Binary options’ trading is all about predicting the directions and behavior of assets. Since an equivalent assets that are traded in their respective markets are an equivalent ones we’ll encounter in binary options, it’s necessary to understand the way to analyze these assets technically and fundamentally. When the trader has mastered this, he or she is going to be ready to perform solid binary options analysis.
Let us take an actual trade example. This trade was a Touch/No Touch trade for the EURUSD taken on October 25, 2011, with a 24-hour expiry. We placed a No Touch binary option trade for the EURUSD, predicting that the EURUSD wouldn’t touch the worth barrier of 1.4031 before expiry.
The trade was successful, as the EURUSD did not reach the price barrier before the expiration date. A total of $55.65 was staked within the trade, with a profit of $44.35, giving us a complete payout of $100.
The Binary Option Analysis for this Trade is stated below:
The first step in performing a binary options analysis for this trade was to locate a chart for the EURUSD to analyze. Since most binary options brokers don’t offer charting tools, we had to locate a forex broker whose trading platform had charts or us to use. We located one and started the analysis.
In the financial markets, the basics of an asset always supersede the technicals. This is why we did a fundamental analysis first. At the time of study , there was a gathering of the Eurozone financial ministers to work out the way to put together a rescue package for Greece, which was groaning under a sovereign debt crisis. At an equivalent time, Italy was also on the radar as its debt reached a staggering 600billion Euros. These were indeed bad times for the Euro and therefore the markets had responded accordingly. The meeting was thanks to end later that week with the issuing of a communiqué to announce measures to assist these countries out. We knew that the markets would be range-bound as traders looked to the result of that meeting for direction. Thus, we didn’t see the Euro climbing past the 1.4000 psychological barrier before the top of the meeting.
We headed over to the charts to ascertain what the worth action was saying, and that we got the confirmation we would have liked . A strong resistance had capped the EUR/USD at 1.39605 for three days straight. Thus, we were ready to set an appropriate price barrier that we felt that the EUR/USD wouldn’t achieve in 24 hours.
The trade was then setup on the binary options platform, with a price barrier of 1.4031 and a 24-hour expiry. As at the expiration of the trade on October 26, 2011, the resistance cap was yet to be breached, putting us in the money.
Binary options analysis isn’t about guesswork, or trading on a hunch. You must be ready to perform the acceptable analysis of the basics of the asset you would like to trade, search for confirmation on the charts then execute the trade accordingly.