Trading the news is an effective method for creating a profit while trading binary options and for scouting out opportunities of when you should be most active in the market. For this trading method to be most effective, you need to have a firm understanding of how news events influence asset prices, along with the market psychology that goes along with this.
When you have a basic understanding of this, then trading decisions can be streamlined, ensuring that you are saving time and energy as you focus on the most important times to be trading.
First, you need to consolidate the tools that you need. You will need a broad ranging economic calendar. Many binary options broker provide these for you, but not all. If you are in need of one of these, a quick web search will give you more than you can handle. Be sure that whatever economic calendar you are using handles all of the overarching fundamental data that will impact your assets of choice. For example, if you trade the GBP/USD, then your economic calendar should reveal info on both the U.S. market and the British market, including any scheduled central bank announcements, job reports, gross domestic product reports, or anything similar that will impact prices.
Once all of the economic data that you need is collected and stored in a single place for easy reference, you will need to set up a news stream so that you are getting news as it develops. There are many ways to accomplish this, but we prefer a widget that updates in real time. This way, you can get influential news sent to you as it occurs. You can also set this up on your smartphone so that you are getting data sent to you even when you’re on the go. If you have a trading app, this will allow you to make informed decisions even when you are away from your computer.
Next, you need to pay attention. Let’s say you are waiting for an announcement to come from Apple about a new product release. The moment that announcement is made, you need to know what it is, and how the public is likely to respond to it. For example, if it’s announced that an urgent new update is needed for iPhone security, you can guess that this will be a harmful thing for the company and that stock prices will drop. Things like this will guide your decisions.
Things to Look Out For
The timing of each trade needs to be looked at. Just trading the news is not a recipe for success. This inevitably is left out of many traders repertoires, and as a result, great opportunities are lost. The news is just a part of the overall picture, alerting traders when they should be active and when they should focus their time. If you are not timing trades with basic technical indicators and the use of charts, then the news is not going to be as helpful to you as it could be.
This means that even though this strategy revolves around following the news events that will impact your asset’s price, you still need to have a firm understanding of trading and the subtle technical skills behind it. Although this is a skill that takes a long time to develop, many traders skip the basics and jump right into it. This is something that doesn’t need to happen to you. To successfully trade the news, you do not need to know everything there is about technical indicators, but rather just a basic overview. If you do not develop these basic skills, then your trading of the news will not be as effective or profitable as it should be.