The financial markets are always very volatile and can be affected by numerous factors, one of the most important being financial crises. Market psychology indicates that when this type of force acts on the market, it is even more volatile than it usually is. When reports like the non-farm payroll are released, unprecedented market activities is often triggered. This also takes place when other major economic news releases take place or when a natural disaster occurs.
While some traders would prefer not to execute trades during these kinds of events because of the unusual buying and selling patterns which tend to occur around these times, in fact it is possible to make considerable profits by carefully trading these events, and opting for binary options trading during these times is one of the safest and best ways to benefit from their occurrence.
The Risks of Binary Options Trading in an Economic Crisis
Binary options trading during a period of economic uncertainty or financial crisis is certainly not without its risks, and if you do not take adequate care, you can experience significant financial loss. It is therefore vital to weigh up all of the pros and cons of playing the markets at a time when economic news is about to be released before plunging in and risking a potential loss.
Should you choose to attempt to profit from the financial markets during troubled times, the only way to gain profits is to combine your knowledge of the market with a good understanding of how market forces come into play. When trading binary options, you have a big advantage as it works when the financial market rises during boom times and also when it falls during a time of financial collapse.
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How to Trade During Financial Uncertainty
When trading binary options, a trader only has to choose correctly whether their chosen asset’s price is going to fall or rise. This enables an investor to make profits whichever direction an asset’s price moves, and if they make good use of their technical data, adjusting it to suit the current market sentiment, it is possible to make an excellent profit. It has even been estimated that in these troubled times, the return on investments can even be as much as 85%.
Some real world examples of successfully trading financial crises include the 2012-2013 debt crisis in Cyprus which weakened the Euro. The changes in the financial market following the country’s downgraded credit rating represented an excellent opportunity to profit from the news.
Another example is the 2011 Japanese tsunami and earthquake which seriously affected one of the country’s biggest nuclear power plants. Traders who executed trades that predicated a decrease in stock prices would have enjoyed excellent profits.
This proves that it is possible to place very successful trades and reap excellent profits during a financial crises when the market’s volatility levels have increased significantly.
Budget Management When Binary Options Trading in a Financial Crisis
Although a binary options trader is in a better position than other types of traders in a financial crisis, it is still vital to adopt a strong strategy of budget management. Binary options are suitable for both professionals and beginners because they are relatively simple to execute and allow opportunities to trade across a broad spectrum of assets, however they do require a disciplined and strategy approach in order to maximise profits and ensure the best chance of success. Automated binary options trading software can be one way to minimise the emotions involved during these volatile times, to take the best advantage of volatility without personal feelings coming into play.
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- Hedge fund stock trading in the financial crisis of 2007–2009. Ben-David, I., Franzoni, F., & Moussawi, R. (2012). Review of Financial Studies, 25(1), 1-54.
- Institutional trading and stock resiliency: Evidence from the 2007–2009 financial crisis. Anand, A., Irvine, P., Puckett, A. and Venkataraman, K., 2013. Journal of financial Economics, 108(3), pp.773-797.