Should You Trade with Fundamental Analysis?
Fundamental analysis is one of the major types of strategy employed by traders around the world in many different markets. When you trade based on fundamentals, you take a look at what’s going on in the financial world and the geopolitical sphere and how those events might influence the price of a particular financial instrument. Then you trade based off of what you expect to happen or believe is happening right now.
Is fundamental analysis right for you?
With binary options trading, you can trade stocks, commodities, currencies and more, so there are many different areas you can study to make your trading decisions. Oftentimes a single event will influence the price of all of these different financial instruments, albeit not always in the same way. Examples of events which can influence price include major events like elections and speeches as well as the release of government reports such as the nonfarm payroll (jobs) report and company quarterly earnings reports.
The same event that causes one financial instrument to rise can make another fall.
Binary traders who use fundamental analysis to make trading decisions are experts in their field. The successful ones who pull in long-term profits are able to achieve consistent results because they know the financial world inside and out.
It’s important to draw this distinction because many beginners are drawn to binary options on the basis that they believe they can profit from their very limited financial understanding.
There is a reason however that critics say that binary options trading is a form of gambling; for many traders, it is. And like gambling, the field has been rife with stories of fraud brokers and scam trading sites. Many people wonder is 24option legit or if they are a scam? If you aren’t an expert on fundamentals, you shouldn’t trade them, plain and simple. You can certainly learn, although it’s probably not going to be the most efficient course. If you are an expert in your field, then you will need to learn to trade with discipline based off of your knowledge and continue to constantly soak up new information.
It’s possible to make a lot of money trading based off of financial events.
A lot of traders take advantage of the large moves generated by the release of the nonfarm payroll event, for example. A lot of traders also lose money quickly when the market jumps based off of a report. If you can learn how to trade reports and events, then do so—but if you aren’t going to be using fundamental analysis, it’s best to avoid trading binary options during major events.