Investing in the capital markets is a business that requires a strategy and risk management that will consistently generate returns. To achieve success as an investor, individuals need to develop a trading style that is in line with their personality and level of risk tolerance. Once an investor designs a style and strategy it is imperative that they endeavor to stick to that style.
Veering off course can be hazardous to the health of any business plan, and can generate a negative spiral that eventually puts the business in a situation where losses can ruin the business. Developing an investment style requires some analysis of your business personality, along with your risk tolerance. This process takes time, but can be made easier by using Binary Options as an investment vehicle as it mitigates some of the issues related to generating a successful trading plan. Continue reading "Trading Psychology – Do's and Don'ts" →
By Nick Santiago, an Expert Technical Analysist, Chief Market Strategist, President and CEO of InTheMoneyStocks.com, and a gifted teacher in educating other on the truth of the markets.
When it comes to trading, active markets are always the best. If you have traded the markets for a considerable amount of time, you know that the best part of the trading day is within the first hour to ninety minutes. This is a time period when there is typically high volume in the market. Higher volume indicates more participation in the markets, especially by institutions. This activity allows for the key support/resistance levels found on charts to be great trading points. Continue reading "The First Hour is For Binary Options Day Traders" →
The returns an investor receives can be measured in many ways, using a number of techniques that describe the efficiency of a portfolio. Generating profitable returns is one aspect that is key to success, but the costs associated with generating those returns is an aspect of market analysis that sometime goes unnoticed. For many investors, risk adjusted returns are extremely important as excessive volatility in a portfolio can be considered problematic, which might mitigate the attractiveness of the portfolio.
In addition to strong risk management techniques, which for many traders are the use of Binary Options which have a predetermined risk reward ratio, traders need to consider the extent of the volatility associated with a specific strategy which can be evaluated by using a number of statistical metric which can help determine robustness of the risk-adjusted returns. Some of the more well-known statistical ratios are; the Sharpe Ratio, and the Information-ratio. Each of these ratios supplies an investor with a benchmark to judge the risk-adjusted returns of their portfolio. Continue reading "Applying Portfolio Efficiency, Ratio Segmentation and Management to Trading" →
Monetary policy, which is also known as interest rate policy, describes the actions or in-actions of a country’s central banks. Interest rate policy generally focuses on maximizing price stability and growth. The central bank of a country is considered the institution that controls a countries currency, money supply, and interest rates. Central banks also usually oversee the commercial banking system of their respective countries.
Each central bank has guidelines that are mandated by their legislature. For example, in the US, the central bank has a dual mandate which is to maximize price stability and employment. Other central banks, such as the European Central bank, have only one mandate which is price stability.
Central banks often spur growth and employment by reducing interest rates, making it easing for banks to lend money at reduced rates. Lower interest rates also increase liquidity, and make purchasing riskier assets a more attractive alternative than holding low interest baring government notes. Continue reading "Trading Using Monetary Policy Analysis" →
Market volatility comes in two forms, implied volatility and historical volatility, both which can affect an investor’s ability to be successful in trading Binary Options. Implied volatility is similar to a financial security as it fluctuates with market sentiment and is an estimate of how much options trader perceives a financial security or index will move over a specific period of time on an annualized basis. Historical volatility is the actual past movement of a security and can be defined as the standard deviation of a time series, reflected in percentage format.
Implied volatility affects the price of a Binary Option, but it influences standard vanilla options much more than it effects Binary Options. Implied volatility changes as market sentiment changes. Generally as fear and trepidation increase, implied volatility increases, while increases in complacency are generally highly correlated to declines in implied volatility. Continue reading "How Volatility Affects The Options and Binary Options Markets" →