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We earn money on fundamental analysis

We earn money on fundamental analysis

Fundamental analysis is one of the most effective how to make money on binary options. It is believed that this requires a lot of experience, but you need to start, this article will help you to be one step ahead of others.

Basic principle

The purpose of any market analysis is to forecast price movements. The Dow Theory behind technical analysis states that "history repeats itself" and "price includes everything."

You can look at the indicators for a long time, but the change in the balance of buyers/sellers is determined only by global economic factors that directly affect the stock and foreign exchange markets. Fundamental analysts adhere to the efficient market hypothesis and assume that the market is constantly in search of fair value – deviations from it can be used to search binary options forex signals.

When the current price is higher than the “fair” - the asset is too overbought, the price should go down - we are looking for entry points for the PUT-option. When below, open only CALL-option.

Moneymakers with their speculative volumes constantly create a market imbalance, forcing a lot of small players ("market plankton") to move in the right direction.

You need to decide on the terms. So:

Fundamental analysis is auto binary signals or trading strategy based on macroeconomic, geopolitical, and natural factors, statistics, and the actions of Central banks and government regulators. Other events and patterns that affect all financial markets: stocks, commodities, currencies, companies, and economic sectors.

Learn more about how it works

Not all information exerts a strong enough "pressure" on the market. Usually, the predicted factors are already taken into account by the price, can not cause speculative fluctuations or reverse the trend.

The fundamental analysis of an asset begins with determining the list of factors that most affect it. Each of the following sections will be given further consideration in separate articles, but for now we will focus on the general theses.

Basic options:

  • Comparison method. The cumulative influence of statistics from leading EU countries on the exchange rate of the euro against the dollar.
  • A variant of induction and deduction. An example is complex statistics, statistical reports of companies, the impact of the stock market on the dynamics of commodity currencies.
  • Correlation method. An example is the correlation top binary options signals of the AUD / USD currency pair to the price of gold or the Canadian dollar to oil.
  • Grouping and summarizing. Example: complex indices of currencies of developing countries that affect the overall trend of the region.
  • Seasonality. Example: weather conditions affecting agriculture, increased purchases on public holidays, purchase of foreign currency for payments during the financial reporting period.

In addition, we always take into account:

  • Long-term impact on the global or national economy for a period from 3-6 months to several years;
  • Short-term impact on the market within a few hours (minutes).

 «Rumors» and force majeure

Again, you need to define the term. "Rumor" is considered to be unverified information (including those listed above), as well as the hype before the release of statistics or any other event that causes a speculative price reaction on which the binary option strategy stops working.

Regularly in the media and the Internet, "rumors" are specifically thrown out on the market. So that this is repeated, commented on, analyzed, predicted, and then the big players "skimmed the cream" from the impending panic.