SIMPLIFICATION CAN COUNTER MARKET VOLATILITY

at Thursday, October 10, 2013 | 0 comments

With US politicians seemingly delaying their decision on raising the debt ceiling right up until the 17th October deadline, we are likely to see a great deal of volatility in the markets in the coming weeks. It appears as though many of these politicians are taking an incredible political gamble and it is one that could backfire massively. If a budget isn’t successfully passed and if the debt ceiling isn’t raised, then the US will default on its debts, sending several countries (including the US itself) back into recession.

This potential crisis is likely to create a great degree of volatility in the markets. Although the markets have been relatively stable thus far, we have now entered the second week of the stalemate and, with no end in sight; it looks as though the situation could escalate quickly.

As a trader, you need to be able to bypass as much of this volatility as possible. In order to do this, you should simplify your trading strategy. One way that you can do this is to trade in Binary Options. Here’s how Binary Options work and why they can help you by simplifying your trading strategy.

What are Binary Options? 

When you’re trading using Binary Options you’re essentially making a direction decision. The question is: will the price of the asset go up or down over a set period of time?

Once you’ve made your decision you can place your trade and, when the timeframe elapses, you’ll either win, lose or break even.


You win if the market moves in the way that you predicted, and you lose if it moves against your prediction. You will break even if the market doesn’t move, or if it returns back to where it started when you opened the trade.

For this reason, when you’re trading using Binary Options, you’re making three basic decisions:

1. What asset you would like to trade

2. What direction you believe that asset will go in (up or down)

3. How long you would like the trade to last

Traditionally speaking, Binary Options are short term gamble investments and they can last anywhere from 30 seconds to a year.

How do Binary Options Counteract Market Volatility? 

Most investors are attracted to Binary Options because of their fixed risk element. This has led to Binary Options becoming increasingly popular as a trading option.

Many so called ‘traditional trading options’ have an incredibly high risk element and some potential investors are put off as a result. The win-lose nature of Binary Options, however, means that there are only three potential outcomes and you’ll know your potential gains or losses beforehand.

For this reason, many traders use Binary Options to trade in both ‘bullish’ and ‘bearish’ markets that have a high degree of volatility. This is because traders can get ‘in and out’ of markets quickly if they see a pattern emerge without risking their long term strategies.

To conclude, Binary Options are a great tool for people who want to trade in volatile markets like the ones that are currently emerging due to the US debt crisis. This is because of their simplicity and their limited risk.