The simplest of all binary options strategies are those which are related to fundamental analysis. This form of analysis requires that you utilize market news and reports as a means of predicting the upcoming price movement direction. This form of research is far easier for novice traders to complete, and while it can leave some room for error, it pays to know exactly what is driving asset prices in one direction or the other.
Economy is very important since it affects global finance market. Regardless of where you are in the world, important events and occurrences are happening at a quicker pace than ever before. Many of these events have a major impact on the global economy, and thus the assets on our binary options trading platform. That is why you need to know what is happening in order to succeed in binary options trading. That is why economic calendar is a good tool which can give you better insight. You can always follow at our binary options economic calendar here.
When we learn about options trading, it’s important to identify tools that can help us to keep up-to-date on these events to better inform our trading decisions. One of the many tools available to traders is an economic calendar that provides a chronological overview of an assets’ performance in line with any activities that are going on across the global economy. This is typically presented in a chart format listing the asset, economic indicator and the change in value.
What is economic Calendar
Economic calendar is a very useful tool and if you want to be good at trading you will have to start using it since no matter what kind of trader you are, it is used for every market(Forex, commodities, etc.). It is in such demand because it gives the traders straight news or indicators on what is going to happen in the industry and when is it going to be released. Some of the news are more important the others, usually that is noted. To keep track with calendar is important side when it comes to fundamental analysis and therefore can not be ignored. If you have ever witnesses a reversal on the chart, it was probably due to some important news – that is how much of an impact it does.
Binary Option Trading Economic Calendar
Economic calendars help traders by providing insight into assets, such as stocks, indices and currency pairs across a range of markets. By highlighting changes in the value of an asset following an economic announcement, it can highlight how sensitive an asset is to a particular announcement. For example, if there is an announcement from the US government stating that there was a drop in unemployment in the US and this subsequently created a rise of 2% in the value USD/JPY currency pair this can provide insight for future trades. So, when a similar situation occurs in the future, you may choose to take that information to predict a rise in the value of the USD/JPY.
A range of economic indicators are included in economic calendars, including the unemployment rate, consumer price indices (CPI), trade balance information and manufacturing data. The goal is to include figures in economic calendars that drive movements in the overall economy. By including this information in one chart, traders can have a central location to find this information as they place their trades.
Economic calendars, like other advanced techniques such as fundamental and technical analysis, help traders organize information. They can help you gauge the price movement of an asset within a given timeframe. By using an economic calendar, binary options trading enthusiasts can better determine the economic performance of given markets on a regular basis, helping you to improve your accuracy in your trading predictions. Since the markets are constantly changing, economic calendars can come in handy as they will strengthen your expertise and knowledge over time.
When you are provided with an economic calendar, you should partner the insight you gain from it with all your knowledge sources. Remember that being successful at binary options trading involves pulling all your resources together so you can build a strong picture on your selected assets. Using tools such as economic calendars can help you maximize your earning potential as a binary options trader.
How to use economic calendar for Binary option Trading
Anything you trade, any asset, let it that be currency or commoditiy, you have to be able to read the news and interpret it. Let us take a look at one example on how you can use economic calendar at your advantage and potential profit at the end. In this case we will take a look at GBP/USD pair and perform binary option trade.
From the picture below we can see release of a news that is interesting, which is boe inflation report. This report has been in downtrend for GBP from the start of financial crisis in 2008. The effects of that are still here and therefore the economy situation is not looking bright for british pound, therefore we decide to make a PUT on this trade in our prefered binary options broker.
Advantages and disadvantages
You have to know that this tool can be used only as information source, meaning that it will not teach you how to be a better trader since it already thinks you know how to use it. You have to understand it and use it in proper way for trading. At first it is good that you just look at it and see certain events and check how the market responds to it, the more you will know the better you can actually trade. Try it on demo account first. This way you prepare for the market.
If you know how to interpret the news data and use it to setup trades, then this tool will become a money minting machine for the trader. Even if that is not your thing the economic calendar is a non sucking tool. You only have to keep a very loose eye on the events listed in order to benefit. Staying up to date on how the market is responding to data and how the data is trending is like having your finger on the pulse of the global economy. For others, the economic calendar is a great way to predict trades. Let’s say that the BOJ is expected to lower rates at its next meeting. You can target that day as a trading day, set up a couple of trade scenarios and then wait for the announcement and pick a trade.
It is strictly an informational tool. It does not teach the trader how to take any trade with the data. It is assumed that the trader knows how to interpret the data. If the trader does not know how to interpret the data and use it for news trades, then the Economic Calendar tool will not work for that trader and so in this respect, the tool sucks. However, this is an educational opportunity that cannot be missed. Understanding the workings of the economy, the data and how it impacts the markets is a valuable tool that can never be unlearned. The more you know the better prepared to trade in all conditions.
The bottom line
The economic calendar is a must have. If you are an expert I can’t stress enough how much utilizing the calendar will help you with your trading. If you are a newbie start following it. Pick out a few economic indicators and follow them closely. One that most people follow is GDP. It is a measure of economic output. It can be measured by region, country or globally. These numbers are important indications of market trends. It can help you soo much when it comes to trading, so start following it. We have one available for you to use it here. If you are a beginner i would suggest to follow few of the events very closely and see what happens.