It may be that one of the most popular ways in binary options online trading is to trade on news and latest events as well. It is believed that this is the easiest form of binary options trading available.
After all, if a company released a new product today, then all your duty is to focus on forecasting that the stock prices of that company would go up, it is right? Well, no. It isn’t very simple. Actually, it is a bit more complicated than that. Trading on news is really not recommended to newcomers, in reality.
Actually, trading binary options on news is only recommended to medium to high skilled traders. But, why? The reason is that the asset’s value is usually the most volatile during an important event connected to that asset. It is no doubt that newcomers will have a very hard time forecasting the asset’s movement during specific events.
Nevertheless, it is obvious that news binary options trading remains one of the best ways in order to make money online in case that you follow a few well-established guidelines. Now, read this article to learn about how to trade binary options on news and other events. It is expected to be really useful for your trading.
Trading Binary Options on News Is Not for Beginners
As I mentioned in the introduction, trading on news and events is not recommended to newcomers, actually. Being a newcomer, it is perhaps that you should try out some other binary options strategies first, general considerations for money management and pinbar candlesticks, for example.
It is clear that forecasting the markets’ movement is almost unfeasible immediately before and immediately after the major news’ release or event related to an underlying asset. Mostly, just experienced traders have enough confidence in navigating through this net.
Very high price fluctuations
The biggest reason perhaps, total newcomers and beginners should not trade on news is that the asset’s value can fluctuate really powerfully before and after a main event takes place. The movement of the asset is almost never predictable in these stations.
Most often, for experts, they even are not sure what the right choice is in these cases. Nevertheless, it can be seen that trading on news and events becomes much easier after a certain time after the event. Below, it allows you to find several useful rules supporting you in trading binary options on news and various types of events as well.
The rule of 15 – 15 minutes
What we didn’t mention above is the asset’s value doesn’t only massively fluctuate after an event took place but also shortly before the event can take place (it is in case that the event was planned and announced).
So, it is very clear that you should not trade 15 minutes immediately before an event and 15 minutes immediately after an event if you are an experienced and impatient trader, perhaps. The movement of the markets during these times is not predictable because of the high number of trades performed by others (mostly, they are newcomers having no clue.)
In these times, you will probably see the fluctuations of super massive price during very short time frames seemingly without making any sense at all. Thus, you should definitely avoid trading 15 minutes immediately before a major event takes place and 15 minutes immediately after the event.
The rule of 30 – 30 minutes
Being a medium skilled trader and having a bit more patience, it’s then perhaps you should not trade 30 minutes immediately before an event relating an asset and 30 minutes after that event happened.
It is due to the same considerations I mentioned above. Factually, price fluctuations are less heavy before and after the 15-minute mark, they are still significant, however. Thus, if you aren’t an expert yet, then you should consider carefully and avoid trading during these time frames.
How to Trade Efficiently on News and Events
Now, you can know that you should avoid trading during which time frames. But, you still don’t know clearly when you will have the greatest chances to cash in large amounts of money as trading on news and other kinds of events such as product launches of companies and more.
If you trade before 30 minutes after an event relating an asset happens or 30 minutes after that event took place, you will have the most optimal winning chances in binary options. Let us explain for you why this is like that:
– With 30 minutes before the event:
Well, before an event occurs, there is usually a general agreement about the nature of the event. Let’s take an example of Apple, if it will in a few hours launch a new product, then most people will suppose that the product in question will be of good quality and bump the company’s stocks.
With this case, it’s very likely that the stock prices of Apple will rise during this time frame. In this situation, you will be able to buy the suitable option contracts. But, things will go crazy when only around 30 minutes remain before the product launch. People will start to speculate, sell, buy, and the stock prices of company will jump around heavily.
– With 30 minutes after the event:
Many speculators are still trading actively during the initial 30 minutes (while the event is most likely still taking place), which results in the value of an asset jumping around all the time seemingly without any logic.
But, after the initial 30 minutes, you can see the asset will stabilize and start to either continually rise or reduce. The reason is because 30 minutes in the event (as a product launch, for example) people will already be able to have their evaluation about the nature of the event.
In similarity of our Apple example, 30 minutes into a product launch you will already be able to say about the quality of the product launched. If seeing that the company released something really great, you will know that the value of Apple’s stocks will rise.
However, if the product sucks or there is nothing major was released, then you see that the value of the company will reduce. As such, you will be able to predict rightly and earn lots of money.
Trading on news involving currencies
It is said that one of the most popular ways of trading binary options is trading on news involving currencies. And, trading on the Non-farm Payroll report which is released by the US Department of Labor on every third Friday of the month is seen as one of the best ways of doing this.
We know that this report is a statistic of the US non-farm labor force in the previous month. The report will show overall how much jobs were lost or how much new jobs were created in the US during the previous month.
Indeed, this report always influences the conversion rate of the USD compared to other currencies. Basically, there are two scenarios to take into consideration here:
– Many new jobs were created the month before:
The USD will rise in value. So, in this case, you should make a forecasting according to which the USD/xxx (clearly, xxx as in any other currency) exchange rate will reduce, as the USD became more powerful due to the consequence that more investors invested in the USD knowing that the US economy was boosted last month by the new jobs.
– Many jobs have been lost the month before:
For this case, the USD’s value will drop because of the fact that the loss of jobs pointed out a stagnation/reduce in economic output. Thus, in this case, you should buy a binary options contract having the ability to predict that the value of the USD/xxx exchange rate rises (it means the USD will perform poor).
Trading news on stocks
Let’s see! We already dealt with this situation in our examples above. The most common news related to companies involves in product launches, as hinted. If, the general consensus thinks that the next product launch of a company will achieve success, then the stocks of that company are expected to increase.
Now, if around 30 minutes after the product launch it becomes evident that the new product launched is very best, then the of the company’s value will naturally rise. In fact, you will have a very easy time making a good prediction in these cases.
But as I said, you just avoid trading either 30 or 15 minutes before a product launch and 15 or 30 minutes after a product launch. This advice is really important for you to remember.
As you can see this is how you trade binary options on news, product launches and also other types of events. As I mentioned in the introduction, being a total newcomer, you op perhaps should wait to trade binary options on news in the very beginning. It is wise that you gather some experience with other strategies first, then start your trading.
If you want to learn more about binary options strategies, our additional guides and tutorials are very useful for you to do that. As you know, knowing and understanding how many binary options strategies work will greatly help you increase your overall winning rate.Check Out 100k Factory