During any sort of market crisis, there are always areas that suffer more than others. It doesn’t matter how severe the crisis is. It can be a legitimate recession, or it can just be a little hiccup in progress. Back in 1999 and 2000, it was technology stocks. In 2008, it was housing. And now, in 2014, the area that seems to be hurting the most is the energy sector. No one is 100 percent sure what’s going to happen in the next few months, but the focus for the foreseeable future seems to be on energy companies and how they respond to the uncertainty.
For the third quarter, energy stocks dropped by 9.2 percent, and are on pace for a 3.6 loss total for the year. As of this moment, that is the weakest projection for any sector in the S&P 500 index. Whether or not this is going to be the tone for the entire downtrend in this particular turn of the market is unclear, but right now, it seems like it will be. It makes it even more important now that Exxon Mobil, ConocoPhillips, and Chevron are reporting their earnings soon. Positive numbers could promote a big upswing throughout the entire economy. Bad numbers could send the current chaos spiraling even further downward. Energy stocks have seen their losses occur entirely within the last 20 weeks, and now could be the time that things turn around. This remains to be seen, though.
There are ways to take advantage of the drop, even though we aren’t sure just how far prices will keep going downward. Binary options allow you to trade for a profit when prices are dropping through put binary options. When you’re not sure how long prices will be going down for, these are extremely helpful since they focus on the short term. You might not feel comfortable with the ultra short term trades like a 30 second option, but 15 minute trades are most profitable when the day’s direction has been decided. Binary brokers tend to restrict stock option trading during the first 30 minutes of a trading day to reduce their losses, but this is actually a good thing for you if you take the middle timeframe length approach. After the first 30 minutes of the day, the tone has been set for your stocks of interest, and a mid-length expiry is going to be an easier prediction to make, thus increasing your profit rate. Your 30 and 60 second trades will still be hit or miss because they are too short in nature to have a solid basis for decision making, but if there’s a clear tone set for the day, you can take advantage of it in increments still.
A long term strategy is also helpful. The general mantra of the market is to buy low and sell high, and with prices going down, this presents a very clear area where you can focus on buying low with the hopes of selling high later on. Be selective about which assets you choose for this, but supplementing your short term trading with a long term investing is a solid approach and decrease the amount of risk that you are assuming. You’ve probably heard that diversification is important, and it truly is. A various amount of timeframes for your open trades is a good way to help diversify and grow your money in a safer manner. Look at things like oil and energy stocks that are down now so you can buy near the bottom and hold them until they create a profit for you.