How to Trade Binary Options on News and Events?
It is not really advisable for the new users to trade binary options via news and events. For newbies it is, probably, better to check out other policies in the beginning. For instance, general consideration for money management or pinbar candlesticks.
Making the forecast of the market fluctuations is close to impossible right prior or after the outbreak of a large event or booming news, which is linked to the basing asset. In most cases, just traders with sufficient experience have enough confidence to operate with these tools.
A high level of value fluctuations
The major factor, due to which no new user should begin trading on events, is a very strong changeability of the asset price prior to and after the big event. During these stages, the fluctuations of the price are nearly unpredictable.
In most cases, experts also do not have sufficient confidence regarding the correct decision in a particular trade. Nevertheless, it gets simpler, when a concrete time passes after the event. Further, there are some rules, which might be helpful for you in order to work with binary options on different kinds of news.
The rule of fifteen-fifteen minutes
The factor, which was not mentioned earlier, is that the assets prices are not only moving greatly after the event, but also right before it (if it was planned and a strict time was given).
Thus, for traders with experience but without sufficient patience it is not recommended to operate fifteen minutes right prior to and right after the event. During these periods, the market fluctuations are not forecastable; as there are a big quantity of trades handled by other traders (often these are new users, who do not understand the real situation)
Within this period, there are extremely big value movements during a rather short period of time, which in the end will not change much. Thus, do not trade fifteen minutes right prior and fifteen minutes right after the event.
The rule of thirty-thirty minutes
For the traders with skills of a medium level and a little bit more patience, it is, probably, not recommended to operate thirty minutes right prior to and half an hour right after the event, which involves a particular asset.
The reason for that is similar to the one stated earlier. The movement of the values is not as strong as within the fifteen-minute interval, but it is any way great. Thus, until you turn into an expert in this strategy, better do not operate within these time periods.
The ways to operate efficiently with the information, based on events and news
We have clarified, that is necessary to keep out from operating within the above mentioned periods. But it is still necessary to figure out, which time frames are the most optimal and will allow you to make a lot of money on events, for example, the launches of product, etc.
The best chances to succeed will be, if you operate beyond the 30-minute interval prior to or after the event. And here is why.
Half an hour prior to the upcoming event:
Prior to the outbreak of the event, there is a general opinion prevailing regarding its character. For instance, in case Apple is introducing its new gadget in couple of hours, almost everybody will consider it to be qualitative and snap the company’s stock.
As a result, in all likelihood, the value of the Apple stock will go up within this time span. In this case, there will be a possibility to purchase the corresponding option. But, when there is half an hour left prior to the release of the product everything turns upside down. Traders will start to gamble, purchase, drop off, and as a result, company’s share price will fluctuate enormously.
Half an hour after the outbreak of the event
Within the primary thirty minutes (during this time, the event is probably still happening) a big number of gamblers keep being active, thus, cause the price of the asset to move non-stop without any order.
When the 30-minute period passes, the price is stabilized and begins to go into one of the two directions – increasing or decreasing. This is due to the reason that in thirty minutes after the event has happened (for instance, the product release),traders already have a possibility to assess its characteristics.
As in the situation with Apple, which was described above, after 30 minutes from the release of the product, it will be already possible to evaluate the product’s characteristics. It is obvious to expect the price of the company to go up, if their released product is excellent.
In case the release failed and the product is far from perfect, then it is also possible to predict, that the price of the company’s stock will fall. In this way, the traders can forecast the price and make a lot of profit.
Operating with currency via news
There is one more famous method, how to trade with the help of news and currencies. The most effective method is to operate on the Non-farm Payroll report, issued by the United States Department of Labour monthly, on the 3d Friday.
These are statistics, involving the United States non-farm labor force for the previous month, which shows a total number of both newly created jobs and the lost ones in the United States for the indicated period.
The report always has its effect on the conversion scale of the USD in comparison to other currencies. All in all there are two main cases to consider:
A big number of jobs were formed during the last month:
The price of USD will rise. Due to this fact, it is necessary to forecast that an exchange rate of USD vs. any other currency would go down, as USD got more stable in a result of investments from a bigger number of investors, who got to know that the economy of the United States became stronger last month with the help of new jobs created.
A big number of jobs were lost during last month:
The price of the USD will fall according to the lost jobs, which, in turn, signifies, that there is a situation of stagnation or decrease in the overall economic structure. Thus, it is recommended to purchase an option, which forecasts the price of the USD vs. other currency rate to rise, due to the fact, that USD became weaker.
Operating stocks via news
This case has already been covered in the situations mentioned earlier. As it was pointed out, the biggest number of news linked to the companies includes the releases of products. In case, the common opinion, which prevails, considers the future release of the product to be successful, then the value of the company’s share is thought to rise.
In case in half an hour after the product is released it is clear that this product is successfully released, then most obviously the price of the company’s stock will go up. It is rather simple to forecast wisely in such situations.
However, it is necessary to remember not to trade binary options within the interval of thirty and fifteen minutes prior to and right after the release of the product. Do not take this recommendation for granted.
In the conclusion
This is the way in which is possible to operate on the product releases, news and other kinds of events. As it was mentioned in the introductory part for complete beginner it is, probably, advisable to avoid operating on news and events from the very start. Practice another methods at the beginning.
If you would like to obtain more information on binaries methods, then you are welcomed to read other guidelines and tutorial of ours additionally. If you know and understand the ways in which the major part of this strategies function, you will enormously level up your success rate.
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