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Of course, not everyone agrees that China will be growing so fast. A couple of major problems loom: China’s GDP has indeed been growing rapidly in the last 30 years, but that could be because it has a while until it reaches a high rank. Chinese GDP is still below the 100th rank in the global economy. Another factor making it difficult for China to climb to the top is the state of the current global economy, the decrease in demand for exports and the rise of unemployment.
Some experts even feel that China’s GDP will fall in the next few years. Hedging might be a great binary options and forex strategy for traders of forex and binary options for those who are cynical about the Chinese takeover of the world.

What this means for traders:
Traders might want to pay attention to the Asian currencies, in particular the yuan, the Chinese currency which the Chinese government decided earlier to peg to the dollar (see our previous post). This in turn makes Chinese exports more expensive, but imports cheaper. Be on the lookout for trades connected to rises in production expense and major companies such as Wallmart and Target, who have overseas factories. Other companies which have been cheaper alternatives to American products, such as Toyota and Honda, may also present good binary options opportunities.

What this means for trade operators:
Chinese stocks and markets are a new opportunity for traders. The Asian market will also be influenced by its #2 neighbor. Read more about online trading in the binary options market.

Best Month in a Year
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One great way to make binary options work to your advantage is to trade based on monthly and quarterly earnings reports. Options can be predicted to rise or fall shortly before these news releases. If you do the research you can capitalize on these movements in the market. But more on this strategy at a later posting. Now let’s concentrate on our monthly report.
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Stocks did better this month than they have in an entire year. Sixteen of the thirty DOW stocks ended higher at the end of July, including Home Depot (up 1.6% at $28.51) and Boeing (up 1.4% at $68.14). Intel (down 1.7% to $34.46) and Merck (down 1.7% to $34.46) ended lower than expected.

Stock Market Summary

News Events of the Month-

Technology News-

Economic News-

Currencies-
The dollar rose against the British pound and Euro but fell against the yen.

Savings and Consumer Spending-
Consumer sentiment for July rose to 67.8 and not the expected 66.5.

Commodity Market
Oil, gold, and copper all rose in price.
Gold- $13.30 to $1,181.70 per ounce.
Copper- up 2.15 cents to $3.3115 a pound, up 12% for July.
Oil- closed at $78.95, up 4.39% from last month.

Employment
Increased to 9.6% from 9.5% for last month for the US market.
Private employers added 90,000 jobs to the payroll, an improvement since June.

Sales and Manufacturing
Manufacturing activity slowed to its lowest level since December. Reports of Midwest manufacturing rose to 62.3 this month from 59.1 for last month.

Source: Gold Alert

Market analysts speculate that gold could be the next bubble, as large investors continue to buy gold along with other commodities as a safe investment against the rising economic instability in Europe and now Asia.

Developing countries have simultaneously been buying gold as a safe and secure place to store monetary assets.

Both reactions have caused a rise in the price of gold over in the last week of May even though demand has fallen in the first quarter of 2010. But what is more interesting is that gold prices are extremely sensitive to sentiment, or people’s perception of the value of the commodity.

Financial investors are largely responsible for the market price of gold, who decide whether they believe the price of gold will rise, and then invest in gold. This causes the price of gold to rise even further, as investor sentiment rises.

The price of gold has been known to fall in times of wealth and economic prosperity, however.  In times of severe economic hardship, as in ware or economic collapse, it has been known to be a fairly liquid investment which can be easily traded for money.

Gold Prices for Last 10 Years (Google Chart)

In the last 10 years,  gold has risen steadily (see chart on side), breaking an all-time previous high of $1,241 an ounce on May 12. Due to the Greek crisis, foreign investors are cautious about investing in the Euro and prefer to invest in the seemingly more stable commodity of gold.

The price of gold, like other commodities is affected by demand and supply. However, since the total amount of gold in the world is already mined and currently in existence, the price of gold is affected more by demand than other commodities. For the right price, market suppliers can sell gold in the marketplace.

But the sudden growth in demand for gold could also contribute to global inflation, especially in light of the current global crisis and the European Central’s bank’s surprising decision to buy bonds of weak government economies. Investors are currently speculating as to whether gold will continue to rise, or if it truly did hit the breaking point on Wednesday.

Gold and other commodities are offered as investment options on our binary options platform.

Below are a list of a few myths and facts you may have heard about binary options:

• It’s just based on luck.- MYTH Not really. Although last-minute changes in the price of the instrument are inevitable, there are strategies that you can learn to manage risk and increase your chances of gaining money. Our blog includes links and resources  for learning more about binary options and some of the strategies shown to help traders minimize risk.
•  I have to be an expert on finance and stocks in order to invest in binary options. - MYTH If you have the right personality, binary options trading can be a great way to increase your earnings. You need to be determined, patient, and willing to invest time and effort to learn about binary trading. But compared to the conventional market, you don’t have to be an expert.  In fact, binary options were in part designed as a simpler investment alternative to traditional investment.  Of course, if you are a financial expert you are ahead of the game. Our Markets Pulse blog and platform offers you lots of information to start from, and we will in time recommend more information for advanced binary options traders.
• Great. So anyone can do it.- FACT Anyone CAN do it. Binary options trading, however, is not for those of the gambling mentality, who want to arbitrarily select calls and puts all day long. These people will lose a lot of money. See #2 for more information on the amount of effort needed to become a binary options trader.
• It is boring to predict whether a stock rises or falls within an hour. - MYTH Nothing could be further from the truth! Prices of binaries can change at a moment’s notice, due to various market changes. There are different types of binary options, which you can read about on our blog: http://blog.marketspulse.com/?p=14 In addition, our platform will introduce exotic options in the near future, which offers more advanced alternatives to the traditional call and put system.
• I need a lot of money in order to start.- MYTH You can start trading with as little as $100.
• The commissions for buying binary options are high. – MYTH Markets Pulse does not charge commission fees. Most of the online brokers don’t charge commission fees. Find a broker that doesn’t charge these fees and gives a protection rate.
• It’s an easy way to make money.-  FACT See #2 for more information on the personality needed to succeed in binary options. Again, binary options trading are not for the faint of heart. But with some research and knowledge of the industry, you can earn money.
• Binary options are short-term options, expiring within the day or within an hour.-FACT Yes, binary options are short-term, and are used for intraday trading and even hour-long trades.
• I have to first lose a lot of money in order to “get the hang of it.” – MYTH Markets Pulse offers you to join and start trading with practice money. It is strongly advisable to do this before placing actual bets. You will minimize risk.
• Binary options are a relatively new form of trading and the simplest form out there. – FACT Indeed.  Binary options have only been out for the past two or three years. But they have taken off and are growing more and more popular by the day. They are simpler than the traditional methods of investing.

This strategy benefits you mostly when you have two options with a range of expiry, where both options could be in the-money. Then you are able to minimize your risk but   also maximize your gain.

This option is almost most popular in forex binary options, in which the value of the currency can change very quickly in either direction. In this scenario, hedging could be a viable option for reducing risk to the trader.

Take the following scenario of a forex binary option based on the price of the Euro. The Euro has been rising and is predicted to continue to rise at a determined breakout point. At this point you would place a call, expecting the Euro to rise. But what if the price changes quickly and falls? You can place a put option at another point, helping you to minimize risk in the event that the price indeed falls.

In the above scenario, you have placed a call for $500 at the option price of 5.1. You have also placed a put for $500 at the option price of 5.3.

The following outcomes could occur:

• The Euro price could expire at 5.1 exactly, making your call option at-the-money. You would receive $500 in return of your initial investment. In this case your put option would be in-the-money, and you would receive $850 on your initial investment. Total investment= $1000. Profit= $350. This trade would end up being a net gain. (-500 + 500 + -500 + 850)
• The Euro price could expire between 5.1 and  5.3, making both your put option and your call option in-the-money. You would receive $850 for both trades.  Total investment= $1000. Profit= $700.   (-500 + 850 + -500 + 850) This trade would end up being a net gain.
• The Euro price could expire below 5.1, making your call option out-of-the-money. You would receive $75 in return of your initial investment. In this case your put option would be in-the-money, and you would receive $850 on your initial investment. Total investment= $1000. Profit= – $75.   (-500 + 75 + -500 + 850) This trade would end up being a net loss, but you still lose much less than you stand to gain in other scenarios.
• The Euro price could expire above 5.3, making your call option at-the-money, and you would receive $850 in return of your initial investment. In this case your put option would be out-of-the-money, and you would receive $75 in return of your initial investment. Total investment- $1000. Profit= -$75.  (-500 + 850 + -500 + 75) This trade would end up being a net loss, but you still lose much less than you stand to gain in other scenarios.
• The Euro price could expire at 5.3 exactly, making your put option at-the-money. You would receive $500 in return of your initial investment. In this case your put option would be in-the-money, and you would receive $850 on your initial investment. Total investment= $1000. Profit= $350.  (-500 + 850 + -500 +  500) This trade would end up being a net gain.

In each scenario, you stand a chance of winning a greater profit by hedging, or placing two bets in opposite directions, than the all-or-nothing chances of one binary bet. In the instances in which you stand you lose money, you lose far less than the possibility you have to gain a greater profit than loss in other circumstances.

Binary options are an exciting new trading concept in the financial world. There are several reasons for its appeal:

1. RISK MANAGEMENT: Traders know ahead of time their amount of possible loss or gain. The risk in binary options trading is less in comparison with more traditional trading. Binary options trading offer large potential gains with minimal loss. Markets Pulse gives traders an additional benefit by providing a protection rate of 15%, meaning that a trader cannot lose more than 85% of his investment in trading.
2. SIMPLICITY: Binary options provide a great way for inexperienced traders to start trading. Traditionally, market trading has been done by those with deep understanding of finance and market change. Conventional trading involves gaining or losing money on investments based on the amount of  increase or decrease in the price of assets. In binary options trading, traders predict the direction of the market. Binary options also have a much shorter shelf-life than futures trading or stocks. Traders make predictions on the direction of the market within a day, and sometimes within an hour.
3. LESS REGULATION: The regulations for binary options trading are less strict than other conventional forms of trading. Binary options trading are available to anyone with Internet access, and options are traded round-the-clock. If companies find regulation to hamper business dealings, they can easily move offshore or to another location with less regulation.
4. RANGE OF OPTIONS: Binary options offer a range of different products to trade- from financial instruments to sports and the weather. Currently there are a limited number of trade choices within binary options, but as time progresses and binary options become more conventional the trade choices are predicted to increase.