Apple, the one time favorite of Wall Street, just touched upon a new 52 week high on Tuesday, January 17th, breaking the $120 threshold for a short while before settling at just under $120 for the day. It was a gain of $0.93 for the day, or 0.79 percent. This in itself isn’t anything special, but it does show strength for the company. On this same day, the S&P 500 dropped by 0.30 percent, and the fact that Apple was able to outperform the economy—while financial and healthcare stocks weighed everything else down—shows that the company has the ability to still surprise us.
For traders of all sorts, Apple still holds a lot of potential for creating profits. In fact, most analysts predict growth of more than $12 per share over the coming year. While this is something that remains to be seen, it does mean that Apple is like to come under the spotlight yet again in the very near future. Continue reading
The European Central Bank has decided to hold interest rates steady after their latest meeting. The ECB has been criticized for having “loose” policies, but they are actually doing quite well when it comes to maintaining growth within the euro zone. Another thing to come out of the latest ECB meeting was the fact that they are going to continue their euro buyback program until at least March. This program has also been criticized with their interest rate policy, but again, the euro zone is currently seeing very similar growth to the United States’ economy right now, indicating that it is working, at least for the time being. Continue reading
Confidence in the U.S. economy’s ability to recover is starting to return. One easy way to gauge this is by looking at bond rates, and how much (or little) they are moving. If you start with the smallest major increment—3 months—you can see that there is already hope that things will improve in this tiny timeframe. Rates stand at around 0.27 percent, and although they’ve dropped a bit, they are not dropping enough to warrant any sort of action yet. Beyond this, 6 month bonds and longer, things are improving. Rates are going up, and that means that market actions are expecting that the market will be fully recovered and moving upward in 6 months’ time or less. This is purely based on consumer sentiment, but it is a good way to look at market psychology and get a feel for how you should approach your trades.
The obvious thing that a binary options trader should do here is to find a broker that allows long term positions on major indices and start to hedge your short term positions with these longer term ones. If you can take out a six-month call option on the Dow Jones Industrial Average or the S&P 500, that is a good move, but most brokers will time these so that they have specific expiries. In this instance, the midpoint of the year is not far enough in the future to make a call option a good choice yet. The next best choice if you can’t do that is to find an option with an expiry at the end of the calendar year. One that expires at the end of 2016 is even more likely to be a winning trade. The downside is that it ties up your money for a very long period of time. The end of the year is still ten months away, and that’s a long time to have your money tied up in a single trade. But based upon bond rates and yields, ten months from now is even more likely to give you a chance of profits than four months. In this sense, the biggest loss you will experience by doing this is potential. Depending on how frequently you trade and at what volumes, this is something you will have to consider on your own.
Binary brokers do not allow you to trade bond rates at all, but they do serve an important part of the financial community, even if it is just as a gauge for other portions of the market where you will be trading. At the very least, all of this information gives you a decent idea of what the general trading public believes that overall trends are going to be into the future. Over the next three months, things are still likely to be volatile. After six more months, stability is predicted to return. This is a good gauge as you place trades regardless of what market you are trading in. These numbers directly correlate with stocks and indices, and have a slightly negative correlation when it comes to the U.S. dollar. Commodities need to be taken on a case by case basis, of course, but the general rule as of late is that gold is inversely related and oil is directly related. These rules need to be examined in more detail, but they can form a general framework on which you can build a strategy upon. Be sure to use an individual asset’s fundamental and technical information to help you, and tailor things to the timeframes that you will be trading over, too.
The Canadian dollar has had a rough period of time against the U.S. dollar, declining to a point that it hasn’t been in several years. The USD/CAD is now at 1.3951 compared to the 1.3735 that it stood at just five days ago, meaning that the loonie has lost a lot of spending power against the greenback in a very short period of time. It’s very close to the high point over the last year, less than half a penny off of the worst performance the CAD has seen in the last 52 weeks.
There’s a good chance that this momentum will continue, especially given the U.S. dollar’s renewed strength in the world markets. Economists believe that the problem is deeper than this, though, especially because of the fact that the Canadian stock market is also currently in decline. Continue reading
One fault that many traders possess is the fact that they rely far too heavily on technical indicators to make their trading decisions. This can be an easy mistake to make, especially because you can still make consistent money the whole time you are doing this. If you look at your profit number, it could be easy to miss the fact that you were making a mistake at all. To put it another way, you can rely on technical indicators your whole trading career and be profitable. However, if you do this, you are not being as profitable as you could be, and this is why it’s a mistake to do so.
Let’s illustrate why technical indicators are not enough through an example. The Walt Disney Company (DIS) dropped 3 percent in price on a limited trading day on the Friday after Thanksgiving. Continue reading
One question that many people new to trading ask is: can a diversified portfolio save me from a bear market? To rephrase this in another way, can I still make money while others are losing it?
The answer is yes, but with some strong caveats. For one, you can’t make money doing the same thing that everyone else is doing while they are continuing to lose money. It makes sense when you see it like this, but so many people do not take this simple fact into account. When you apply this to investing over the long term, that becomes difficult to do. Most successful investors have a similar long term strategy: find an ETF, mutual fund, or set of individually picked stocks that mirror the S&P 500, and then hold them for a long time. If you are doing this while the S&P is going down, guess what? You’re going to lose money.
Now, before we go any further, remember that although you will lose money over the short term, you will most likely gain over the long. Continue reading
Usually, if the monthly jobs report is better or worse than expected, the day after its release is a busy day in the stock market. The report that was released on April 3rd was worse than expected, and stocks responded in kind the following Monday by dropping. 126,000 jobs were added to the economy, which seems good, but only until you consider the fact that it was expected that there would be 245,000 jobs added within the U.S. in total. It was the worst month seen on the job front in over a year, but it wasn’t felt right away in the S&P 500. This index actually went up almost 14 points on Monday, April 6th, indicating that poor job reports wasn’t going to slow down the growth in the U.S. economy.
Short term traders might have lost out on this because a lot of what was predicted to happen didn’t come to fruition. What this doesn’t take into account, though, is the fact that there can be a long term impact upon bad news like this. And it can go well beyond the stock market and into other marketplaces. For example, it’s predicted by some that the poor jobs report will actually be good for the price of oil. It’s a cause and effect type of reasoning. Continue reading
On Monday, January 5th, the bears had their first big day of 2015. Each of the major U.S. indices fell, some as much as 1.8 percent. The S&P 500, which had been up more than 10 percent at the close of 2014, fell 1.83 percent on the first “real” trading day of the year. The big reason for the drop has originally been cited as being because of the major drama going on with oil. The commodity once again fell, this time by about 5 percent.
Another drop, especially one of this size, was quite unexpected, and it set off a chain of panic amongst investors and traders around the world. The psychology might not make sense at first; falling oil prices should be good for the economies that do not rely heavily upon oil production–such as the United States. It should be good for the economy as a whole and the companies that do business there. In this light, the major indices dropping in value are nonsensical. But this doesn’t mean that it didn’t happen. Prices did drop, and they did it steadily. Even if you don’t understand why it’s happening, you can still take advantage of the momentum and execute short term trades to take advantage of it. Binary options create the perfect opportunity for the average person to profit in situations like this. They’re cheap, for one. Many brokers let you trade for as little as $25 per trade. An initial deposit of $500 into a broker account would let you trade immediately. Even with a success rate of 80 percent–something that should be easy on a day like today–can yield huge results.
Ten trades of 15 minutes each with an 80 percent success rate would be two wrong and eight right. Continue reading
If you’re like most short term traders, you’ve probably thought about trading Bitcoin, but never have because the market seems to be completely unpredictable and therefore not worth spending time studying.
First, realize that Bitcoin doesn’t act like a currency, and it doesn’t act like a stock, either. Right now, it seems to be acting like something completely new (which it is), and like a completely different type of market that what has ever existed before. If it had to be placed into an existing category, it would probably act most like a commodity, but since it is a form of payment, like a credit card or an e-wallet, this isn’t exactly correct, either. In other words, if you’re going to trade Bitcoin, you need to treat it unlike anything you’ve ever traded before. Continue reading
There’s been a lot of talk about interest rates lately. The chairwoman of the Fed, Janet Yellen, has said that there needs to be some serious talks about this in the near future, but as of yet, they have not happened. If and when they do, there will be some serious changes in the U.S. economy. Right now, predictions say that this will likely happen in mid-2015.
The big question is: how does this affect traders? And, of course, the follow up: what can they do about it?
Let’s look at each question one at a time.
The job market is getting stronger. It’s way better than it was three years ago, and back to where it was around 2008. That’s good news, but there’s still room for improvement. Hiking up interest rates needs to wait until then, just because more jobs equals a stronger economy, and that means that the government can profit more when rates are up. But rates won’t just go up there. Continue reading