Before performing any operation on the market, it is really important for you to carry out fundamental and technical analysis of the asset you want to trade. This will not only make your chances to generate profits bigger, but also make you trade with greater confidence. So without such analysis, you risk losing your money.
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Many people refer to binary options trading as bets. This terminology is not right simply because trading is not something that you can master while being on the street. As a matter of fact there is an entire study for trading. Speaking of this you have to know that if you are dedicated and if you want to be good at binary options trading, then you do need to learn how to analyze the current situation on the markets.
In the basics of binary options trading lies the behavior of assets and pricing prediction. If you have been trading with commodities or at least have some experience, then you need to know that binary options trading deals with the same assets and this is why it is really important to know how to analyze those assets fundamentally and technically.
But enough with the words, let us give you a practical example of the above mentioned. The trade you will witness is of type Touch / No Touch and it is on the currency pair EUR/USD. The expiration time is 24 hours. First we place a No Touch binary option on the currency pair and we predicted that it would not exceed the price of 1.4032 before the expiration.
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Since the trade was successful and the currency paid didn’t exceed the price we generated a profit of 44.36$. What do you think – was this a trading hunch or just a simple guesswork? Of course this was the final result of thorough technical and fundamental analysis.
The Binary Option Analysis for this Trade
The first thing you have to do in order to perform analysis (taking under consideration the above mentioned example) is to find a chart of the currency pair EUR/USD and analyze it. You have to know that most brokers out there do not offer any tools of such kind, you will have to perform a thorough research and find one on your own.
The fundamental analysis is actually really important so make sure to master it. Actually, according to many people, the fundamental analysis is better than the technical one and this is why we will pay attention to it first. Keep in mind that by the time this analysis took place the financial ministers of the Eurozone had to determine how to rescue Greece which was under a sovereign debt crisis, plus Italy was also generating huge debt – 600billion Euros. All those factors stated one thing – this was a bad time for the Euro. This is why there was almost no chance for this currency to exceed 1.4000 which was the psychological barrier.
Now the technical analysis! Take a look at the chart we mentioned earlier. Due to strong resistance the EUR/USD was capped at 1.39606 for 3 days in a row. This is why we decided that this will not be exceeded within the next 24 hours.
Then the trade was customized on the platform for binary options trading – the price barrier was 1.4032 and the expiration time – 24 hours.