:00 24.02
OIL-APR17 (BRENT) 56.105 17:00 24.02
TOYOTA (US) 113.725 17:00 24.02
SONY 30.865 17:00 24.02
COLGATE-PALMOLIVE 73.005 17:00 24.02
FIAT CHRYSLER 10.74 17:00 24.02
LOCKHEED MARTIN 263.670 17:00 24.02
FERRARI 64.920 17:00 24.02
TSX 60 919.950 17:00 24.02
NZD/CHF 0.72402 17:00 24.02
CAD/CHF 0.76719 17:00 24.02
ALIBABA 102.105 17:00 24.02
BOEING 177.215 17:00 24.02
NZD/USD 0.72003 17:00 24.02
BANK OF AMERICA 24.145 17:00 24.02
CAD/JPY 85.655 17:00 24.02
AUD/USD 0.76799 17:00 24.02
AUD/JPY 86.220 17:00 24.02
GBP/USD 1.24984 17:00 24.02
EUR/USD 1.05800 17:00 24.02
GENERAL ELECTRIC 29.945 17:00 24.02
EUR/CHF 1.06391 17:00 24.02
S&P 500 2357.320 17:00 24.02
DOLLAR INDEX-MAR17 100.983 17:00 24.02
3M 186.885 17:00 24.02
CITIGROUP VS AIG 0.93773 17:00 24.02
CITIGROUP VS JP MORGAN CHASE 0.66142 17:00 24.02
MASTERCARD 110.390 17:00 24.02
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By: Adam Stone
May 9th 2014 6:10am GMT, London UK
 

Binary options traders get ready for another foray into the wilderness that is the financial markets on the heels of some mixed results and higher than normal volatility. For starters, the equity markers in the US are simply unable to do much in the way of solidifying a positive trend. Yesterday, the US stock markets were having what many would consider a fine day only to close in the red with a flurry of selling in the closing moments. These sudden turns should be nothing new to binary options traders and is the primary reason we’ve stayed clear of indices of late. In fact, these increased volatility and more importantly the increased phenomenon of sudden shifts in investor perception has simply dried up the binary options volume on indices of late.

We don’t completely understand why this should be the case. While it’s certainly harder to find longer term trend based trades, the higher volatility ordinarily plays into the hands of binary options traders. So when this type of behavior is seen in the forex markets, we have come to simply shrug it off thinking “hey, that’s the market”. But when it happens on some US equity index it’s more like “whoa, I can’t handle this”. So this obviously looks rather out of sync with the true abilities of binary options traders.

Daniel Gant, the dealing room manager at GOptions, explained it eloquently: “binary options traders are more than capable of creating profitable trades on forex assets and this is seen daily with stable volume levels and ever rising profitability. In fact, the profit margins of customers trading forex and binary options on forex has increased over 12% since January. However, indices, which have usually held approximately 15% of the volume levels, has not increased in profitability for binary traders. Considering a nearly identical behavioral situation, it’s difficult to see why this is the case. However, our analysis shows that binary options traders still have a higher proclivity of buying into a trend as opposed to selling into one. So in other words, binary options traders tend to do much better when the trend is heading higher and when not, it’s all about losses”.

From our perspective, a neat way to combat this negativity is to simply stop thinking about indices as an asset that is expected to do this or that. Yes, they are expected to rise, but that is over months or years. From a daily analysis perspective, binary options traders need to simply latch on to the short term trends and reap the rewards of gauging correctly as opposed to do any more than this. After all, this is primarily what is done in the forex markets anyway. So why do anything different ?

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Adam Stone
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Adam Stone

As COO of GOptions, my first and foremost goal is to provide traders with the most up to date info from the markets. I have been trading the markets since 2004 and have been involved with stocks, binary options, and forex trading since then. I have had no formal market education and pride myself on a self taught approach to everything related to trading. I try to focus though on both the technical and fundamental aspects related to each trading day and bring forward the most important aspects of risk/reward in the market.
Adam Stone
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