Are Banks Rebounding?

Growing Banks

The financial sector has long been one of the most profitable places to put your money. Regardless of what the economy is doing, people need to utilize this industry. Sure, there are ups and downs here, and weaker companies are often weeded out and put out of business, but this is a sector that will always be growing and will always be necessary. Putting your money here is very smart–especially if you are investing at a low point in a major company that has a history of continuous growth–but that doesn’t meant that short term traders are going to be successful here. This is especially true if you are trading binary options since it is often difficult to find trades that last longer than 30 days. Even the biggest and best company can have a downtrend that lasts longer than a month, even in the world’s biggest industry.

Just because there is fluctuation in this market that can be difficult to predict at times does not mean that it’s impossible. Because of their prominent positions within the trading community, financial services companies are extremely sensitive to the news. For example, when the housing market crashed in 2008, the companies that needed the most help from the government were the big banks because these were the lenders doling out money to home builders and buyers. Many banks would have completely collapsed because of the backlash here, but thanks to government funds, the banks were kept alive and are now stronger than ever, a mere six years later.

There are other news factors that can have a profound impact upon financial stock prices. For starters, recent announcements from HSBC–one of the world’s biggest banking corporations–might have a huge and immediate increase in the company’s stock. EDF just recently announced that they have hired HSBC in order to help advise them financially with a huge nuclear energy project. This project is said to be worth $27 billion and will undoubtedly lead to a big profit for the bank. Just in the 24 hours since the announcement was made, prices have already reversed courses and HSBC is no longer in a downward fall. They had recently been downgraded in their status, but more current estimates have said that the return on their tangible equity goal should be moved up from 15 percent to 19 percent, thus illustrating the fact that the company should be capable of much bigger things. And while this is not a huge money making deal for such a big company, it does show that things are starting to get better for HSBC.

What that means for long term investors and short term traders at this precise moment is pretty much the same thing. Taking a long position can work out well. HSBC is currently at a relative low point, and with good things in the works, there’s really only one direction that their stock can go. It isn’t guaranteed by any means–nothing in the world of finance is–but it is very likely that the stock will go up. Binary options traders, especially, are in a good position because of the fact that they can take baby steps in order to time their bigger trades with this asset correctly. And the damage will not be too severe if this doesn’t work out. A $100 loss is much easier to rebound from than investing in 100 shares of a stock currently valued at almost $50 each. Losing even a few binary trades at $100 each is a lot easier to stomach than losing 5 percent of a $5,000 trade. Even if you lose a little more at first with binaries, recovering becomes much easier because of the fact that profit rates are so high. HSBC might increase up to $65 per share within the next year according to some analysts, but even this is about 35 percent in gains. A binary option can secure you up to 81 percent in profits every time. One is a guaranteed rate and the other is an estimate. Even with risking less in binaries, you can earn far more.