Trading Binary Options To Trump’s Twitter Feed

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Trading Binary Options To Trump’s Twitter Feed

Most institutional traders are now required to watch Trump’s Twitter feed very closely. The reason is that his comments, contained in short and often quite direct tweets, have the power to move the markets as they often do.

Trump opened up a a channel for communication which no president has ever done before him. All his predecessors made official speeches or used the official media channels to express their views. Everything was very much controlled.

Trump seems to prefer to fly solo and use his Twitter account to express his views, be they political, economical, or sometimes even personal. It seems like the president of the USA does not want to use any filter and many people like this direct contact.

How Trump’s tweets can move the markets

Of course not all Trump’s feeds move the price of assets, but there are some that definitely do. Trump is known for his quick response and he tends to follow through on his statements, at least most of the time.

It’s not surprising his tweets move the markets, they reflect the views of one of the most powerful man in the world. So when Trump mentions a company or a new regulation, his opinions suggest a certain type of action which he will take and traders see this as a trading signal.

Here is an example of Trump’s tweet about the Boeing corporation:

And here is the market reaction to Boeing stock soon after this comment on market reopen:

Trump made his comment after Dennis Muilenburg, the Boeing Chief Executive indirectly criticized Trump’s trade policies. Whether deserving or not, this was a great trading opportunity for someone who knew how to trade it. Since Trump signaled the cancellation of a government order, traders knew that Boeing stock would suffer some considerable losses.

There are of course other similar examples of Trump’s tweets which moved the markets enough to even trade the High-Yield Touch options where profits can reach up to 300%.

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Not all Trump’s tweets are negative. There are some very positive ones that have the tendency to move stock prices up.

For example, his mention about Ford on the 4th of January moved the company’s stock price up a whooping 4.6%. That is a bog move and it only took one day.

Here is the tweet that did it:

And here is the result of this tweet clearly visible in Ford Motor’s stock price spike:

Again, as in the previous example, this move was substantial enough to reach the levels of a High-Yield option and gain well over 100% return.

The price of Ford Motor stock has returned to previous levels a day later.

How to trade Trump’s tweets in binary options

The great thing about binary options is that you can trade company stocks, currencies, indicies, funds, and commodities, all from a single online platform. That allows for greater flexibility and more choices of assets that are directly influenced by Trump’s tweets.

Although, as seen in both examples prices tend to jump and playing the High-Yield options could produce a great return, it may be risky to choose this particular option. If you’re unsure that the levels of High-Yield options can be reached than it’s best to stick to regular options where the return is still very high. (I consider a 70% return to be very high.)

If you choose to trade a regular option with 70-85% return, you will have a greater chance of winning.

Timing your trades and setting expiry times

In binary options, the right timing is crucial. As we could see in the above examples the stock prices moved considerably throughout the daily trading session. If you had entered the trades soon after Trump’s tweets (when markets were opened) with an expiry of 3-12 hours you’d most likely win in both cases.

However the best way to trade Trump’s tweets is to monitor the underlying asset on H1 charts to see how it’s performing and then place your trades accordingly.

Brokers can’t adjust platforms to Trump’s tweets

Many brokers set certain limits on the orders and their trading platform during very influential market releases. Sometimes they increase the margin levels or simply add a temporary delay to the order taking so that when you enter a trade it always seems a bit late before it is actually executed.

Many users have noticed this and there are plenty of examples on binary option forums were frustrated users voice their opinions. Brokers argue that the delay is often due to the sudden rise of orders and technological capabilities, or they simply argue that there is no delay or only minimal.

The exact times of influential economic releases and speeches are known to the brokers because their times and importance is clearly defined in specialized economic calendars. See example below:

Events with three bull icons next to them are the most important ones and they usually influence the price action of the underlying assets. See live example here.

The great thing about Trump’s tweets is that they cannot be monitored, as they are quite spontaneous. In addition, traders often don’t have to trade on the asset as soon as the tweet is out. They can wait and trade at anytime after the tweet which makes it impossible for brokers to control.

Few final words in conclusion

As an investor and trader, one always looks for a good signal and trading opportunity that can produce good returns. That’s obvious. Many subscribe to professional signal services to receive trading alerts. To know what moves the market is important for any trader.

Trump with his direct Twitter approach makes things a lot more interesting for an investor who is always on the look out for a good trading signal. Monitoring Trump’s twitter feed can give you a heads up and point you in the right direction.

The great thing is that Twitter is free to use and you can receive the exact same ‘trading signal’ from Trump as the most experienced institutional fund traders, and also at the same time as they. That’s a huge advantage.

Now instead of just reading about Trump’s latest shocking tweets in the news you can actually act and make money on them, before journalist even publish their stories and it is already too late.

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Trading Binary Options To Trump’s Twitter Feed

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Trading on Donald Trump’s Twitter Tantrums

Donald Trump speaks during his press conference at New York’s Trump Tower on January 11. Shannon Stapleton/Reuters

When Donald Trump this week gave his first press conference since winning the presidential election, he alternately lauded the press and shouted down reporters he didn’t like with jeers such as: “Fake news!” He slipped into stream-of-consciousness rants about everything from Chinese hackers to hidden cameras in hotel rooms “all over the place.” And he denounced pharmaceutical companies for committing “murder.” To this, the Wall Street traders I spoke to had nearly the same reaction: “He’s crazy.”

They noted how pharmaceutical stocks, which initially received a boost after Trump’s victory, got hammered after his one-off remarks Wednesday, which also targeted carmakers General Motors, Ford and Fiat Chrysler. Investors who had feared tough action on drug pricing under a Hillary Clinton presidency believed Trump would be the safer bet. Not so. At Trump’s presser, he announced that “the drug industry has been disastrous,” adding that he planned to create new bidding procedures for drugs to “save billions of dollars” for Americans and would do the same with other industries, sending stocks into a swoon.

“We are dealing with a completely unpredictable, absent-minded man who may wake up on any given day and just decide to attack a stock he hates—or praise one he loves—and then turn around and change his mind,” says David Tawil, president of Maglan Capital, a New York event-driven hedge fund. “I don’t like that. Those are 50-50 odds. I would never play that. No one would, unless they had some inside track. The one thing we hate is binary potential.”

It’s not so much that Wall Street investors necessarily object to Trump’s plans per se. It’s that the president-elect tends to announce them via highly nontraditional channels and without warning—more often than not, to his 19.7 million Twitter followers at all hours. As a result, major Wall Street traders and everyday investors are racing to find ways to stay on top of his constant tweets, from keywords to algorithms to analytics that track social media. While banks and hedge funds have invested millions of dollars in trading systems that can be tweaked to “Trump-proof” their portfolios, solutions for ordinary investors have been few and far between since Trump won the election. That changed this month.

One of the easiest tools to use (and it’s free) is a new app called “Trump Trigger” from Trigger Finance Inc., which offers market information and trading alerts. The app will send a message to users whenever Trump tweets about a stock they own, with options to buy, sell or short. “While it’s no surprise that Trump has been actively tweeting since the election, no one anticipated that a single tweet could potentially eradicate billions of dollars in market cap from large companies,” the company wrote in a blog post last week, introducing the app.

Fidelity Investments also offers a feature called “Social Market Analytics” that investors can add to their trading dashboards to track trading signals via Twitter, Facebook and other social media. The analytics tool does this by measuring both positive and negative comments on social media versus the norm. Sentiment indicators culled from social media are increasingly pointing to events before they happen. This was true when Trump complained in a recent tweet about the high cost of F-35 fighter jets from Lockheed Martin, sending its stock price lower. In fact, Trump’s Twitter followers goaded him into going after Lockheed after he tweeted in December that he wanted to “cancel” plans for a new Air Force One from Boeing, because “costs are out of control.” Ever the crowd-pleaser, when his followers urged him to attack Lockheed too, that’s exactly what he did.

What’s interesting is that Twitter sentiment indicators for Lockheed shot into negative territory and the company’s trading volume spiked even before Trump’s tweet, because social media had already gone negative on Lockheed hours earlier. Trump’s tweet was just the coup de grace.

One big worry: What if Trump’s tweet storms lead to a market that becomes hopelessly reactive to politics instead of economics? A former “bond king,” Bill Gross, who runs the $1.7 billion Janus Global Unconstrained Bond Fund, alluded to just that. He compared Trump’s penchant for singling out certain corporations and bullying them into changing their practices as redolent of the Italian dictator Mussolini. “Some of these pre-term policies, where [Trump’s] cajoling companies to move production back into the United States, that’s fine, but it reminds me to some extent of policies in Italy long ago associated with Mussolini and government control of corporate interests,” Gross said in an interview with Bloomberg Radio. “I don’t want it to go too far.”

Of course, it could also go too far in the other direction. “At some point, Trump could lose all credibility, both domestically and internationally, where no one takes him seriously anymore,” a London-based trader tells Newsweek on the condition of anonymity because the trader isn’t authorized to talk to the press. “Being the president-elect might give his tweets weight now, but that won’t necessarily last if he wears out his welcome.”

On Thursday, Trump abruptly praised L.L. Bean in a tweet after hearing that the granddaughter of the Maine company’s founder, Linda Bean, had donated thousands of dollars to a political action committee that supported his presidential campaign. Most of Trump’s tweets since winning November’s election, however, have been negative. Among the companies he’s tweet-bombed in addition to Boeing, Lockheed Martin and General Motors are Amazon, Apple and Carrier, a unit of United Technologies. With this week’s presser, Big Pharma is now on his hit list.

Attention from Trump has not been beneficial for most companies, so many investors are actively shirking the stocks he obsesses over. “I am staying as far away as I can from any sectors that Trump seems to be focused on—financials, pharma and the auto industry’s biggest carmakers, I am staying away from it, consciously, yes,” says Tawil.

Karen Finerman, co-founder and chief executive of New York investment management firm Metropolitan Capital, says she’s invested in a number of stocks that could be affected by Trump’s running commentary, including tech issues like Facebook and Google’s holding company, Alphabet Inc. (Silicon Valley largely favored a Clinton presidency over Trump) and financial stocks like Bank of America, JP Morgan Chase and Citigroup.

But the stock Finerman is most concerned about is GM, she says, even though the company’s most recent earnings beat expectations. “That’s the one where I am most tweet-vulnerable, so I guess I am a little nervous,” she says.

Finerman did well with tech issues, which initially got crushed after Trump’s victory but edged up after he met with Silicon Valley kingpins in the Trump Tower in December. “When the tech stocks fell, we kept buying as they kept getting cheaper,” she says, “so we did well on that.” In other words, when companies take a hit due to Trump that are otherwise healthy, it could be a good buying opportunity.

Even so, Wall Street will continue to be extremely wary of what traders are calling “the Trump Effect.”

“The only way you can truly insulate yourself from any potential fallout,” Finerman says, “is to not own any stocks. But it’s my job.”

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