Learn to trade EURGBP in binary options trading

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7 Binary Options

One of the most important things to keep in mind while trading the EURGBP in binary options is that it is a cross. Its movements are determined by the economy of the Uk and that of the Eurozone. Therefore, traders should carefully watch what happens in this two areas economically.

Trading A Currency Pair – EURGBP

By the fact that the fact that EURGBP is affected by the European and England’s economies, it means that there is a very important role played by the Central Banks of these two places; the ECB, which is the European Central Bank, and the BOE, which is the Bank of England. Traders should, therefore, be aware of the main events concerning monetary policies both in England and Eurozone.

The ECB for instance, holds meetings every month, on the first Thursday of every month except January due to holidays. Each of these meetings is followed by a press conference 45 minutes later, where the president of the ECB reads the statement of the Governing Council and also takes several questions from the representatives of the press.

The Euro Pound drastically moves as a result of the press conference than due to the actual interest rate decision of the ECB.

Then, on the same day that ECB is releasing its interest rate decision, BOE is setting the monetary policy 45 minutes prior to the ECB’s interest rate decision release. The BOE has no press conference after the release of the decision; not unless the interest rate has been changed.

Important Economic Releases To Watch In Europe

Economic news from Europe greatly affects the movement of the EURBGP currency pair. Traders should keep a keen eye on these news releases especially those which have a larger impact like the CPI, Consumer Price Index.

European CPI represents the inflation in the Eurozone and the European Central Bank depends on this inflation when setting the monetary policy.

The other important European news releases are the PMI, Purchasing Manager Index. The PMI indicates whether a sector is expanding or contracting. This, in turn, gives a clue as to whether the CBE will interpret the information as bullish or bearish.

The other news releases that traders should look at is the GDP, Gross Domestic Product, and the unemployment rate.

Unlike the effects of most Central Banks on currency pairs with a currency associated with the specific bank, the EURGBP doesn’t experience much movement when the ECB is having its monthly meetings. This is mainly due to the fact that the ECB meetings are followed by press conferences during which the market prices of the EURGBP, fluctuate drastically. Sometimes it is even impossible to trade during this time since the market becomes too volatile and the liquidity at times gets too low.

In the long run, the economic releases during the month help traders in making a wise guess as to what the ECB will do when they meet. For example, if the inflation drops below what the ECB had targeted during their last meeting, then it is only obvious for traders to expect interest rates to be cut, which will affect the Euro and the EURGBP currency pair as a whole.

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Important Economic Releases To Watch In UK

The UK economy is one of the most important ones in the world of financial markets. United Kingdom’s currency, the Great Britain Pound, commonly referred to as the GBP is usually affected by some economic news releases in the UK.

The UK does not use the Euro Pound as its domestic currency. It uses the GBP which is controlled by the Bank of England, which is the Central Bank of the UK. The BOE (Bank of England) mainly has one mandate of keeping the inflation level at about 2%. To address this matter, the BOE has a Monetary Policy Committee (MPC) which holds a meeting once in every month in order to assess the country’s economy.

Contrary to the ECB meetings, the MPC meetings are never followed by any press conferences, not unless the interest rates are being changed.

Among the economic news releases which greatly affect the GBP and as a result the EURGBP, is the Gross Domestic Product (GDP). And when it comes to this, traders should be keen in noting the preliminary release since it rarely contradicts the final release.

In addition to the GDP, there are other economic releases such as the Retail Sales and the Purchasing Manager Index (PMI), which indicates the level of inflation. In actual sense, the Bank of England (BOE) is mostly concerned with the inflation. That is why the financial markets move very aggressively during the release of the Inflation Letter.

The PMI is usually split into two: the construction sector and the manufacturing sector.

What To Expect From Economic Releases

During the economic releases, one should expect very sharp movements of the EURGBP as well as to all other Euro currency pairs. Especially when using larger timeframes, one can easily notice the correlation between EURGBP and EURUSD. In most cases, these two currency pairs move together.

This shows that if a trader looks at the EURUSD and notices a rise in the market prices, then there is a similar rise in the EURGBP currency pair. The same is the case if there is a fall of the market prices of the EURUSD.

MetaTrader 5

What is Forex trading

The foreign exchange market (Forex) is the world’s most liquid and most traded market, where trades worth trillions are completed each day.

Forex trading involves buying one currency and selling another currency at the same time. This is why you always see them quoted in pairs. For example: EUR/USD and GBP/USD.

Which currencies can I trade

Forex trading involves buying or selling these “currency pairs”. When you buy a currency pair such as EUR/USD, it means that you are buying the EURO and selling the USD at the same time.

Currency pairs are categorised as follows:

  • Major pairs – Consist of the world’s most widely traded currency pairs
  • Minor pairs – Consist of less liquid currency pairs
  • Exotic pairs – Consist of one non-USD major currency that’s paired with the currency of an emerging economy. For example: GBP/HKD

The spread – why it matters

When you see currency pairs offered by a broker or trading service, there are usually two prices available: the ask price and the bid price. These are also known as the buy price and the sell price respectively.

The spread is the difference between the ask and bid price.

Based on the table below, can you tell what is the spread for the EUR/USD currency pair?

Symbol Bid Ask
EUR/USD 1.05652 1.05653
GBP/USD 1.24509 1.24515
USD/CHF 1.01010 1.01015
USD/JPY 113.248 113.251
USD/CAD 1.31441 1.31444
AUD/USD 0.76876 0.76879
AUD/NZD 1.06683 1.06691
AUD/CAD 1.01043 1.01050
AUD/CHF 0.77652 0.77658

Let’s calculate the spread for EUR/USD:

Ask price – Bid price = Spread

1.05653 – 1.05652 = 0.00001

What time is the market open for me to trade

The Forex is an over-the-counter market where trading takes place between two parties, and not with a centralised exchange or marketplace.

Depending on your broker or trading platform, you can start trading from the time the Sydney market opens on Monday morning to the time the New York market closes on Friday evening – up to 24 hours a day, five days a week.

Binary.com clients can trade Forex from Sunday 21:00 GMT to Friday 21:00 GMT.

How to trade Forex

A Forex trader always has one objective in mind when trading: to exchange one currency for another in order to make a profit.

This is why we’ve come up with the following three-step tutorial to help you bridge that gap and make your first trade:

Step 1: Learn to read currency pairs

One of the first things most Forex traders learn is how to read a currency pair. There are two parts to a currency pair

EUR / USD

Tips

  • The base currency is always equal to one unit.
  • The ask price of the currency pair indicates how much of the quote currency is required to buy one unit of base currency. This is more commonly known as the exchange rate.

For example, if you see that the EUR/USD has an ask price of 1.05382, you’ll sell USD 1.05382 (quote currency) for every EUR 1 (base currency) you buy.

If the bid price is 1.05229, you’ll buy USD 1.05229 for every EUR 1 you sell.

Step 2: Understand when to buy and when to sell

Think that a certain currency will go up or down? Learn when you should buy (or “go long”) and when to sell (or “go short”).

Traders choose to buy a certain currency pair if they think the value of the base currency will rise. The opposite is also true: they sell a certain currency pair if they think the value of the base currency will fall.

Let’s compare the differences between buying and selling, using the EUR/USD as an example:

  • You’re buying the EUR and selling the USD
  • You expect the EUR to rise in value so you can sell it back for a profit
  • Buy = go long
  • You’re selling the EUR and buying the USD
  • You expect the EUR to fall in value so you can buy it back at a lower price (and make a profit)
  • Sell = go short

Step 3: How to purchase your first currency pair

After you’ve decided which position you want to take, your next step is to purchase that currency pair on MetaTrader 5.

Here’s an example of the EUR/USD currency pair and its bid-ask price:

To go long, you’ll want to click on ‘Buy’ to purchase EUR 1 for USD 1.17726

To go short, you’ll click on ‘Sell’ to sell EUR 1 and receive USD 1.17725 in return.

Forex margin policy

Margin allows you to trade on leverage – meaning your existing capital can give you a much higher level of market exposure.

For example, if you wanted to purchase 100 units of a particular asset that’s trading at USD 50 per unit through a traditional broker, it would typically cost you USD 5,000 for this transaction.

However, with leverage you can purchase those 100 units at a fraction of the typical cost – depending on the leverage afforded to you by your broker or trading platform.

How to calculate margin

You can determine the margin for our currency pairs by using the formula below:

For example, if you buy one lot of the EUR/USD pair with a contract size of 100,000 and leverage of 100:1, the margin that you need to purchase one lot of EUR/USD will be calculated as follows:

What’s a margin call and how is it applied

Equity is the sum of your balance and floating profit and loss (PnL). Margin level is the ratio of equity to margin. When that ratio reaches a specified percentage (usually 100%), your account will be placed under margin call. This does not affect your ability to open new positions; it serves to alert you that your floating PnL is moving lower. However, it is recommended to add funds to your account in order to keep your positions open. Alternatively, you may close losing positions.

What’s a stop out level and how is it applied

If your margin level reaches an even lower level (usually 50%), it will reach the stop out level where it is unable to sustain an open position. This will lead to some, or all your open positions being forcibly closed (also known as “forced liquidation”).

When your account hits the forced liquidation level, your orders and positions are forcibly closed in the following sequence:

  1. We delete an order with the largest margin reserved
  2. If your margin level is still under the stop out level, your next order will be deleted. However, orders without margin requirements will not be deleted
  3. If your margin level is still under the stop out level, we will close an open position with the largest loss
  4. We will continue to close open positions until your margin level becomes higher than the stop out level

Forex contract specifications

Major pairs

Symbol Description Lot size Minimum volume Volume step
AUD/CAD Australian Dollar vs Canadian Dollar 100,000 0.01 0.01
AUD/CHF Australian Dollar vs Swiss Franc 100,000 0.01 0.01
AUD/JPY Australian Dollar vs Japanese Yen 100,000 0.01 0.01
AUD/NZD Australian Dollar vs New Zealand Dollar 100,000 0.01 0.01
AUD/USD Australian Dollar vs US Dollar 100,000 0.01 0.01
EUR/AUD Euro vs Australian Dollar 100,000 0.01 0.01
EUR/CAD Euro vs Canadian Dollar 100,000 0.01 0.01
EUR/CHF Euro vs Swiss Franc 100,000 0.01 0.01
EUR/GBP Euro vs Great Britain Pound 100,000 0.01 0.01
EUR/JPY Euro vs Japanese Yen 100,000 0.01 0.01
EUR/NZD Euro vs New Zealand Dollar 100,000 0.01 0.01
EUR/USD Euro vs US Dollar 100,000 0.01 0.01
GBP/CHF Great Britain Pound vs Swiss Franc 100,000 0.01 0.01
GBP/JPY Great Britain Pound vs Japanese Yen 100,000 0.01 0.01
GBP/USD Great Britain Pound vs US Dollar 100,000 0.01 0.01
NZD/USD New Zealand Dollar vs US Dollar 100,000 0.01 0.01
USD/CAD US Dollar vs Canadian Dollar 100,000 0.01 0.01
USD/CHF US Dollar vs Swiss Franc 100,000 0.01 0.01
USD/JPY US Dollar vs Japanese Yen 100,000 0.01 0.01

Minor pairs

Symbol Description Lot size Minimum volume Volume step
CAD/CHF Canadian Dollar vs Swiss Franc 100,000 0.01 0.01
CAD/JPY Canadian Dollar vs Japanese Yen 100,000 0.01 0.01
EUR/NOK Euro vs Norwegian Krone 100,000 0.01 0.01
EUR/PLN Euro vs Polish Zloty 100,000 0.01 0.01
EUR/SEK Euro vs Swedish Krona 100,000 0.01 0.01
GBP/AUD Great Britain Pound vs Australian Dollar 100,000 0.01 0.01
GBP/CAD Great Britain Pound vs Canadian Dollar 100,000 0.01 0.01
GBP/NOK Great Britain Pound vs Norwegian Krone 100,000 0.01 0.01
GBP/NZD Great Britain Pound vs New Zealand Dollar 100,000 0.01 0.01
GBP/SEK Great Britain Pound vs Swedish Krona 100,000 0.01 0.01
NZD/CAD New Zealand Dollar vs Canadian Dollar 100,000 0.01 0.01
NZD/JPY New Zealand Dollar vs Japanese Yen 100,000 0.01 0.01
USD/CNH US Dollar vs Chinese Renminbi 100,000 0.01 0.01
USD/MXN US Dollar vs Mexican Peso 100,000 0.01 0.01
USD/NOK US Dollar vs Norwegian Krone 100,000 0.01 0.01
USD/PLN US Dollar vs Polish Zloty 100,000 0.01 0.01
USD/SEK US Dollar vs Swedish Krona 100,000 0.01 0.01
USD/ZAR US Dollar vs South African Rand 100,000 0.01 0.01

Exotic pairs

Symbol Description Lot size Minimum volume Volume step
AUD/SGD Australian Dollar vs Singapore Dollar 100,000 0.01 0.01
CHF/JPY Swiss Franc vs Japanese Yen 100,000 0.01 0.01
EUR/HKD Euro vs Hong Kong Dollar 100,000 0.01 0.01
EUR/ILS Euro vs Israeli New Shekel 100,000 0.01 0.01
EUR/MXN Euro vs Mexican Peso 100,000 0.01 0.01
EUR/SGD Euro vs Singapore Dollar 100,000 0.01 0.01
EUR/TRY Euro vs Turkish Lira 100,000 0.01 0.01
EUR/ZAR Euro vs South African Rand 100,000 0.01 0.01
GBP/SGD Great Britain Pound vs Singapore Dollar 100,000 0.01 0.01
GBP/TRY Great Britain Pound vs Turkish Lira 100,000 0.01 0.01
HKD/JPY Hong Kong Dollar vs Japanese Yen 100,000 0.01 0.01
NZD/CHF New Zealand Dollar vs Swiss Franc 100,000 0.01 0.01
NZD/SGD New Zealand Dollar vs Singapore Dollar 100,000 0.01 0.01
SGD/JPY Singapore Dollar vs Japanese Yen 100,000 0.01 0.01
USD/HKD US Dollar vs Hong Kong Dollar 100,000 0.01 0.01
USD/ILS US Dollar vs Israeli New Shekel 100,000 0.01 0.01
USD/RUB US Dollar vs Russian Ruble 100,000 0.01 0.01
USD/SGD US Dollar vs Singapore Dollar 100,000 0.01 0.01
USD/THB US Dollar vs Thai Baht 100,000 0.01 0.01
USD/TRY US Dollar vs Turkish Lira 100,000 0.01 0.01

How to read the contract specifications table

The Forex is typically traded in lots. One standard lot is equivalent to 100,000 units. Each time you open a position on a currency symbol, you can start with a minimum transaction of 0.01 lots.

For information about Forex leverage refer to our Margin Policy.

Important notes on our swap rates (overnight funding)

If you keep any positions open overnight, an interest adjustment will be made to your trading account as indication of the cost required to keep your position open.

This interest adjustment (or swap rate) is based on interbank lending rates, on top of a 2% fee.

The interest adjustment is calculated in ‘points’ – meaning we will convert the relevant interbank lending rates to ‘points’ in the base currency.

Please take note that our swap rate also depends on the time and days you hold your positions open:

  • You will be subjected to swap rates if you keep a position open past 23:59:59 GMT.
  • Positions that are still open on Wednesday at 23:59:59 GMT will be charged three times the swap rate to account for weekends – a standard practice for all Forex brokers.
  • Our swap rate may also be adjusted to take holidays into account.

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In the EU, financial products are offered by Binary Investments (Europe) Ltd., W Business Centre, Level 3, Triq Dun Karm, Birkirkara, BKR 9033, Malta, regulated as a Category 3 Investment Services provider by the Malta Financial Services Authority (licence no. IS/70156).

Outside the EU, financial products are offered by Binary (SVG) LLC, Hinds Building, Kingstown, St. Vincent and the Grenadines; Binary (V) Ltd, Govant Building, Port Vila, PO Box 1276, Vanuatu, regulated by the Vanuatu Financial Services Commission (view licence); Binary (BVI) Ltd, Kingston Chambers, P.O. Box 173, Road Town, Tortola, British Virgin Islands, regulated by the British Virgin Islands Financial Services Commission (licence no. SIBA/L/18/1114); and Binary (FX) Ltd., Lot No. F16, First Floor, Paragon Labuan, Jalan Tun Mustapha, 87000 Labuan, Malaysia, regulated by the Labuan Financial Services Authority to carry on a money-broking business (licence no. MB/18/0024).

This website’s services are not made available in certain countries such as the USA, Canada, Hong Kong, Japan, or to persons under age 18.

The products offered via this website include binary options, contracts for difference (“CFDs”) and other complex derivatives. Trading binary options may not be suitable for everyone. Trading CFDs carries a high level of risk since leverage can work both to your advantage and disadvantage. As a result, the products offered on this website may not be suitable for all investors because of the risk of losing all of your invested capital. You should never invest money that you cannot afford to lose, and never trade with borrowed money. Before trading in the complex products offered, please be sure to understand the risks involved and learn about Responsible Trading.

In the EU, financial products are offered by Binary Investments (Europe) Ltd., W Business Centre, Level 3, Triq Dun Karm, Birkirkara, BKR 9033, Malta, licensed and regulated as a Category 3 Investment Services provider by the Malta Financial Services Authority (licence no. IS/70156).

In the Isle of Man and the UK, Synthetic Indices are offered by Binary (IOM) Ltd., First Floor, Millennium House, Victoria Road, Douglas, IM2 4RW, Isle of Man, British Isles; licensed and regulated respectively by (1) the Gambling Supervision Commission in the Isle of Man (current licence issued on 31 August 2020) and by (2) the Gambling Commission in the UK (licence reference no: 39172).

In the rest of the EU, Synthetic Indices are offered by Binary (Europe) Ltd., W Business Centre, Level 3, Triq Dun Karm, Birkirkara, BKR 9033, Malta; licensed and regulated by (1) the Malta Gaming Authority in Malta (licence no. MGA/B2C/102/2000 issued on 01 August 2020), for UK clients by (2) the UK Gambling Commission (licence reference no: 39495), and for Irish clients by (3) the Revenue Commissioners in Ireland (Remote Bookmaker’s Licence no. 1010285 issued on 1 July 2020). View complete Regulatory Information.

Binary.com is an award-winning online trading provider that helps its clients to trade on financial markets through binary options and CFDs. Trading binary options and CFDs on Synthetic Indices is classified as a gambling activity. Remember that gambling can be addictive – please play responsibly. Learn more about Responsible Trading. Some products are not available in all countries. This website’s services are not made available in certain countries such as the USA, Canada, Hong Kong, or to persons under age 18.

Trading binary options may not be suitable for everyone, so please ensure that you fully understand the risks involved. Your losses can exceed your initial deposit and you do not own or have any interest in the underlying asset.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.6% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Binary Options

What are binary options

A binary option is a type of option with a fixed payout in which you predict the outcome from two possible results. If your prediction is correct, you receive the agreed payout. If not, you lose your initial stake, and nothing more. It’s called ‘binary’ because there can be only two outcomes – win or lose.

Advantages of binary options trading

Aside from the simplicity of its ‘yes or no’ proposition, binary options trading is also very flexible. It gives you the ability to trade:

  • All markets

Trade on underlying markets that include Forex, indices, commodities, and more.

  • All market conditions

Predict market movement using up/down, touch/no touch, and in/out trade types.

  • All durations

Take a short-term or long-term view with trade durations from 10 seconds to 365 days.

  • All payouts

Earn payouts up to USD 50,000. Losses are limited to your initial stake and nothing more.

Why you should trade binary options with Binary.com

Enjoy an award-winning online trading platform with trading conditions that are ideal for new and experienced traders.

Award-winning online trading platform

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All conditions and durations

  • All markets and conditions
    Trade currencies, indices, commodities and more in rising, falling, sideways, quiet, and volatile markets
  • Short to long-term durations
    Choose timeframes from 10 seconds to 365 days

Competitive and transparent pricing

  • Sharp, benchmarked prices
    Receive prices that are benchmarked against interbank rates
  • Transparent risk and potential reward
    Know how much you will win or lose before you purchase the contract
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Ideal for new and experienced traders

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How to trade binary options

Binary options trading is relatively easy. You can purchase a contract in just three steps:

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