Large capitulation stocks often do not see a lot of big short term movement, which makes it tough to make money off of them in the binary options market. This is interesting to consider, especially because major binary brokers typically only carry large cap stocks. It’s a good idea for them, because it limits the profits that you can make off of extreme amounts of momentum, but it makes it tougher sometimes. This doesn’t need to be the case, though. If you know how to react to events, then you can use your knowledge constructively, even if you do need to use a little extra patience to do so.
First, realize exactly what a “large cap” stock is. By accepted definition, a large cap company has a market value of more than $10 billion.
The value of the company should be reflected in the price of the company’s stock. In theory, the number of shares of stock multiplied their price should be equal to the company’s worth. This is theoretical, of course, and when it does happen, it doesn’t stay that way for long. But still, it is a good starting point for figuring out where a company should be–or at least where the public believes a company should be in a rough manner.
The obvious difference is that, percentage wise, it takes more cash to move a bigger company than it does a smaller company. If a stock valued at $10 per share moves $1, that’s a 10 percent change–pretty big. But if a $500 per share stock moves $1, that’s only 0.2 percent change, not a lot at all. If you owned 10 shares of each, your profit would actually be the same, though. But the amount you invested in the cheap stocks to realize that profit would be far less than what you needed to invest in order to realize the same dollar increase in the other. One requires a $100 investment while the other required a $5,000 investment.
You can negate all of those problems, though, if you skip the stock market proper and trade with binary options instead. A 10 percent increase in price would return you the same as a 0.2 percent increase in price with binaries regardless of what the actual dollar changes are. Instead of worrying about percentages, you can just focus on direction. This simplifies your life and makes predictions and timing a lot easier. It’s still tough–don’t be confused by that–but it’s simpler. Large cap stocks can take years to return something worthwhile to you if you stick to the stock market solely, but with binaries, you can make 80 percent or more on a single trade*.
*Amount credited to your account for a successful trade.
Of course, you will not be investing as much on a single trade. When you invested $5,000 at once for that $500 per share stock earlier, you would probably be focusing on keeping that money in the market for a few months or longer. A binary trade usually lasts less than an hour. So, it makes sense that you would invest less in the short term than the other. This is actually beneficial since you can invest a little bit a lot of times this way. Instead of a $5,000 investment over the span of six months with a 0.2 percent return, you can invest $15,000 over the span of just a month. That seems like a huge number, but it’s really not. $15,000 is just 150 $100 trades. That’s only 5 trades per day. When you consider the fact that a typically binary trader can make 50 or more trades per day, this is a tiny number. In other words, when you constructively use a binary broker, you can invest more in a shorter amount of time with less risk and make more money. That’s definitely a good thing for you, especially if you are focusing on the biggest of all stocks.
***Your capital may be at risk. This material is not investment advice.***
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