Tuesday, February 25th, 2014 by Tim Lanoue
As many of you may know the financial markets has had their ups and downs making trading more difficult than what we were hoping for. Unfortunately, there is still a recession taking place causing traders from all fields to trade in a difficult bearish market. A bearish trend or bearish market is an occurrence that takes place when the price of an asset goes down or many assets financial health go down causing a dip in the economy. The aim of today’s article is to provide readers with fundamental knowledge and a couple ways on how to effectively trade binary options when a bearish market is present.
When it comes to trading bearish markets it is important to keep in mind that they are more likely to be volatile therefore making them harder to predict. Luckily for us when trading binary options we only have to predict whether we think the price of the asset we are trading will be higher or lower than our entry level. We don’t have to worry about stop/sell orders or complicated stock market trading protocols. One important thing to keep in mind though is that just because some assets are falling in value doesn’t necessarily mean a bearish market is present. Assets decreasing in value over any period of time would have what is known as a bearish trend. However, when it comes to a bearish market we need a strong and prolonged decrease in value in a number of assets . Bearish markets are vulnerable to price spikes due to instability that results from government actions as well making it even more of a hazard to trade.
One of the best ways to trade in a bearish market would be to utilize fundamental analysis to your advantage. Fundamental analysis involves the observation of an assets financial health, new press releases and competition. Accessing all the information necessary for fundamental analysis is quite simple can be all attained at a financial portal such as Google Finance. One way we benefit from fundamental analysis would be if we are constantly seeing a decrease in the price of an asset of a long period of time. More often than not that price will continue to decrease in value so we could place a short-term trade with the downward occurring trend that the asset possesses. This is a rather simple and common sense type of trend trade, however, if you want a few more concrete strategies then keep reading.
The second type of analysis that can be applied when it comes to trading online or in general would be technical analysis. Technical analysis is the observation of an assets live feed, no financial portal is needed, all we need is a charting solution like the one that can be found here www.freestockcharts.com. When it comes to applying this trading style we have access to many trading indicators and the raw data feed of an assets value. Now I am not going to dive into a hardcore strategy solely for trading bearish markets but recap and point out other strategic articles I have written that would be great to use when trading in a bearish market.
Bearish markets are a market condition that cannot be avoided but if we understand the basics and have the right trading patterns to implement when one is present our chances of succeeding while trading binary options significantly increaes. If you have have a question or comment about this article, market conditions, or any of the trading patterns directed in the article please feel free to leave them below.