Online trading account india sbi24 comments
Software broker asuransi
Certain assets in the binary options market share correlations with other assets and market occurrences, making it possible to predict the movement of one asset based on the performance of its correlated asset or event. In this article, we examine the various correlations that exist in the binary options market and how traders can benefit from them.
The following assets are seen to be closely correlated, and so will present correlation-based trading opportunities in the binary options market. Binary options traders will need to watch all news reports that give an indication as to where the Chinese economy is heading, and then trade the AUDUSD subsequently. Some of these news reports coming out of China are:. All the economic indicators mention above correlate in a positive fashion with the Aussie.
AUDUSD and Copper Following on from the correlation discussed above, copper binaries provide another example of a correlation between a commodity, a currency pair and an economy. China is the largest buyer of Australian copper. Indeed, if the trader does not want to trade the AUDUSD in response to Chinese economic growth indices, copper binaries present a viable alternative. The trader should always be on the lookout for when copper, the AUDUSD and the Shanghai Index are in close correlation, and periods when this relationship disintegrates transiently.
The price of crude oil is dictated by forces of demand and supply. Demand for crude oil is driven by growth. Growth will need more crude oil and its derivatives to fuel expanding industries and all that come along with it. Supply is determined by the quotas set by producing countries, as well as availability of the product if there is a major crisis in countries where it is produced.
So what is the correlation play here? The USD will be negatively affected by higher oil prices. This is because the US is a net importer of crude oil, and more money spent on crude imports will increase the US trade deficit, which is a USD-negative event.
Weaker oil prices mean that less money will be spent on crude imports by the US, reducing the trade deficit a USD positive event. Therefore, the trader can trade the change in crude oil prices on the binary platforms as follows:.
This allows the interplay between the USD and crude oil to fully manifest itself. Gold and Inflation Gold has traditionally been treated as a safe haven asset which traders buy into in times of economic crisis, or in times when market participants are in capital preservation mode.
However, when capital is depleted as it will be if the crisis lasts long enough , traders may then trade in their gold stores for cash, leading to a gold sell-off. So it is not a wise idea to trade gold simply on expected demand during crisis periods in the financial markets. Rather, it makes more sense to trade gold as an asset correlated to inflation. This is because gold is better used as a hedge against inflation and not just as a safe-haven, capital preservation asset.
Central banks commonly use interest rates as a way to defeat inflationary pressures. So whenever there is an expectation of inflationary pressure on the economy of a country, it brings an expectation that rates will go up.
This brings on a risk-on sentiment to the market, with traders willing to back up such expectations with an increase in gold demand. This is because gold and the USD are inversely correlated.
For the binary options trader, watch the inflation reports coming out of Australia and the US, and also watch the Reserve Bank of Australia RBA statements regarding their plans with regards to interest rates, looking closely at the concern they have over inflation.
If you see a hawkish tone in the statement following a rate decision increased or left unchanged with a chance for increase in future , get ready to make a technically-directed entry into gold or the AUDUSD on the CALL side of the trade. Sovereign Debt and Currencies The sovereign debt crises witnessed in Greece, Ireland, Portugal and Spain and the hammering that the Euro took as a result, shows how sovereign debt, credit ratings and the value of the affected currencies are all correlated.
Credit ratings are assigned by three major credit rating companies: The ratings simply tell creditor nations about the ability of a government or other entity to repay loans taken as sovereign debt government bonds.
National governments are supposed to have the highest ratings because in theory, they are too big to default. But what happens when there is a massive threat of default as hung over Greece and Ireland in to ? This is what happened to the Euro, as it fell from 1.
Mounting trade deficits and unfunded liabilities are another kind of sovereign debt problem with the same effect. The US was hit by a rating downgrade not so long ago. Binary options traders should begin to look at the emerging correlation between sovereign debt and the value of a currency. It can be seen that most of the correlations are fundamentally based.
This allows traders to get a long-term direction on the asset that they intend to trade based on these correlations, and look for possible trade entry spots to profit from them.