THE MARKET

Watching the market as a whole is the final step in a bottom-up qualitative analysis of a potential stock pick, and is crucial for traders buying binary options. The strength of a company and the overall health of the industry can be trumped by a broad market sentiment, which can shift directionality almost instantly if the forces at work are strong enough. This is why most serious binary option investors have a constant stream of global data coming in while they are trading, to ensure that they know of any large-scale events as soon as the rest of the market does. Perhaps the most important qualitative market force is investor sentiment. Because traders are fallible human beings, they can often act in irrational ways, guided by fear or uncertainty on the one hand, or over-confidence and brashness on the other. At times the market may seem to ignore fundamental data entirely, moving as a whole in one direction or another based on a herd mentality. Watching for strong bullish or bearish movement in the market is crucial to avoid misgauging an asset’s direction. Even if every bit of data seems to imply that an asset will move in one direction, if the market sentiment is pushing strongly enough in the other direction, it will likely move that way. Times of uncertainty are perhaps the single biggest motivator in the market, and impact everything from the prices of currencies and commodities to the lowliest stock. If the threat of war arises, for example, or if a country seems poised on the edge of default, the market may choose to pull back from riskier assets, including equities, en masse, running instead for the safety of the US Dollar or other safe harbor instruments. These moments of market crisis can be excellent opportunities, however, as they can amplify directionality if they coincide, removing a great deal of doubt from a relatively strong binary option.