Success in online binary option trading is all about being able to consistently predict the way a commodity, stock, index, currency or other asset is going to move. You need to be able to assess whether prices are going up or down, if a currency is strengthening or weakening against another one. Your best chance of doing this with any degree of confidence is to thoroughly research and analyze any group of assets you are planning to trade.
Factors Affecting Movement
Assets don’t just move in price for no reason. In fact, prices generally change due to a combination of factors. If you are aware of those factors and how they are likely to influence prices, the chances are that you’ll be able to make better than an educated guess. You’ll then be well on the way to success in binary options trading and it’s largely due to analyzing the market.
You can use either technical analysis or fundamental analysis to judge the way the market is likely to move. Better still, use a combination of the two. Although they are both different in principle and practice, the knowledge they provide will give you a competitive edge.
Technical and Fundamental Analysis
Technical analysis is based on the principle that markets price assets accurately and that price changes can be predicted by looking at historical data. It therefore analyzes statistics and available information to establish past movements with a view to being able to predict future direction. Various methods are used that include identifying if trends have become established, determining if assets are likely to settle back to their mean value, whether momentum is increasing or decreasing, or identifying the movement patterns.
Fundamental analysis takes the opposite view to technical analysis, adopting the principle that most assets are incorrectly priced. It therefore looks at available facts, such as news items, public statements along with anything else that can affect an asset’s value.
Being aware of current events will help you analyze their effect on the markets.
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