Trading binary options by news
Hedge the news with Binary Options
Things are a little more complicated than they seem on the surface, but they are much simpler than you might think. Why binary options are ideal for news events trading Three strategies for trading events with binary options With this information, you will be able to use the next big news event to trade a binary option.
In an ideal world, this trading strategy is simple and effective: After good news about an asset, traders invest in rising prices. The market rises, traders win their investment. After bad news about an asset, traders invest in falling prices. The market falls, traders win their investment. If this sounds too good to be true, you are right. The issue with news trading is that traders also invest in anticipation of an event.
For example, when a company publishes its earnings or the government new unemployment data, investors have certain expectations.
Those investors who anticipate good news, invest in rising prices before the news is published. Those investors who anticipate bad news, invest in falling prices before the news is published. Whether the market rises or falls depends solely on the relationship of supply and demand.
News Trading Strategy: Knowing What to Trade Trading the news in binary options entails having to know what assets to trade and when to trade them. The easiest way to do this is to follow an economic calendar that will show the most important and influential economic releases and which currency assets will be affected directly and also to what degree. This approach is quite straightforward but in order to time your trades well you will need to refer to technical charts for entry points and have your chart window open while you wait for the news release.
To predict whether news will tantum autotrading to falling or rising prices, it is therefore not enough to simply analyse whether the news is good or bad, you have to understand whether the news is better or worse than what the market expected.
This is a tough call to make. When millions of traders from all over the world can buy or sell an asset, it is impossible to know what they are all thinking. Some of them might expect crazy things, and who knows what they will do when they find out what is really going on.
Because of these dynamics, the market often falls in reaction to good news and rises in reaction to bad news. Analysts will later say that traders apparently expected better or worse, but none of them would have been able to predict this reaction in advance. Completely logical news trading only works in hindsight.
Binary Options News trading
Can Events Trading Work? Despite the limitations of news trading, it can be a profitable strategy — if you follow a few rules. Traders have worked long and hard to develop strategies that can deal with the challenges of illogical reactions to the news, and they have found several ideas on how to make news trading work. Trade accordingly. If it is impossible to predict with certainty what will happen next, there is no sense in trying. News events are significant. It would be a shame to trading binary options by news them.
While it is impossible to precisely know what will happen, the one thing you do know is that there will be a strong reaction to the significant When the government releases new unemployment numbers, for example, some trader will be disappointed and some excited, but many of them will have to adjust their trading to the new realities of trading. Consequently, there should be a strong movement.
Strong movements provide great investment opportunities. Binary options are great tools to trading binary options by news binary options. Binary options offer the perfect way of translating these lessons into your trading. There are many different binary options types, and there is one perfect type for each kind of strategy that trades the news. Of course, there are much more possible strategies.
We want to provide you with three examples of strategies that trade the news in different ways.
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. Regardless, knowing how to use it right will only help you to find more money making opportunities. This makes it more than worthwhile for you to know.
With these three examples, you know the bandwidth of possibilities and can pick the approach you like best. There is enough time to fine tune it later.
The Future of Binary Options
Trade The News Directly This is the simple and direct approach. You trade the news directly: When good news reaches the market, you invest in rising prices.
When bad news reaches the market, you invest in falling prices. You can fine tune this strategy with the help live option your broker. When the news come out, you can compare the actual results to what your broker predicted: If the result is better than what your broker assumed that the market would expect, you invest in rising prices. If the result is worse than what your broker assumed that the market would expect, you invest in falling prices.
If the result is what your broker assumed that the market would expect, you stay out of the market. One touch options might not even be the riskier alternative in this case, as they win you your option as soon as the market reaches the target price.
Some traders will also consider using ladder options, but this is the high-risk alternative. We advise against it. You will, however, also lose some of your trades. Manage your money well, and this will not be a problem.
We recommend investing between 2 and 5 percent of your overall account balance on every trade. Straddle The Event The straddle strategy has been popular with traders long before binary options.
Binary options, however, have made the straddle easier and more profitable than any previous type of investment.
News Trading with Binary Options
A straddle strategy has a simple goal: it wants to make you money regardless of the direction in which the price moves. Traditionally, traders traded the one asset in both directions at the same time, hoping that the profit from one investment will outweigh the other. Of course, there were situations in which this strategy failed, and both investments resulted in losses or the profit of one failed to outweigh the loss of the other.
With binary options, this problem has been solved.
Boundary options offer traders two target prices in equal distance from the current market price — one to the top, one to the bottom.
You win your option when the market touches either price, even if it is just for a split second. Boundary options replace the straddle but offer more security and eliminate the uncertainty. You know your payout and your risk, which allows you to create a winning strategy.
News events provide you with a great opportunity to trade a boundary option.
Even though you are unable to predict what will happen, you know that something big will happen. When the government releases its unemployment data at 2 PM, you know that there will be a strong movement starting a few seconds after 2 PM. To benefit from this movement, you can invest in a boundary option at 1. Regardless of whether the market will react positively or negatively, just by reacting it, it will win you your option.
This strategy is simple; it can win you a high percentage of your trades, and get you high payouts — a great combination.
With this strategy, you apply the second lesson traders learned about trading the news: news events are significant. There are many binary options types.
Those with higher trading binary options by news require stronger movements. Additionally, most brokers offer one or more options types in a low yield and high yield version, with the high yield version providing a higher payout but requiring a stronger movement.
With one touch options, for example, the low yield version might require a movement of 1 percent and provides a 75 percent payout.
The high yield version could provide a payout of percent but require a movement of 3 percent. Of course, any trader would want to trade binary options types with a high payout. Their faraway target prices make this type of strategy difficult to execute under normal conditions.
The challenge is to find market environments in which you can anticipate the strong movements that allow you to win options with a high payout.
Market Reactions News events provide precisely this environment. You can never be sure how the market will react, but you know that it will react strongly.