Despite the apparent complexity, this kind of binary options trading is one of the most productive and fast. Not only that, it is replicated easily with Forex and CFDs trading. Calculations of market movements can be made with aproximate precision because market reacts reflexively to stimuli. Trading strategies based on important events are related to fundamental analysis, which examines the supply and demand of the market. The peculiarity of the strategy is that every trader has his own understanding of actions algorithm when trading important events.
Tools for Event Tracking
The main tool is undoubtedly the economic calendar, which gives a clear idea of the information and the time of the expected event. Traders can also use of Bloomberg and Reuters as an information suppliers.
To start the trader must know which economic indicators are able to change and influence the value of assets. The main indicators are the news about interest rates and inflation, GDP, labor market situation, it is also important to take into account the reports, which shall be announced profitability or unprofitability of the largest leading companies.
Driving the Wave
It is necessary to restrict the news that changes the situation appearing on the market, and as a result of which the prices get the momentum in one direction. First of all, it is advisable to pay attention to the source from the Eurozone, United States and Japan. It is important to fully master the possibilities of economic calendar each week to mark the news for yourself that have strongest interaction with the market.
With the advent of certain trade practices, important events trading becomes automatic, the trader will begin to navigate of a country-asset or asset-news relation. For example, if the news from Australia, New Zealand or Canada are scheduled for today, traders need to focus on AUDUSD, NZDUSD and USDCAD currency pairs.
It is not necessary to buy an option before the release of the news, which expiration date occurs after the appearance of the publication. It should be borne in mind that in the first seconds, the graph can illustrate the false price movements due to sharply emerged hype, but real response also will not take long.
Trading Currencies with FX CFDs or Binary Options When There are Big Market Events
Meaningful trade on the news in the binary options involves careful attention to the interpretation of any changes in the market. There are unexpected and planned news. The first are very difficult to be predicted, but planned release in a fixed time and it is easier to work with them. Often, at first glance, bad data leads to an increase in the value of currency, and positive causes the opposite reaction of the market, since the assessment of the currency pair must take into account the value of the two currencies together. Every news has its own period of relevance, trader must learn to distinguish which ones will have long affecting the price change, and which will be able to shake up the market just for few minutes.
Understanding Important News
You have to understand that the important and influential news occur only occasionally, but not continuously. Every important event has its shelf life, since other events begin to release after it. For example, in Japan the news of a strong decrease in exports released, the Japanese yen began to fall, and after an hour, there was a statement by the government that there is a clear plan for implementation of this problem in the next 6 months. Thereafter, Japanese yen rose higher the previous values.
Therefore, investing in the trading on important events, traders do not need to choose long-term binary options. Although in some cases, it is possible to act contrary. For example, the news comes at the end of the week, it sets a trend and major changes are not expected ahead, then you may want to invest for a period until the end of the week closing.
Trading strategy based on news release includes an interesting and individual algorithm of actions, because for each asset, its own analytical tools and news channels should been used. Through news reports, you will learn to anticipate future price movements of an asset not only for one hour, but for a longer period. This allows you to buy options for a day or more, but with a high level of your forecast’s reliability. You can validate other analysis methods, such as using support and resistance levels or indicators when trading important events.
Remember that success in trading comes not only in the case of good strategy availability, but due to the ability to choose secure and trustful binary options broker. The credibility of the company, which trader cooperates with – is a very important issue for every trader. All the brokers promise high quality service, individual approach and extremely profitable terms, but in relation to the practice, these assurances are not always to be true. Therefore, it is important to choose an honest, reliable and responsible broker.