A lot of the news reports out there are indicating that consumer spending is going down. Typically, this is a warning sign of an impending bear market, and it’s something that the U.S. economy has been hyperaware of for over a year now. However, the news probably isn’t as bad as it seems, and the fundamental data that is being used to arrive at the previously stated conclusion isn’t the only side of the story.
A lot of the speculation about declining consumer spending is because many of the major retailers, including Macy’s and Nordstrom, are showing weaker figures. However, according to the most recent government report on the subject, consumer spending has taken the largest leap upward that it has seen in a year. This isn’t good news for all areas of the retail sector, such as the couple companies listed above, but it does show that the economy is doing far better than many analysts had originally thought. The thoughts that the U.S. economy were headed toward a bear market have been squashed once again with this piece of information, and although this is good news for the stock market in general, it is also something that should impact how you decide which trades to make, and which to avoid.
Yes, it’s very important that you have a strategy in place for your trading for when a bull market turns bear, and when a bear market turns bullish. One of the strong points of being a short term trader, and particularly a binary options trader, is that you can navigate these changes with more ease than the typical long term investor is able to. But having correct data is key, and if you are only getting one side of a story, then your data is incomplete at best, and biased in a specific direction at worst. By digging deeper and getting your news from multiple sources, you can help to avoid this issue. Doing your own analysis will also help you here. You should be doing this anyway on a technical level in order to perfect the timing for your entry and exit points.
The best way to uncover a winning trade is to start with the fundamental data, such as consumer spending reports, decide the general direction that the information says that an asset will go, and then use things like the news and technical analysis to time your entry points. If you are using binary options for your trades, then you would also need to figure out expiry points so that you are not leaving a trade open for too short of a time or too long. The timeframes of each trade should take the technical information that you are looking at into account, along with the strength and timing of the news events that you are looking at. For example, the government report mentioned above was released late on a Friday, and it has the potential to set the tone for the stock market’s actions when trading opens up Monday morning. Beyond Monday, this news has very little impact unless other information is released to support it. Other news events often have more weight, so you will need to weigh everything individually and then create a customized approach based upon it. Limiting your risk is a good approach regardless, as even the strong stories can sometimes be negated by more pressing events. Just like you want to be able to have a workable plan in place if a bear market occurs, you should have a plan in place if your trades suddenly are not going to be profitable.