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.
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.
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 what news is better to trade binary options for binary option traders.
One of the simplest ways to trade the news is through the breakout strategy.
Learning how to use it effectively for your own purposes is going to be a helpful short term trading strategy, and for beginner binary options tradersit is often one of the best places to start, depending upon your background.
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.
The fun is beginning. Some countries decided to fully erase Binary Options from their legal framework. What is the essence of binary options? BO is a mere bet on the market.
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. 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.
The Bottom Line Binary options are financial options that come with one of two payoff options: a fixed amount or nothing at all. That's why they're called binary options—because there is no other settlement possible. The premise behind a binary option is a simple yes or no proposition: Will an underlying asset be above a certain price at a certain time?
Two options can in fact be bought: one with a one hour and the other with a one day expiry. 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. 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.
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