Binary options have become an increasingly popular means of trading the financial markets. They allow traders to easily profit from different assets across a variety of markets and industries, by predicting whether the direction of a price will go up or down in a set time.
One of the most popular asset types in binary options trading is stock options. Trading stocks on a binary options platform gives a trader access to a large portfolio of stocks across the global markets and a range of industries from technology to financial services. Whether you are interested in Facebook or Yahoo, Goldman Sachs or Louis Vuitton, binary options traders have the opportunity to profit from short-term movements in the price of the world’s biggest brands.
Trading binary options stocks successfully requires an understanding of how stocks behave. It is fortunately very easy to find information about stocks in the financial news. Access to this information, together with an understanding of how to track price movements over time on a particular stock will help a trader determine the direction in which the price will move, enabling them to make more accurate predictions. There tends to be regular information about stocks in the financial press and on the internet, placing traders in a better position to achieve an educated understanding of how quickly a price may move following an important piece of news. Traders should be aware that stocks are closely linked to the performance of an overall industry. As the majority of companies provide products or services for specific industries or sectors, any information reaching the public domain regarding that industry may result in a movement in price in the stock in question, helping the trader to make informed price predictions over the short-term.
To get involved in trading binary options stocks, traders need to fully understand the factors that cause movements in stock prices, one of which is market sentiment. If there is a gloomy market sentiment and concern about the global economy, most investors will tend to hold cash and sell their stock holdings, leading to a drop in stock prices. New products and purchases also affect the markets, so traders should keep an eye out for Apple’s next iPhone release and Google’s next corporate takeover, for example.
Earnings reports, released every 3 months by public companies, also affect the price of stock. A good or bad earnings report can cause a stock price to rise or fall respectively. Traders should remember that a company reporting a loss may look bad, but if the loss is lower than a previous loss, this may be perceived as positive by investors, leading to increased demand and a rise in the price of this asset. It is thus important that the trader has access to historical data in order to effectively use earnings reports.
Remember that government policies can have a positive or negative effect on stock prices too. For example, if import duty waivers are imposed, this could positively impact on the profitability of a company which will then be reflected in its stock price.
The best way to achieve successful trades and profit from trading binary options stocks is thus through practice and acquiring a thorough understanding of your chosen stock along with keeping up-to-date with general financial information on current market events. Good luck!