One of the main advantages of binary options trading over traditional trading lies in the fact that binary options can be traded profitably in both bullish and bearish markets. A bullish market arises when the prices of many assets follow an ascending path, denoting high activity and interest. A bearish market, on the contrary, occurs when asset prices fall over a period of time, denoting the growing hesitation of investors, or a sell-off prior to a foreseen decline. Understanding why assets perform in certain ways, and the factors that create uptrends and downtrends in price values, can help you correctly predict bullish or bearish trends, leading to successful trades.
Analyzing Market Trends
There are three main indicators that can help you decide whether to predict bullish or bearish trends, and predict evolution of market trends: technical analysis, fundamental analysis, and market sentiment.
Technical Analysis: Technical analysis looks at graphs and charts to view the current market situation and its evolution over time. Once the current trend has been determined, the main thing you need to consider is the highest and lowest realised values of the asset (known as resistance and support levels) in order to determine how much longer the price may continue to move in the same direction.
Fundamental Analysis: Fundamental analysis focuses on external events, such as economic news and important financial data releases that can affect the price of assets. When predicting bullish and bearish forecasts for trading binary options, market news plays an essential role as strong indicators of market movements, and many traders time their trades specifically around them for more increased profits.
Market Sentiment: Market sentiment is primarily employed in combination with fundamental analysis and looks at the general feeling of investors towards the market. If investors are feeling hesitant, and shy away from trading despite a somewhat bullish market for example, the trend can quickly turn bearish if no other events are brought to consider on the issue.
As bullish and bearish forecasts deal with general trends in the market and follow major financial news releases, they can be quite easy to trade even by the novice trader who has not yet mastered more complicated strategies. The bullish and bearish forecasts, moreover, do not apply only to overall markets but can be successfully used for trading specific assets as well. When the market turns bearish, for example, investors are likely to flock to specific safe-haven assets in order to protect their investments, or offset some of the risks of the market at least, creating bullish conditions for those specific assets. On the options trading platform of Banc De Binary you can follow the bullish or bearish trends on many different assets that will help you determine market conditions and the appropriate direction to apply to your trades.