No Santa Claus Rally

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. If you had deposited $500 with the intention of making ten trades at $50 each, you would have lost an immediate $100 because of your two incorrect trades, but on the other eight, you would have made around $75 in profit per trade. This gives you a profit of $600 for your right trades. Take out your losses, and you have finished the day at $1,000 even–doubling your cash for a 100 percent profit rate. Finding the right asset at the right time–something that could have been easily done by hopping on a freefalling index like the S&P was on Monday–and having a decent read on where the public is pushing momentum will lead to huge results. Put options are great in a situation like this because there are no extra costs in binary options like there are with other types of trading.

Not all of the stocks in the U.S. fell, though. It was the energy sector that led the way with price drops as the energy portion of the S&P fell by about 4 percent. This was offset in other areas, For example, there were a lot of pharmaceutical companies that posted huge gains on the same day, many of them over 15 percent in the black. For those that do not like binaries, or do not like taking short positions, this is where you should have been looking. Things like this always happen in major indices. Big losses are balanced out by other sectors doing well, and vice versa. It is a very rare day where all sectors go up or all go down. When it does happen, it’s usually very slight in nature. Being on the lookout for who is doing what, and how movement is spread out across the different sectors will help you to place your trades in the right place at the right time.