Another day and more red was seen everywhere in the financial markets. The US markets headed lower for the 5th day in the last 6 as the Dow fell 0.75% to 12835, the Nasdaq dropped 0.39% to 2934, and the S&P fell 0.67% to 1354. The fact that nearly each day we focus a great deal of our daily reviews to the status of the US markets is primarily because our readers tend to trade a huge amount of volume on US indices. The amount of volume traded on the US stock indices accounts for about 30% of the total volume in binary options trading and this according to www.goptions.com, one of the largest binary brokers in the world at the moment. The rest of the volume is almost 50% forex related whereby nearly 30% is on EUR/USD binary options and the other 20% is based on the USD/JPY and GBP/USD. The remaining 20% of the volume is commodity and individual stock based where the split is about 10% and 10% between the 2 groups.
As such, binary traders looking at the market today probably notice the down-tend in US stocks and stock indices and are looking for opportunities to “go short” which means to Sell an asset even in the case where you don’t own it. What this really means is that you can, in one click, can profit if an asset drops in price. In binary options trading on days like these, using sell trading signals which lead to DOWN binary options, seems like a solid investment strategy. However, bear in mind that this downtrend of about 2 weeks, isn’t necessarily the real trend in the market. It’s what we call the short term trend. Medium and long term trend in the market (1-3 months and 6-18 months) are the more general trend and they are both heading higher. This is true of the US stock indices across the board. Meaning, if you look at a daily chart, you will see, if you look at a whole year, that the general trends are Up, and only recently is weakness being seen. As such, when we provide our trading signals, we keep trends aligned. This is a trading strategy that requires that at least the Mid term and short term trends are in the same direction of the trading signal. So if they are both Up, we won’t recommend a trading signal towards the downside.
Today, despite the strategy we explained at length above, we do recommend some reversal signals. These are opposed to the previous strategy and are similar to the signals we provided yesterday. Apple stock is a great example of this. Yesterday the stock actually headed somewhat higher, so our trading signal was not reached, but we hope it does today and binary traders can take Down options at 560.5.