Economic News for Binary Options Trading

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Binary Options News trading

Most binary options traders swear by technical analysis when it comes to securing a long-term edge in their “trade”, more or less ignoring market fundamentals. The bias is indeed obvious: most binary option traders only incorporate fundamentals into their trading to the extent of simply staying away from the action when economic news are due to be released. While in itself this approach is indeed a healthy one considering a trader who is overly reliant on the technical aspects of strategy, beyond that it results in a plethora of missed – and potentially good – trading/profit-reaping opportunities.

Those trading indices, Forex, commodities or stocks have long resorted to news trading to secure an edge and indeed, there are traders out there who have turned this approach into a sort of art-form. Binary option traders can adopt similar strategies too and they too can be successful at news trading.

The first step (although this isn’t an actual part of binary option news trading strategy), is to find a tool that will help one make heads and tails of the news-flow. There are indeed trading tools out there thatwill organize the data, creating a virtual economic news calendar, that will have the importance of various news-releases graphically illustrated, together with the actual, previous and forecast values of the variables involved. Such a tool is a must for everyone looking to trade the news, and that goes double for binary option traders.
As it’s usually the case in trading, there aren’t any rules etched in stone when it comes to trading the news with binary options. There are however a number of measures one can adopt to radically impact his/her chances of success. There’s nothing particularly deep or technical about these “strategies” either. They’re all quite straightforward and depending on the sort of news they’re aimed at exploiting, quite self-explanatory as well.
One of the simplest ways to trade the news is through the breakout strategy. This approach requires quite a bit of pre-planning, but its execution is simple and straightforward as are the signals that call for its application. This strategy should only be used with news which are likely to elicit a highly predictable movement in the price of an underlying asset. With currency pairs, announcements regarding the increasing or decreasing of the interest rate are potentially such news. Usually, when the interest rate is raised, the targeted currency gains. When it’s lowered, it drops. In addition to that, one can of course analyze the ever increasing highs and lows as well as the increasing moving averages associated with the asset price to confirm the general trend (which in this case would be an uptrend). The critical points of this strategy are the entry point (which is when the trader actually places the Put/Call trade) and of course the expiry. In a hypothetical scenario, the entry signal can be the actual announcement. The trader may also wait to see what sort of effect the announcement has, entering shortly afterward. The expiry time can be anything from 1 hour to a day. Two options can in fact be bought: one with a one hour and the other with a one day expiry. This strategy calls for simple, Put/Call contracts.

Most of the time though, the problem with news trading is that while one knows a certain announcement will indeed produce a massive swing in the price of an asset, it isn’t clear in which direction the swing will occur. An announcement on the part of the US Federal Open Market Committee (FOMC) is a good potential example in this respect. Such a situation obviously calls for a range trade, with an “Outside” option purchased. This way, regardless of whether the swing happens upward or downward, as long as the price ends up outside of the range, the trade is a winner. This method is called trading on volatility, because that is indeed exactly what it does.

In conclusion: when it comes to binary options news trading, what we’re looking at are a handful of rather straightforward strategies, each of which effectively covers a well-defined scenario:
– the Put/Call trade on assets the price-movement direction of which is relatively easy to predict (the currency interest-rate change announcements offer a good example in this respect).
– trading the volatility (a technique which calls for a range/outside approach, and which works with news that induce volatility but no clear direction in the asset-price)
– price-rebound trading. Often, economic news will create volatility in an asset-price, which will later settle. Such asset-price rebounds can obviously be exploited through binary options as well.

Economic News for Binary Options Trading

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News Trading Strategy

News Trading Strategy or also called a fundamental strategy is a very old type of Strategy used in all other markets such as Forex or Stock Exchange.

For many traders, it is a simple and very practical way to trade and make significant profits.

Most Binary Options strategies are based on reading graphs and understanding some indicators such as the Stochastic, the RSI, Moving Averages or others, the News Trading Strategy teaches you to negotiate based on news.

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That is, not having to use graphical analysis, but be attentive to the economic news that moves the market.

Many people do not have the required analytical skills, nor are they interested in learning how to use charts and indicators.

Some people question whether it is possible to trade Binary Options without this knowledge and without using the strategies that all websites teach and that are based on this knowledge of graphical or technical analysis.

The answer is yes. There is a very simple way of trading that does not require any kind of knowledge in technical analysis.

Advantages of News Trading Strategy:

  1. No knowledge of technical chart analysis required.
  2. You do not need to configure graphs with complex indicators.
  3. No need to spend hours waiting for an entrance.
  4. The news has a scheduled time, you only have to be ready when the news are released.
  5. The market usually always reacts the same way to the important economic news, so the hit rate is very good.

In addition to the strategy I explain below, we also have a news strategy module in our Online Training.

In this module, we explain the most important economic news and how to trade in each one.

It is a very simple, and understandable strategy.

Also, a great strategy to apply, whether for those who like to trade based on news or for those who operate with analytical strategies but wish to have a plan B.

Sometimes we offer this module, along with other offers for our partners (Binary Options Brokers).

Please ask our support if we have any offer campaigns for this active module, or check here if the PROMOTION IS ACTIVE.

News Trading Strategy

It is very simple. You just have to choose a site that has all the important news that makes the prices of the assets vary.

You can use the site Forex Factory or Investing. The calendar has all events per day and an hour for the current week.

We just have to learn to apply the results simply to binary options trading. How to do it? It is very simple.

Example of Forex Factory Calendar

EXPLANATION OF THE NEWS TRADING STRATEGY:

1 – We should only look at high impact news (see the subtitles of the calendars).

2 – Then we need to understand which asset the news will affect. This website affects the assets on the foreign exchange market or Forex.

That is, we will trade binary options based on Forex assets. For example, a news story about the USD will affect pairs that have the USD: EUR/USD, GBP/USD, USD/CHF, etc.

If the news is from Europe, there are countries whose reports have greater impact than others. In the first place is Germany and then France.

We should only focus on the news for these two countries. And for pairs with the EUR, such as EUR/USD, EUR/GBP, EUR/CHF, etc.

3 – As an example, imagine that there is a high-impact (red) news report at 08:00 GMT for Germany.

On the Forex Factory website, there are 3 columns: the actual value (current value updated as the news is released), the forecast which is the prediction and the previous value, typically the last month.

4 – The news is released; it had a forecast of for example 10 but the actual result is 9.

This means that the value was below the forecast, which is bad for Germany, which will tend to cause the EUR to fall.

Let’s imagine, however, that the news was on unemployment. And that the forecast was 7% but the result was 6.9%, in this case being below is good, because unemployment fell.

In this situation, the EUR will rise.

The way to tell if the result is better or worse than expected is to look at the color of the value that just came out. If it is GREEN, it was better.

In this case, it was good for the EUR and it will go up. If it is RED, it was bad and the EUR will fall relative to other currencies.

Example of Investing Economic Calendar

5 – Summary. Choose important news (red icon).

Check if the result is above or below expectations and on that basis, trade the assets that are directly linked to this news. You don’t have to analyze anything else.

6 – For this News Trading Strategy to work it is important to act right at the moment the news is announced.

If the news is at 8:00 am you have to place the order right at the moment that the result comes out.

Please note that the greater the disparity between the forecast and the result, the more likely the price will be influenced by this news, therefore the more likely you are to make money.

7 – The kind of trade that you should use is the high/low and use an asset time-frame of between 5 to 15 minutes.

Because normally in the few minutes after the news announcement, the market will react to the news.

From my experience, the ones that work best are the 5 minutes and the 15 minutes.

However, the asset itself will vary the results. If, for example, you use the EUR/USD, you can use the 5-minute time-frame.

Tips from our Professional Trader: 6 reasons to have 2 accounts

Do you know that you should work with more than 1 broker?
Check the 6 reasons why you should have account with at least 2 brokers:
  1. Each platform has its differences. If you try different platforms you may find those more suitable to your trading style.
  2. Each broker has his own payouts that keep changing during the day. If you want to open a trade and one offers 60% and the other 80%, you will choose the one with best payout, no?
  3. Sometimes the brokers close some assets, if you have just one account and you want to trade on that asset and it is closed, you will LOSE that trade, no?
  4. If there is an issue with your Broker’s platform, or they are updating it you’re not able to trade, unless you have another account with other broker.
  5. Deposits and withdraws. Brokers keep changing the deposit and withdraw methods, imagine you need cash fast and your withdraw system is closed at that moment on your broker, what do you do?
  6. Each platform has its owns indicators and trading tools, imagine you found a new stratey and it does not work on your broker because it uses an indicator that your broker does not offer.

Below you can find our main trader suggestions on brokers:

Precautions in using News Trading Strategy:

Sometimes before the news announcement, the market is volatile, making the price shoot in one direction, or go up and down quickly and with large variations.

If this happens, wait for the news and for the market to stabilize. After 1 minute, trade based on the result.

Sometimes there are several news announcements at the same time, some for Europe that affect the EUR and others for the US that affect the USD.

In this case, it is sometimes better not to trade, for example, if you want to trade the EUR/USD.

When the news is announced, you have to read the result and place the trade in the right direction.

For example: If there is news for the USD and it is good, and you trade the EUR/USD, the price will fall, because being good news for the United States makes the USD climb and the EUR drop which causes a lower price in EUR/USD.

Usually, when this News Trading Strategy is applied well, it can have a success rate of 70%, which means that in every 10 trades, you will be right on 7 and wrong on 3.

Most of the Brokers offers a gain of about 80% for the EUR/USD, which translates into a gain of 56 and a loss of 30 when using this News Trading Strategy.

The best way to get results is to test several assets with different time-frames (5, 10 or 15 minutes) and see which suits you best.

The advice that I always give is that if you have 3 bad negotiations, it is because you’re doing something wrong or it is a bad day for the News Trading Strategy.

Check everything that you’re doing and fix the mistakes.

If you’re not doing anything wrong with the news trading strategy then it’s because the market is not reacting logically to the news that is coming out.

In this case, you should turn off the platform and not trade anymore more during that day. Come back the next day.

If you like this strategy, check at all the other strategies on the site: Binary Options Strategies

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Top Binary Options Broker 2020!
    Best Choice For Beginners!
    Big Sign-Up Bonus!
    Free Trading Education!
    Free Demo Account!

  • Binomo
    Binomo

    Only For Experienced Traders!

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