Using fundamental data strategies to trade binary options

Trading using fundamental indicators has been popular among forex traders but can also be used by binary options traders looking to trade both news events or longer expiry options. The reason why the release of fundamental data is so important for traders, whether it is specific to a single company or general to the economy, is that it generates both volatility and direction within the market. The length of the effect that it will have will vary on both the nature of the data and also in whether it has been foreseen by market speculators. Data which is seen as unforeseen often creates large swings and spikes in price which can be taken advantage of by binary options trades as well as traditional market investors.

Using the heavyweight data releases to trade the news

Some of the most general economic data releases which traders follow to look for trading opportunities are known as the key economic indicators. These have the ability to dictate market direction over large periods of time due to their underlying influence in economic performance of currency, commodity and stock markets. Binary options traders may choose to trade these as short-term news opportunities or, alternatively, in order to guide them in the prevailing direction of long-term binary options. Either way, key economic indicators can be used to both judge the fundamental health of a market and to look for shocks and short-term opportunities during their release. For those looking to trade the news it is worth noting that, prior to this becoming market knowledge, analysts frequently assess the market’s expectations and create their own predictions of the outcome. This is useful for binary options traders to determine if the data is above or below the market’s expectations.

Momentum trading with fundamental data

Unforeseen results in any number of key economic indicators, such as interest rates, employment or GDP figures will result in high levels of volatility in the minutes or hours following the release. Binary options strategies to purchase options during this period can be those which attempt to jump on board as soon as the data is released and those who set orders to catch the swings which are generated in the following hours. The first strategy will largely depend on the type of trader that is investing and whether they have the ability to very quickly analyse the data, or perhaps they will simply trade with the momentum of the market. Either way this is perhaps the most risky technique, with the potential for false-breakouts and sharp reversals very high. Momentum trading on the release of data is very much for those traders purchasing sixty second binary options whilst those preferring a more rational basis may look at longer expiry times for such news trades.

Taking advantage of Range and One Touch binary options tools

Longer binary option strategies for trading a data release include setting orders to trigger when price reaches a certain threshold. Keeping in mind the average daily range of a stock, currency or index, these entry orders may be placed sufficiently high to show a high probability of a intra-day trend. Without the requirement for stop-losses, timing is the most important issue for binary options traders who would hope that a significant rise in price following a data release would indicate the underlying trend for the following minutes or hours. For those looking to trade data releases slightly differently however, the Range and One Touch trade options come in to their own when news is considered either dull, creating a range-bound or sideways markets, or highly volatile and moving between higher or lower levels and offering significantly rewarding options.

 


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