One of the simplest ways to tell if a company is a good long term buy or not as an investment is to try to create a picture of what the company will look like ten or twenty years from where they are right now. If they are more than likely to still be around and to still be relevant in their particular sector, then they will probably have grown over the course of ten years. This is a rule of thumb that many investors use when buying stocks, particularly those that want to buy and hold for long periods of time.
However, this doesn’t help you much as a short term binary options trader. In fact, a company that is going to be successful ten years from now has a long time to turn a profit. In fact, they could perform below par for years before they begin to show any signs of growth, and if you have a call option strategy in place for them, then the trade is completely misguided.
There are many companies out there that are currently doing well within their sectors and are likely to do so for at least ten years. Amazon is a strong example of this. Once again, the company showed spectacular earnings in their quarterly report, but it’s their business model that is the most impressive thing about Amazon. What started out as selling books and other household goods has grown into an entertainment dynasty. With Amazon Prime and the various partnerships with networks like Disney, HBO, Starz, and others, Amazon is moving into the territory of companies like Netflix and Hulu that have long been prominent in the streaming business. Amazon has stronger resources than any of these other companies, and as a result, even if they struggle in the semi near future, they are one company that is likely going to be relevant for quite some time.
The ways that companies operate changes over time. Look at what happened to Disney’s animated movie department starting in the mid 90s and going forward for the next 15 years. Disney struggled to put together a decent movie, and it wasn’t until new leadership was brought in that they turned this around and started producing blockbusters again. Businesses change, but a strong company with good leadership and the strong vision to adapt to changing climates is what makes a good, profitable company. There will be a lot of companies, just like the thousands that have come and gone and have been forgotten, that have a good product and find quick success, but if the leadership isn’t ready for the demands of survival, then the company will disappear.
This will have little bearing on your short term trades, but the long term ultimately guides the short term. You should still be looking at technical indicators before every single trade you execute, but having an idea of what the long term prognosis is for a company can give you more insight into you should trade them. One of the benefits of short term and binary option trading is that you can find opportunities to grow your money, and diversifying your positions once in a while and taking out longer term buys can be beneficial to your long term financial success. Whether you primarily focus on binary options or if you just use them once in a while to help grow your money a bit more quickly, it can be helpful to expand your markets and branch out. Either way, sometimes the largest benefit to trading binaries is that you uncover even more ways to grow your money over the long run.