3 topics for Day Traders to spot the upcoming financial crisis

3 topics for Day Traders to spot the upcoming financial crisis


Looking back on history we know that around every 58 months there is a financial crisis and a recession takes place. Between 1945 – 2008, the average occurrence of a recession is nearly every 4 ½ years, according to from the US National Bureau of Economic Research, which puts us on pace for the next crisis to hit around April of 2015, lasting through March 2016.

Here is some food for thought, why don’t we as day traders be proactive instead of reactive to what the markets will do.

Trading options is all about future predictions. This is a view of what we will expect to happen in the upcoming months, thus far as investors we need to plan. Although binary option tends to be more of a daily activity to trade market volatility, there are options to do long term trades with expiry times as far as 6 months in advance. The best part of trading options, especially binary, is that the does not need to make gains. Profit can be made on assets that lose value, if the day trader places a Put Option, and the asset falls below the value, then the trade is a success and the trader can make a profit on what placed as their binary option trade. The Binary option trade is outside of the market, as the investment is not placed in the asset. The trade is held by the brokerage and the financial compensation is paid from a binary option brokerage.

As capital markets across the world are expanding, binary option traders routinely trade currency pairs, as the hours of operating are throughout the day. Financial regulation is growing in Latin America, Africa and parts of Asia as well. The MINT nations, Mexico, Indonesia, Nigeria and Turkey are becoming stronger as the BRICS, Brazil, Russia, India, China and South Africa have been lackluster.

Germany is leading the eurozone, as the US still remains the most competitive economy based on the IMD’s World Competitiveness Rankings.

Currently, interest rates as well as government bonds yields are being held a record low levels and the process of now deleveraging the books of companies and government balance sheets has started.

The list of the top 3 topics Day Traders need to look out for were compiled by handpicking what issues I thought were going to have the biggest impact, but please consider that there will be many more that either correlate or surpass the topics that I mention.

1. World’s Energy Crisis
Gas is currently at a low with prices in the US remaining below $2. The crisis in the future will not come from resource scarcity as the new technique of fracking has allowed for more oil to be taken out of the ground, as well as more supplies in the US being made available. Shale gas is now seen as somewhat of a geopolitical weapon, and if the US congress permits for US companies to export shale oil, global prices would drop even more.

This however, may cause problems with OPEC and Russia as they are major exporters of oil, and will not like the new competition.

2. Stock Earnings
Annual earnings were a bit negative for large corporations, while stock markets came back to an 18% gain during the time span between June 2013 -2014. India saw returns of 30%, while China disappointed with 8%.

The excess liquidity in the markets on top of the fact that there were little other options as safe havens, much of the money in the markets went to the equity markets.

The difference in stock prices, and corporate earnings is the largest it has been compared to the previous pre-crisis figures in both 2000 as well as 2007. In the event that markets came back to their expected earning value, there would be a catastrophe as markets around the world would drop by 30%, causing immense damage to global economies.

3. Geopolitical crisis
The world map of potential geopolitical crisis is expanding as areas in the Middle East such as Syria are growing, as well many other areas in Europe including Russia and Ukraine, as well as Africa with Nigeria, and in South America with Venezuela.

As a day trader, it is important that you know what geopolitical stances are being taken as these relationships spill over out of the political environment and into the financial.

Governments have the ability to implement laws and change regulations which directly influence the way the financial sector operates, and as nations try to build their local economies, sometimes trade with the outside world is either supported or not.

Politicians have major influence on how items are taxed, which further fuels the appetite of their citizens. Corporate executives too, have great power as they are accountable for many of their employee’s jobs.

In order for governments and businesses to do it right they have to communicate and be willing to negotiate so as that both sides can do their jobs.

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  2. Benjamin Fredernson December 30, 2014, 3:33 pm

    2015 will see the USD, oil prices fall and gold value rise, as China and India demand for gold will continue to rise.

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