How can one trade on the news? There are many ways to make money on it.
Given the fact that in Binary Options trading there is no such thing as requites, inherent to the stock exchange market, a broker always sells the contracts at the price of the underlying asset at which a trader buys them.
Trade on the news can be carried out either on the fact of the index and shortly before its publication. For example, one of the most popular events, where you can really make money – is the publication of the interest rate. If it is left unchanged or is rising, in most cases, currency quotes grow. When interest rates fall, the exchange rate usually drops either.
It can be used in the work for profit. Before the publication of data on the interest rate you can buy a lot. Moreover, if the trader expects that the interest rate will remain unchanged or will rise, he buys a call option, otherwise, it is better to purchase a put option. Moreover, it is important to take into account the fact that the expiration should come after the publication of important data. Otherwise the purpose of such trade defeats.
So, first of all, a trader is interested in GDP data. Usually quarterly data is published. And it can be as preliminary and revised, as well as the final one. The strongest – these are preliminary. Therefore, shortly before the release of the data you can buy binary contracts.
The unemployment rate, which is one of the indicators of economic health, is also important information. Therefore, it is necessary to pay attention to it in trade. News on unemployment can vary. In the US there is a number of indicators. The strongest of them are the so-called non-pharma.
Trading binary options on the news is pretty well during inflation either. But the inflation in the raw as a percentage is not published. Usually it is the consumer price index and other price indices. Therefore, before this news, depending on the forecast the trader can buy a contract.
A strong influence on the markets may have speeches of central banks representatives. Often they talk about monetary policy for the future. And the markets come in quite a strong movement. Therefore, before the performance of the central banks representatives one can also buy binary contracts.
Thus, trading binary contracts at the time of the release of important economic news is a quite profitable, albeit risky strategy. But many traders successfully use it getting a good profit. This suggests the following features in the market at the time of publication of important information:
- Important publications invariably lead to a dramatic surge in activity, which is caused by the prospect of data.
- The market is relatively unpredictable, but if to track the emerging trend in time, the price movement becomes more logical and understandable.
That’s all for now. Got any questions? Just ask the expert!