Binary Options Trading Forex Contra Dance

Ok the headline binary options trading contra dance was mostly to draw you two-steppers out there into the discussion but it is still relevant to the topic of the day: contra-indicators. It has long been the joke of traders that the “best contra-indicator” to a stock’s performance was to be touted as a “winner” or “risisng star” in Barron’s magazine. The point being not that Barron’s writers are idiots (that would be totally unfair to say), but that by the time anyone actually got to reading the Barron’s article any positive trading opportunity would have long since passed.

Barron’s Brings Late-Comers to the Party and Sticks Them with the Bill

Inevitably what ended up happening was that readers (a.k.a. late-comers to the party) buy at the top – and if they’re lucky – take a 10% haircut when they get stopped out on the way down. Those poor fools without stop-loss orders end up with dead money – never to find liquidity again. Is this abysmal performance Barron’s fault? Heck no. Each of us is responsible for making our own trading decisions – but here is something you probably didn’t think about as you were drooling over the latest CNBC “hot pick” or Wall Street Journal featured stock: ALL TELEVISION AND PRINT COMMUNICATIONS MEDIA IS ADVERTISING. There is no such thing as a ‘documentary’ programming. There is no such thing as ‘entertainment’ programming. There is no such thing as ‘sports’ programming. There is no such thing as independent print journalism. Every last word, video, picture, interview, breakaway dunk, and hair-flip is designed to sell you something.

Knowing that.. why would you expect anything different when you turn on CNBC? I can’t imagine what they might be selling on that channel… think it could be… STOCKS MAYBE?!? Now is this accusing hosts or individuals of ‘pumping and dumping’ stocks? NO. That is not the point. The POINT is that CNBC is in the BUSINESS of SELLING people on the excitement of the stock market. Does that mean the hosts may from time to time take liberties on the accuracy of what they say in order to maintain the feeling of the “rush” that comes from day trading? Yeah.

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So Why Does CNBC Mean Something to the Binary Options Trading Guy?

Now you know why we’re here. We just got done telling you that financial television and print media are in the business of SELLING stocks and the stock market. Here’s a riddle for you… if I was a financial Print/TV media owner (I am not) and I wanted to make money in that industry, what kind of customers would stick around? Which customers would be considered “sticky”? Well, didn’t we just talk about a couple of “late comer” traders in the “Barron’s” heading above? Have you ever listened (or worse… been one) of those pathetic callers to one of those CNBC shows? “Gee, (insert media pundit) do you think the Verizon stock I just bought at 20% above current market price will make me money?”

What can you tell about that kind of caller? Do you think he has some Verizon stock? Think he’d like to be able to SELL it to someone? Do you think CNBC thinks they’ve got a live one? Do you think that is the “perfect” television viewer for CNBC? Why do you think? Do you think it’s because the guy is sitting on dead money watching CNBC all day hoping one of the gurus might throw his stock a bone? Do you think the caller BOUGHT the stock when the “gurus” threw someone else a bone by SELLING it? *EVERY* time a stock is mentioned on television or print media (favorable or not) that it FREE ADVERTISING to every last person who owns that stock. Now tell me… who owns the most stock – dumb retail traders like you and me or hyper leveraged hedge funds? Now riddle me this… who sponsors CNBC? Do you think it might be financial trading companies, including some with positions to unload? Do you think CNBC gets “interviews” with traders and hedge fund managers out of the goodness of their hearts? For heaven’s sake, wake up! Financial people don’t have jobs unless they have dumb-doras like us giving them work to do by making trades and allowing access to our capital (so it can be used to trade against us – more on that another day).

For the record about what I sell… you can see my disclosures page. One thing I don’t sell is stocks I own – I don’t even talk about them. I do talk about index options puts and calls from time to time… but I say what my position is and leave you to make your own decisions. I don’t expect you to bail ME out of bad positions. Try getting a TV analyst to commit to that.

Forex Market Pushing S&P 500 Up:

Just an end note this morning – futures were strong up pre-market confirmed by strong risky asset forex trading pairs. Forex market looks as though it may weaken intra-day – that may provide an opportunity to pick up binary options puts at an intra-day peak. I’ll be looking for a combination of a rising Yen and VIX combined with falling cross rates in AUD, NZL, and CAD.

Based on what we’re seeing around 1:50pm forex trading is turning risk negative. Watching for the rising VIX now for the peak indicator (binary put option opportunity). We closed the day well below the 2.2% (Dow) / 2.45% (SPY) intra-day “peak” dictated by forex cross rate movements around 1:50pm, even though we had to hold onto our collective cajones all the way to the close. All else equal folks, the forex market don’t lie – and that stands to reason given it dwarfs all the other markets for combined leverage and liquidity.

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