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No Taper = Currency Wars.
Absolutely Shocking! Ben Bernanke and Company (FED) have decided not to taper. That took everyone by surprise as most were counting on a taper of $10 to 20 billion of the monthly asset purchase program. This decision can bring on another round of currency wars.
Risk-on currencies, like the Aussie, the Euro and the British Pound (Sterling) all shot higher after the news. This decision, by the FED can prompt other central banks to begin to devalue their currencies to keep the edge.
We are on the very cusp of another currency war. Especially if the Fed does not taper in October or December. Other G10 countries will now react. The only thing they can do is provide even more accommodative, soft, policies to equalize what the Fed has done in the currency market.
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Forget the Shutdown. The Debt Ceiling is Worse
Uncle Sam to Run Out of Money?
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The opening act for the United States was yesterday, October 1, as the United States Government could not reach a budget agreement and shut its doors. This is just the beginning to something potentially far worse coming just down the road. A stalemate on raising the debt limit to avoid a default.
One side has to blink. Either the Republicans or the Democrats and at this time, it is anybody’s guess who. This could last for a day or two or three until someone sees that by the Government not paying someone is, technically, a default.
This kind of default will be worse.
Read on
Shut Down? Who Cares? Markets Move Higher
Traders Shrug the Shut down Off
U.S. markets kicked off October, and Q4, with modest gains. We have moved up from a string of recent losses as upbeat economic data cheered sentiment. Investors, for now, are ignoring the shutdown as the Yen and Gold are the go-to safe haven assets.
The markets, for now, are going to go about their business as politicians have always found a solution in the past. This closure of the U.S. Government, creates volatility and not a change in the direction of financial markets. However, we will see an impact on economic growth and sooner than later, the debt ceiling will come into play.
For now, on the economic front, U.S. manufacturing has expanded at its fastest pace in nearly two and a half years.
The shutdown could cost the US more than $300 million a day in lost economic output and is expected to shrink GDP growth by around 0.1 per cent every day. Most market players expect the shut down will be over by this time next week, as pressure builds on the Republicans and the Democrats to agree to terms on the budget as the debt ceiling deadline on October 17th draws nearer. Under the government shutdown, essential services will continue to run like healthcare and defence while non essential services will be closed.
Last night, the Australian Statistics Bureau showed a trade deficit of $815 Mn for Aug after July’s number of $1.375 billion. This underwhelmed market expectation that the number would drop to $450 million for August.
Read on forstocks, forex and indices analysis
Trade Ideas 2 OCT- The S&P Recovers and the Dollar Weakens
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S&P 500 (1691.25) moved lower after forming a bearish candlestick. We expected this move. However, investors have shrugged off the recent closure of the U.S. Government and the market has recovered.
http://www.binaryoptionstrategy.com/wp-content/uploads/2013/10/SP500-2OCT.png
S&P500 2OCT
We have moved up from 1680.29 and can now aim for 1700.00. A move above that can test 1715.00. A move below 1680.29 can target 1667.71.
For Binary Traders, this would be a good time to purchase a CALL
Trade now
EUR/USD (1.3517) we remain bullish in the market as long as 1.3460 holds.
EURUSD 2OCT13
We look to aim at 1.3700 with a break above that testing 1.3710. We expect 1.3710 to hold and bring some consolidations. A break below 1.3460 indicates a top (short term) and will change our forecast to bearish targeting 1.3105 and then 1.3100. A break below that sees 1.3000.
For Binary Traders, this would be a good time to purchase a CALL
Trade now
GBP/USD (1.6174) we remain bullish with 1.5956 holding. We are bumping against 1.6200 which must break to continue the rally.
GBPUSD 2OCT
Above 1.6260 will aim for 1.6300 and the 1.6380. We need to see a break below 1.5956 to indicate a short term top at 1.6200. Till that happens we remain bullish.
For Binary Traders, this would be a good time to purchase a CALL
Trade now
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Before you invest in a signal service, you should have a firm grasp of how these types of services works. The majority of signal providers usually update their subscribers a few times a day by way of SMS, email or phone calls. Once the trader has received the updates, he can choose to act on them or ignore them entirely. There is good reason for this. Although most signal providers do provide better than average analysis, this does not mean that they can be right 100% of the time. Sometimes, it also wise to defer to your own good judgment when deciding whether to trade or not after receiving a signal. At this point of time, you might be asking yourself why subscribe to a signal provider when they can’t get it right all the time? Well the answer is quite simple. While you could perhaps eventually become an expert in one asset you can't possibly study all the assets and all the information available including technical and fundamental analysis. Nobody has all the time in the world to study the market 24/7. If a trader was to embark on a quest to study the market in detail on a sole basis, he will end up with no time to trade at all! The fact is there is no sure thing when it comes to trading in the financial markets. The best that we can do is to gather as much information as possible and then contemplate whether it is worth to trade or not. By subscribing to a binary options signal provider, that helps to cut down the time needed to do quality research and this leaves us more time to focus on trading.
Using Bollinger Bands to Reduce Risk
A lot of trading strategies are designed to help you, the investor, figure out where the market is going in order to make a profitable trade. Having a good idea of where the market is going is the basis of binary trading, after all. But the future is uncertain; and no one has figured out a sure-fire way of knowing where the market will be when the option closes.
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The thing is, when trading you are most likely going to make several trades. Ideally you’ll finish in the money on every one, but realistically you know eventually a trade will go against you. This strategy works with that reality, and lets you get an edge using math and some of the principles of game theory.
Don’t worry; there isn’t any complicated math to do. Your trading program already does all the calculations for you; you just need to know how to spot the signals and get in on the market.
The strategy is based on using Bollinger bands to get a sense of where the market is going. You don’t need to have an exhaustive knowledge of how this indicator works. Let’s take the following chart:
That’s a capture of the EURUSD, but this strategy works with virtually any asset. As you probably know, the Bollinger bands are the three wavy lines that follow the chart. The line in the middle is the moving average, and the outer lines are standard deviations.
When the market price of the asset is above the moving average, each period is statistically more likely to close higher than the last one. Conversely, when the asset is trading below the moving average, it’s statistically more like to close lower.
As you probably already have guessed, you want to make puts while the asset is above the moving average, and calls when it’s below. Now, it’s important to remember that this won’t predict where the market will be when your option expires, but that over time you will have more options expiring in the money than out. In the long term this means that you are going to make money.
For example, in the portion of the chart that’s marked, you could have made 22 trades as it was going up. 14 of them would be in the money, while 8 would be a loss; giving you a 63% positive ratio.
How do you apply this strategy?
Open a chart that has time frames that coincide with the expiry times of the binary options. For example, if the options expire every 15 minutes, then you follow the market on a chart with 15 candles. Wait for the asset price to cross the moving average (center) line on the Bollinger bands, and then follow the market. As soon as the option opens, get in the market, because even if there are variations in between, you know that by the time the asset expires there is over a 60% chance it’ll be in the money.
What you have to watch out for here is “variance”, which is the tendency of the market to work in streaks. You might have 10 positive trades, but also 5 negative ones. This means you have to invest a relatively small percentage of your account (no more than 10%) to weather the downturns and make a profit when the market turns around.
The basic principle behind this strategy is to average the risk over several trades, so you aren’t as susceptible to market swings (trying to predict the future) and your investment is more secure. You might not make as much money with one or two trades, but over several days your account should stay positive.
Read the various types of technical analysis tools you can use to trade here
Washington Stalemate Moves Markets Lower
The partial closure of the U.S. Government over a budget issue is now entering its third day. There are an, estimated, 800K federal employees out of work till a resolution.
There is a bigger problem now looming for the U.S. Just down the road, on October 17, Congress will meet on the debt ceiling. So far, they cannot agree on the budget, what happens when and if they do not raise the debt ceiling? The U.S. defaults on debt for the very first time.
We also see another problem with the soft batch of economic numbers being reported in the U.S. Yesterday we got a weaker than expected jobs report. The Private sector only added 168K jobs. We expected 180K. The ADP is a leading indicator of tomorrow’s NFP report due out tomorrow.
Read stock, forex and indices analysis and todays outlook
U.S. Stocks Fall 1% on Debt Fears
U.S. stocks fell sharply lower for the second day in a row. Major averages have now hit monthly lows as investors took in what President Obama said about the ongoing stalemate in Washington DC.
Obama is claiming he has not seen any decent proposals from the Republicans and both sides are very far apart in any compromise. He told the House Speaker (John Boehner (R)) to “stop the excuses” and take a vote in the House on the current budget. “…Let us end the shutdown now,” Obama said in his statement. He feels there are enough votes to pass the budget now without strings. He is urging Congress to pass the budget the Senate has already agreed on.
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Market Watch Video– Trading Bullish for Oct 10, 2013
Markets were a bit surprised by FOMC minutes released yesterday that showed the majority of Committee members expected the Fed to begin tapering its QE program by the end of the year. The dollar bounced off an important support level with an impact on several currency pairs. Find out what to expect in the markets today in the video: