Stock trading in binary option is not a gambling or something that can be done solely on the bases of luck. Rather, like any other rational process or trade, it is always conducted under the influence of certain factors. The nature of influence of these factors is what causes the profits to soar or losses to deepen.
While trading stocks in binary there are multiple factors that an investor has to consider. The following lines discuss some major factors that can affect stock trading in binary options.
Before moving on to the affecting factor, it is important to understand the importance of a good broker. It is the broker who provides the platform for trade; therefore, the diverse and better the platform better will be the stock trading. In addition to providing an easily usable interface and access to historical data about stocks, a good broker also provides access to different stock markets of the world. The primary stock markets, which a good broker provides access to include:
There are multiple factors that can either directly or indirectly affect the stock trading in binary options. Some major ones in this regard are as follows:
1. Sentiment of the Market:
The way the investors feel about the global economy and a particular stock market has a direct impact on the trading of stock. If the feeling of the investor regarding economy is on the negative side, then they would hold the cash and try selling the stock holdings which consequently causes the stock prices to fall.
2. Earning Reports:
Another crucial factor affecting the stock prices and behavior of the investors is the earning reports of the concerned stock. Analysis of earning reports is quite crucial, an earnings report showing profit always does not mean good, and similarly a loss report always does not mean bad news. For instance, a company that showed greater loss in the previous quarter but exhibited lesser loss in the recent quarter means good news for the stockholders, similarly, a company that shows lesser profit compared to the profit of previous quarters does not mean good news for the investors. Therefore, earning reports and their proper analysis directly affects the stock trading in binary.
3. Government Policies:
Government policies is an obvious factor that affects the stock trading in binary options. Government policies affect the companies, which affects their profit or loss margins, which consequently affects the attitude and behavior of stockholders. For instance, if Government of a particular region announce tax waive off for a particular industry, it means increase in the profits of the company, which has a positive effect on the stock of the company and vice versa.
4. Acquisitions and Mergers:
Acquisitions and mergers by companies also have a direct impact on their bottom line, thus they ought to affect the stock trading as well. Mergers and acquisitions are usually good news for the stockholders, therefore, the trade of such stock increases for the respective companies.