How to Trade Using a Binary Options Economic Calendar
By now we have several articles about Binary Options Events and Financial Calendars so you probably know that even the perfect setup can turn into a losing trade if you are not aware of the news. Even if you are on the right side of the trend and all your indicators agree with the direction of your trade, you can still lose it if negative news related to your asset is released. So let’s talk a bit about interpreting the news and how to trade using a Binary Options Calendar.
How Hard Can It Be? Not Too Hard Actually
There are too many economic, financial and political events for me to explain in detail (Find Binary Options Economic Calendars here), but I will try to give you the general idea, so let’s start with the basics: positive data moves the asset UP and negative data moves the asset DOWN. Yea, that’s about it, no rocket science, no brain surgery. However, there is a small detail you have to know. It’s not actually a detail, but rather something I have to mention: for some economic indicators a smaller number actually means the news is positive and a bigger number means the news is negative. I bet now I confused some of you, but think about the Unemployment Claims: a higher number of unemployed people is definitely detrimental for the economy, right? So if you see a higher number for that kind of indicator, it means the data has a negative impact on the country’s currency (and in most cases on its indices and stocks). Of course, if the number is lower, it means the economy is thriving, business is blooming and people find jobs easier – that’s a good thing and that’s how a lower number means UP and a higher number means DOWN. For almost all data except Unemployment related, a higher value is considered bullish and a lower value is considered bearish.
There is something else you should know: almost all Economic Calendars have three important sections for each release: Previous, Forecast and Actual. The previous shows… you guessed it, the previous value of the indicator, the Forecast shows the analysts’ consensus about the expected outcome and the Actual will be available only after the release, representing the real number, transmitted by the source (the Government, the Central Bank, etc.). What is important is for you to compare the newly released (Actual) number with the Forecast, not with the Previous. This is a generally accepted rule, but it has exceptions, just as any rule. Anyway, the difference between Actual and Forecast is what moves the market, not the difference between Actual and Previous.
In a previous article titled “How to find a Binary Options calendar that doesn’t Suck” I talked about where to find a good, reliable Financial Calendar but some of you may choose another way of staying informed about the latest economic and financial data: I’m talking about a Tool Calendar that attaches to the screen of your Meta Trader 4 platform. You will find that tool free to download here – News Indicator for Binary Options – accompanied by explanations. By using that News Indicator (similar tools are also available over the internet), all the important events will be displayed directly on your charts so you limit the risk of missing an important release.
Know your Fundamentals
If you take the time to read and understand what I wrote above, you will find event trading much easier and especially, more rewarding financially. The market is difficult to trade; if it wasn’t, we would all be millionaires and sometimes it’s not as simple as just buying a Call on EUR/USD if positive news is released by Germany or France but you have the general idea and if you follow these simple and general rules, you will probably improve your profitability.
The Fundamental Part of Trading Binary Options (Soon)
- Learn more about Economic Calender on our Forum