Economic News for Binary Options Trading

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Binary Options Trading with News

Binary options traders often rely on data that countries and companies publish regarding different aspects that greatly affect the market. News trading is a fundamental binary options analysis method that has found popularity among traditional and binary options traders because of the ease in obtaining the information. Some news releases may denote price rise or falls. And depending on the news, different assets can also be affected.

Trading the news has been used as a technique to trade equities, currencies and other financial instruments on the financial markets for the longest time. Trading news releases can be a significant tool for financial investors and traders because they hold information that is crucial to market movement. For example, news trading can be traced back to times when news of a certain merchant who is involved in a certain trade can greatly affect its patronage among its customers.

Economic news reports often result in strong moves in the markets, which may create positive trading opportunities for traders, if they know how to decipher the news correctly. Press releases about corporate profits, management change, and rumors of a merger, are all events that can cause a company’s share price to move considerably. Interest rates, employment and export/export rates, and a central bank’s policy change, are also kinds of news that can cause a deep change of an exchange rate.

Basing market trends on world and current events can be helpful. A press release of a country’s employment or retail data can greatly sway certain markets. However, new binary options traders are generally advised not to trade around news. Data releases may be helpful if you are a professional trader. But inexperienced traders should try to avoid trading around news or data releases. At times, news trading can be very volatile, and needs the expertise of an trader to do it successfully.

Types of News Trading

There are two types of news trading according to the method employed in obtaining the information. Any of these two are widely used by traders worldwide.

Manual News Trading

Binary options traders who trade in shares of a listed company know there are certain events that may cause the share price to rise or fall. These factors include sudden changes in energy prices, a labor strike at a supplier, a poor month for the sales, and thousands more of other factors. Manual News Trading is the method of making a profit by trading financial instruments just in time (JIT), and in accordance to the occurrence of those events.

Automatic News Trading

This method is also known as algorithmic trading, or as programmed trading. Automatic news trading has been there since electronic trading and digital tools have come about. However, this trading technique has increased in popularity since the early 2000s. As of 2009, studies suggested HFT firms accounted for 60–73% of all US equity trading volume, with that number falling to approximately 50% in 2020. Algorithmic trading allows investors to their computers to scan live news feeds and watch for items affecting any listed company.

When Not to Perform News Trading

New binary options traders should try to avoid trading before news releases because news speculators may be positioning themselves for the pending news. Sometimes, this causes unpredictable movements and spikes in the market, depending on the news release. Sometimes, if the news release is something really important, related markets may not even move at all. They just stay flat despite the impending change.

Novice binary options traders should also try to avoid trading after news releases because this is usually the situation where new traders get very excited about a sudden market shift and wipe their accounts when the market goes in the different direction. Since new binary options traders are not that experienced to truly understand the effect of the news, they usually just blindly trade, usually in large amounts because of their confidence levels, and lose.

Let’s say that a news release comes out at 10:30 in the morning. Now, we can classify traders as patient and impatient traders. Patient traders are those who wait at least 30 minutes before and after an impending news release before they make a move. Impatient traders are those who trade between 10:15 to 10:45, thinking that this is the time when market movement will react based on the impending news. Impatient traders should consider taking another 15 minutes to make sure that the news has stood ground. Patient traders could also consider taking a full hour with reference to the time of the release.

When Should You Look out for News

The following table shows the approximate times in Eastern Standard Time wherein the most pertinent economic releases for each of the following countries are published. These are also the times at which the binary options trader should be paying extra attention to the markets if he or she plans on trading with news releases.

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COUNTRY CURRENCY RELEASE TIME (EST)
United States USD 8:30–10:00 AM
United Kingdom GBP 2:00–4:30 AM
Japan JPY 6:30–11:30 PM
Canada CAD 7:00–8:30 AM
Germany EUR 2:00–6:00 AM
Italy EUR 3:45–5:00 AM
France EUR 2:45–4:00 AM
Switzerland CHF 1:45–5:30 AM
Australia AUD 4:45–9:00 PM
New Zealand NZD 5:30–7:30 PM

What Should You Look out for?

When trading news, the trader first needs to know which releases are actually expected that week. Second, it is important for the trader to know which data is important. Depending on the current state of the economy, the relative importance of these releases may change. For example, unemployment may be more important this month than trade or interest rate decisions. Therefore, it is important to keep on top of what the market is focusing on at the moment.

Generally speaking, these are the most important economic releases for any country:

  • Inflation
  • Retail sales
  • Unemployment
  • Interest rate decisions
  • Industrial production
  • Business sentiment surveys
  • Consumer confidence surveys
  • Manufacturing sector surveys
  • Trade balance

We will always contain the latest news to help you with binary options trading, so just stay tuned. In the meantime, we have compile a list of top binary options brokers to help you get on your way to making profits from successful binary options trades.

How to Avoid Binary Option Losses Due to Economic and Political News Releases

A lot of newbie binary options investors love the idea of trading the news. It is exciting to think that the next time a financial report comes out, you could profit off a large, sudden market move.

But financial reports, elections, declarations of war, and other economic and political events which are newsworthy are also swords. They tend to result in volatility, so if you are going to trade them, you need to know what you are doing.

Even if you are not planning on trading the news, you need to be aware of the potential impact of news releases so that you will not lose money through sudden spikes in the prices of different assets. Here are some tips to help you keep losses to a minimum — and hopefully make some profits along the way.

9 Tips to Safely Incorporate News in Your Trading

1. Check financial calendars regularly.

First of all, it pays off to be in tune with what is going on in the financial and political world. To that end, you should regularly check financial calendars and take note of when certain news releases and events are scheduled. An example of a trading calendar (from MQL5) looks like this:

If you do not do this, you could end up placing a trade during a volatile time without realizing it. You might be right that price on a given asset is moving upward in general, but an abrupt downward spike during a news release could deprive you of your profits if you are trading unawares.

2. If you plan to trade the news, have a system.

You can actually be quite profitable with news trading, but only if you know what you are doing. To that end, you need to have a strategy for trading the news. It needs to be one which is concrete, logical, and which can produce consistent winning results.

Be sure to test your news trading strategy out in demo mode before you begin trading it with live binary options. There is no other way to be sure that you will get the results you got in backtesting.

News trading relies on perfect timing and execution, so you need to find out in whether your techniques will be profitable. It is always best to do that without real money on the line.

3. Start with the NFP or something else suitable for beginners if you are a news trading newbie.

Certain news reports produce more volatile results on average than others. In the US for example, the most volatile reports tend to be the payrolls report (NFP), the retail sales, the trade balance, the FOMC, and the CPI. Of all of those, the NFP tends to produce the biggest market moves.

Generally speaking, the NFP is also considered fairly accessible for beginning news traders. You will find a lot of fairly simple, straightforward systems have been developed for trading it. So that may be a better starting point for profitable news trading than something more obscure.

4. Watch out for wide spreads immediately following releases.

Bid/ask spreads tend to widen in the moments following a news release, and it is common for price to spike abruptly before jumping back on track. In some situations, that spike may profit you, but in others, it could just cause you to lose money.

Slippage and lockouts are additional problems to watch out for. If a lot of orders come in through your platform, the broker could end up filling your order at a different price than you expected.

So you could click on High, and you might think that your trade will go into effect right away. But instead, you experience a price gap called slippage. Price continues to “slip” along while you wait. Your trade then goes into effect, but may not be filled in the manner you require in order to profit.

Think of the surface as the market as a calm pool, and a news release as a very large and heavy stone. The ripples it produces are often more like violent waves. It is easy to get capsized.

What can you do about it? Either use a system which somehow capitalizes off of the whipsaws, or wait for the initial spike to pass. This is usually wiser anyway since it means you are less likely to experience lockouts on your orders.

5. Do not expect every news item to be a major .

Not every single news release or speech is going to cause the market to take a major leap in either direction. The more obscure something is, the less likely it is to produce a sizeable and predictable move.

Note that there are certain events which also tend to produce more unpredictable results than others. You never know what is going to come out during a speech for example. An individual making a speech is subject to all kinds of stresses and emotional factors. Even the tone of a speech could impact the market in an unexpected way. In some cases, that may make even more of a difference than the words.

6. Never forget that you are trading the public’s reaction to the news.

A common newbie mistake when trading the news is to overlook the complexity of the public’s reaction. Let’s take a simple example involving unemployment to see how things may play out differently than seems intuitively likely.

Imagine that the NFP is due to come out. You, and most other people, expect that the job market will be expanding. As such, you are feeling quite optimistic, and place a trade entry accordingly.

The NFP then comes out, and the numbers reflect that the job market is expanding. The problem is, it is not expanding at the rate that most people were hoping for. Optimism sours, turning to pessimism.

The market suddenly does the exact opposite of what you expected. You then end up losing money. What went wrong here is that you traded the news in a very fashion. You thought, “A good NFP will reflect in an upward trend in the value of this asset.”

You failed to see the grey middle ground — that a good NFP might not be “good enough” by investor standards, translating to a downward trend in that same asset.

Part of why trading the news profitably is so challenging is that you need to not only be able to predict the content of a news report, but also predict the public’s reaction to that content. Doing that can be considerably more difficult.

7. Try Double trades.

If you are having a hard time figuring out which direction to trade in, one thing you can do is place a Double trade (sometimes also just called a Double Touch Trade).

Not all binary options brokers offer these trades. But if yours does, you can set two target values, one above and one below the current price when you enter the trade. That way it does not matter if price spikes up or down. So long as one of your specified targets is hit, you will win the trade.

8. Consider avoiding trading during news releases altogether (if you are not using a news based strategy).

What if you do not want to get into news trading, and you just want to avoid losing money when the news is released? You have two options here. I will start by recommending the one which I hear most frequently suggested by others, and that is to steer clear of trading altogether when the news comes out.

The thinking here is simple and logical. News tends to produce whipsaws. You do not want to lose money because of a whipsaw. You do not want your orders to fill at the wrong time. So, if you sit out the release, you can come back when the market has settled down into a more predictable shape.

This is a perfectly viable approach. Just keep an eye on the economic calendar, and avoid trading when you see a relevant event or report coming up. After it has passed, get back to your usual routine.

9. Alternately, just make sure your system navigates around news releases effectively.

There is another approach you can take as well. I have not seen this one recommended by as many people, but it has always worked fine for me. What do I do? I simply ignore the news altogether.

In other words, I actually never look at economic calendars, and I do not think about fundamental analysis at all. I just trade my system (which happens to involve price action). I have noticed that my entry rules seem to navigate me naturally around news reports and other times and situations where the market is not predictable. I follow my trade rules and I stay safe.

You can figure out if your system takes care of this for you or not by doing some backtesting and then looking back over your results. You can even check past economic calendars to see when reports were being released and whether you traded during any of those releases or not.

When I did this, I found I simply do not encounter setups during report times. My win percentage is great, as is my bottom line, so I see no reason to concern myself with news. Does this work for everyone? No, but if it works for you, go with it. There is no reason to complicate your life.

Conclusion: Trading the News Can Make You Money… If You Know What You Are Doing

Should you trade the news or avoid it? Ultimately, that is entirely up to you and what works for you. If you will not be trading the news, play it safe by either avoiding trading during report releases, or by using a strategy that navigates you around the pitfalls associated with those times. If you are trading the news, do so only with a tested strategy that you know is capable of generating profitable results.

Economic Calendars on Options Signals

Economic calendar from Myfxbook

Economic calendar from Investing

Note: That Economic calendar do not show all economic all news and events, but is very easy to use and understand.

How can you use the economic calendar in your binary options trading?

Advise for new binary options traders

First of all, any binary options trader need to get notified of the most important financial and economic news and events. That is critical because each time the relevant news is issued the market changes. In some cases, the market can change so much that you will have to stop trading due to the impossibility of using any binary options trading strategy.
Usually, we cancel the binary options trading and write a message in the web-chat rooms about that.

Change your binary options trading strategy

Another good thing is suitable for advanced binary options traders. Knowledge of the incoming news can help you to change binary options trading strategy and get profit with the economic event. Due to specifics of binary options trading, they are well suited for “news” trading. There are a lot of different binary options strategies on the internet. We advise you to read them!

Compare the risks in using our binary options signals

Of course, our binary options traders do all the best to make safe and suitable binary options signals for you. But you have to understand that we have to publish them a bit earlier then you will trade. That makes some problems in the binary options signals. On the other hand, we are people. You are not getting the signals from a robot. Sometimes we fail with the signals. And the last. We have to publish the many signals because many people are waiting for them. Our regular customers – binary options traders who use our signals service for a long time, already made they’re our binary options strategy of using the binary options signals service. They found the dependence in using our binary options signals during the critical events, calculated the risks and created their strategy.
You have to calculate your risks in using our service during high impact economic news or events.

Note: We advise all binary options traders to control the event calendar and create own binary options trading strategy in using the binary options signals during important economic news and events.

Attention: Trade only on a demo account. It needs some time to understand how to use our binary options signals with your broker and create your own binary options trading strategy. Options signals and its staff are not responsible for any losses.

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    Best Binary Options Broker!
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  • Binomo
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