Future Consumer Confidence on the Rise

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.