Investors who primarily invest in shares were able to enjoy clearly increasing prices this week. The Frankfurter leading index DAX managed the leap over the psychologically important 8000 points mark. AT the New York Stock exchange, the Dow Jones index even reached an all-time high. At first glance, the reasons for such good figures seem to be relatively weak, since there are not really particularly good economic news. In the USA, lately, the unemployment rate at least dropped to the lowest level since the end of 2008, however there are still major problems with the national budget. Meanwhile in Europe, the euro still is in crisis, especially the states in South Europe keep complaining about a high unemployment rate and a bad economic situation.
Central banks heat up the mood
The most important reason for the high increase of the prices on the share markets is the currently highly available liquidity on the markets. The reason for this is the policy of many central banks which wanted to boost the economy by means of a policy of cheap money over the past months. Especially in the USA, there have been major efforts in the recent past and also in Japan, the new head of the central bank wants to continue with this policy. For share markets, liquidity basically is very positive since many investors are encouraged by that to buy shares.
However, this development also implies a risk, so that options in general and particularly binary options may become very interesting within the next few weeks and months. As already mentioned above, the generally good figures are not at all or only to a limited extent supported by figures coming from the companies. This means that the level of the share price generally is relatively high at the moment, alone since the beginning of the year, almost all important indices were able to strongly increase. However, the risk of falling prices is also related to this high level. Many experts predict such a development already now. For them, the question is not whether but when this is the case.
Prices will not increase for ever
For investors having benefited from the strongly increasing prices over the past few weeks, sooner or later the question will arise whether they should realize their profits and sell their security papers or not. Once this mood is predominant on the markets, this may relatively fast lead to clear losses with many security papers. The liquidity being on the market at the moment has to have an end at some point. Experts claim that this will be the case in summer, the latest.
This recognition offers providers who bank on binary options great opportunities. On the one hand, there is probably not going to be a clear price decline on the highest level immediately, but the markets are rather likely to move sidewards. Those who have a good nose for the short term, are able to get high returns within a very short time in this constellation. In the middle term, there may be a decline, in share price again so that you can also earn money with binary options in this environment. Of course, it is nearly impossible to predict the right entrance time. This is exactly why traders should keep an eye on the development on the markets within the next weeks.