Tuesday, June 21, 2016

Monitoring the Markets

With the right market monitoring you as a trader can understand the current market level correctly and predict future developments. Depending on this assessment you can place positions opting to call, put, range or touch option with the corresponding price limits. Prerequisites for the prognosis may be a fundamental and technical analysis.

market analysis

Fundamental analysis

Fundamental term traders tend to look for longer-term developments. A longer-term development may be related to the economy in the euro area, the euro crisis and the euro exchange rate, but also on could relate to the price of oil, the global economy or the price of gold. As these areas are prone widespread uncertainty there is much market volatility and opportunities for lucrative investments. However, late messages play an important role in the fundamental analysis such as the purchasing managers' index, quarterly results of large companies or simply the numbers from retailers regarding such seasonal events as Christmas sales. Brokers usually offer a news feed, many other free sites on the Internet provide very timely updates to ad hoc news.

For many traders, it is necessary to follow economic news throughout the day and take the overall mood. Specific details come from the technical news of stock market portals and trading services. Provision should be made between pure news and opinions of analysts as the latter represent a subjective assessment.

Here is an example:

When EUR / USD currency pair, the facts of the economic situation exist in both currency areas, which can open up quickly from the news. During the euro crisis of 2011/2012 was the Euro against experienced a decline against the dollar euro exchange rate as expected. In fact, the euro fell 1.50 US dollars in early 2011 the rate at 1.30 end of 2012, but there was always counter-movements, the year of 2012 was characterised by a large range.

Political factors also play a role in fundamental analysis, especially in currencies, but also with the major indexes as elections, such as the UK EU referendum and monetary policy decisions. In the case of political turmoil, the currency of the country concerned falls almost entirely against other currencies greatly in demand. The facts of fundamental analysis should be focused on well. Singling out only individual aspects produces distorted results overall.

Chart analysis

Charts illustrate current and historic asset prices and are invaluable for tracing price movements and trends they are not concerned with the background event that impact upon the market. Subject to the hypothesis that markets are always efficient, ie that companies are in principle always experiencing growth in the right economic situation - the company or the economy as a whole - market rates should always be increasing. Likewise efficient markets require that all market participants have the necessary information and evaluate the events reasonably to then act rationally.

market analysis

This thesis of the efficiency of the markets is however criticised partially by experienced speculators. Some market phenomena such as crashes and bubbles refute the assumption that markets are efficient. Participants in certain situations follow the market in a "herd mentality" behaving like the proverbial lemmings that plunge over the cliff together, and act individually on very irrational behaviours. These patterns, for which there are numerous extremely diverse theories, however reflect in on the charts, so action can be taken by chart patterns well. There is much literature available online free of charge that is concerned with chart analysis.

The construction of all binary options is based on chart analysis, because the choice of call and put options is based upon trend-following. Touch options are available for certain volatility patterns with the typical peaks. Anyone interested in technical analysis, should always look for the latest publications, because much of the area, which could still be valid in the 1990s, now seems outdated. This has something to do with the growth of electronic commerce over Expert Advisors, those trading robots that perform up to 10,000 trades per second in a confined space. This has since the 2000s changed the pattern of online trading.

market analysis

Importance of fundamental & technical analysis

There is a much discussion between chartists and fundamental analysts. Some chartists reject the fundamental analysis approach completely, because they assume that all fundamental events have been priced in. This approach could be erroneous because the markets tend to respond in a manner that is irrational. However, not everything can be predicted with fundamental analysis. Some events affect the fundamental perspective paradox - for example, if a company reports good quarterly figures and then breaks its share price. Chartists believe that the market anticipates the good figures but again these can not be proven consistently. Large speculators like George Soros and Warren Buffet along with many lesser known but highly successful financial managers apply fundamental analysis along with technical analysis. For the trader Binary Options Fundamental analysis plays a more important role when the option is kept for extended periods or when important messages are imminent or have just been reported. The course of the Dax, for example, depends on indicators such as the purchasing managers' index in the manufacturing sector. Moreover, the Dax often makes strong references to Dow Jones. These facts can also be observed for a 24-hour trading trading strategy.


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