Binary options are just a tiny slice of a huge, multi-trillion dollar industry. And while binary options represent a lot of parts of that bigger industry, such as the Forex market, stock markets, indices representing those markets, and even the global commodities markets, if you never navigate beyond your binary options broker’s page to learn more about the different ways in which those assets are traded and evaluated, you are severely limiting your profitability. Looking at these other resources is a good way to keep educating yourself and improve your skills as a trader.
Let’s say you want to trade the USD/JPY pair. The United States dollar is the world’s most heavily used currency, and in Asia, the Japanese yen is the equivalent of this. Both currencies have tens of thousands of influencers impacting them, and the quoted price that you see at your broker is just the result of all of these things coming together, weighing one currency against the other. If you do not have an understanding of both what’s going on with the dollar and with the yen, your trading is going to be at a disadvantage. This is why looking at things like what the Federal Reserve is doing, what the Bank of Japan is doing, and on how both the U.S. and the Japanese economies impact their respective currencies, are so important. If you are not able to look at and assess this information, you are not trading as effectively as you can. Unfortunately, many traders never get to this point and rely just on price action. There is merit to price action, but it is limiting their ability to make money, and many of them lose the entirety of their trading accounts as a result of this. We don’t want you to fall into that category, which is why we’re outlining a strategy for beginning traders to more effectively find success here.
Here’s another example of how the huge world of trading can influence your tiny slice of the binary options market. One of the world’s most heavily traded commodities, gold, is a popular asset to trade as a binary option. But the price per ounce of gold is influenced by a very complicated web of supply and demand. Many long term investors use it as a hedge against a volatile U.S. dollar, and when the price of the dollar drops, the price of gold tends to go up. It’s not a direct correlation, but there’s one there nonetheless. This is an easy to remember bit of knowledge, and by applying it to your trading, you can find new trading opportunities, and make even more money as a result of this. There are an almost innumerable amount of combinations like this that can have an influence on your trading, so spending time looking for them and then applying them is only going to help you. It will illuminate new chances to make money, and it will help you to better analyze your existing repertoire of trades.
So, if you are just starting out as a binary trader, it can be easy to get stuck using just your broker’s webpage for analysis, but in reality, there are so many different forces out there pushing and pulling prices of each asset, and if you are not aware of this, then you are putting yourself at the mercy of random chance. This inevitably means that you will lose money. Part of being a profitable trader is being a knowledgeable one. The more little connections and tips and tricks you know that can help, the better off you will be.