How Volatility Affects The Options and Binary Options Markets

Market volatility comes in two forms, implied volatility and historical volatility, both which can affect an investor’s ability to be successful in trading Binary Options. Implied volatility is similar to a financial security as it fluctuates with market sentiment and is an estimate of how much options trader perceives a financial security or index will move over a specific period of time on an annualized basis. Historical volatility is the actual past movement of a security and can be defined as the standard deviation of a time series, reflected in percentage format.

Implied volatility affects the price of a Binary Option, but it influences standard vanilla options much more than it effects Binary Options. Implied volatility changes as market sentiment changes. Generally as fear and trepidation increase, implied volatility increases, while increases in complacency are generally highly correlated to declines in implied volatility.  Continue reading "How Volatility Affects The Options and Binary Options Markets"

Why Investment Education Is the Key to Binary Options Trading Success

Binary options are exciting investment vehicles that give traders a way to leveraging their knowledge to enhance their income.  For an investor to successfully navigate trading Binary Options it is imperative to understand the movements of an underlying and incorporate that knowledge into binary options trading. Traders should also understand the benefits of using Binary Options as well as the different tenors and styles available to trade.

Understanding underlying assets available through reputable brokers such as Magnum options will make the difference to a traders overall success.  By underlying the behavior of different securities, a trader can increase their odds of capturing a move in stocks, commodities, FOREX and indices. Continue reading "Why Investment Education Is the Key to Binary Options Trading Success"

Using Economic Analysis To Trade Binary Options

Capital markets are generally driven by supply and demand for specific financial instruments.  There are many underlying factors that drive specific instruments such as stocks, commodity and currency rates.  One of the best ways for an investor to determine the future direction of certain financial instruments is to use economic analysis, to initiate and determine a trading position to and profit in Binary Options.

Economic Analysis:

Economic analysis is the process of analyzing new economic data to determine if new information is priced into a financial instrument.  Financial markets usually price in certain expectations of future economic information into a financial instrument and the release of new information will generally alter price action to incorporate the new information almost immediately.  Price action is generally volatile after an economic release which produces an opportunity to trade an instrument that takes advantage of short periods of volatility such as Binary Options – with customizable time frames to trade and profitability determined by the correct prediction in direction of a an asset price and trend . Continue reading "Using Economic Analysis To Trade Binary Options"

Strategic Elements Of Binary Options Trading

Successful Trading is a Skill You Can Learn

The famous Turtle Traders founder Richard Dennis made history not only through his record-breaking trading performance but also for transforming the lives of a handful of individuals like you and me in under two weeks. He believed that he could pass on his successful principles as a trader to a non-professional trader and that based on them following his principles to the letter they too can become just as successful. Contrary to his peers opinions he proceed to do just that and the rest is history. This is no different to the teacher student relationship or master builder and apprentice relationship. Modern educators are promoting this exact principle to accelerate and help transform people's performance. It makes sense that success is a skill which can be taught even to trading Binary Options. Continue reading "Strategic Elements Of Binary Options Trading"

Using The VIX As a Fear Gauge In Binary Options Trading

The VIX volatility index is a gauge of the fear and greed that market participants are experiencing and can be used as a tool to help guide binary options traders as it relates to the S&P 500 index.  The VIX is a measure of the implied volatility of the at the money calls and puts of the S&P 500 index, and reflect the level of premium that needs to be paid to purchase at the money options.

Implied volatility is an estimate of the distance the S&P 500 index will move over a certain period on an annualized basis.  For example, a VIX reading of 13.98% means that market participants believe that over the next 30 day period, the S&P 500 index will move 13.98% when annualized, or 1.17% over the next 30 days. Continue reading "Using The VIX As a Fear Gauge In Binary Options Trading"