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news profit in fore
What Kind of News Do We Trade?
There are literally hundreds of financial news events released around the clock from all over the world. The key is to concentrate on news releases that have an immediate impact on the market. There are about 5 to 10 important news from U.S., and about 3~5 each from UK, EURO Zone, Australia, Canada, and New Zealand. These news releases are usually scheduled monthly or quarterly; they will repeat every month around the same day of the week or day of the month.
We only trade news releases that are currently considered as “hot”, meaning that the market is particularly interested in it. For example, a few years ago during the real estate boom, U.S. Housing Start, Existing Home Sales, and New Home Sales were constantly ignored and no one was paying attention to it. Why? Because at the time economy was doing good, home sales were always better than expected, and market just assumed the best and basically ignored the numbers. Look at the same news releases today in mid 2008, Housing news releases were particularly important because the economy is suffering, any signs of rebound from the housing sector signals improvement in the economy, as many market analysts pointed out; therefore, housing data is currently “hot”. Similarly, the weekly Jobless Claims just became “hot” recently because of former Fed. Chairman Greenspan talked about it in his book…
Other news releases such as consumer confidence, current account, and even the TIC Net Long-Term Securities are currently being ignored. But they will eventually become hot again, as many of these news releases and market focus work in cycles, just as the fashion industry.
The key to trading economic news successfully is to be selective with news releases to trade. As stated before, with hundreds of news released monthly, why risk with less important news releases and gamble your hard earned money when you can trade with news that have a higher probability of success? Therefore, I have compiled a list of news releases that have a high probability of success (at least 70%) backed by solid track record.Another important “hot” factor in today’s market is RISK. There are basically two different reactions to Risk, one being “Risk Aversion” and the other “Risk Appetite”.
Risk Aversion basically means to avoid risk. Market will react go with the safest route, selling high yielding currencies and buying low yielding currencies, such as BUYING CHF and JPY while SELLING GBP and AUD. Few instances recently of extreme market risk aversion, GBP/JPY pair have been documented losing up to 1000 pips in a 24 hour period.
This is an extreme example but not an isolated case, we have seen risk aversion taking over market sentiment and dropping USD/CHF, GBP/JPY, AUD/JPY 200 to 500 pips a day.
What kind of news sparks Risk Aversion? The answer: Any news that creates risk (or rumor of risk) in the market, for example:
1. Geopolitical uncertainty – Rumors of war or actual terrorist attack.
2. Subprime Mortgage Write-down – Bear Stearns, Fannie Mae, Freddie Mac, etc…
3. Major industry sector negative earning/forecast report. Such as AIG (insurance), Bank of America (finance), GM (Auto), etc…
4. Or any huge surprise in fundamental news that reminds the market of the condition our economy is currently in. Such as a worse than expected Housing Data, a worse than expected employment data or unemployment rate, etc…
What to do in a Risk Aversion situation? The best answer is to stay out of the market or take a short position!News Profiteer’s Guide to Fundamental News Trading -Lite
Page
10
Risk Appetite means market willing to take on risk. What is considered risk? When the market is buying high-yielding currencies such as GBP, and selling low-yielding currencies, such as JPY, it is considered as Risk Appetite. Therefore, when carry trades (JPY based trades) are winding, or going up, it is a sign of Risk Appetite.
What kind of news sparks Risk Appetite? Basically any news that promotes:
1. Geo-Political Stability – Peace Treaty, peace talks, etc…
2. Good Earnings Report from major sectors.
3. Good Surprises in fundamental news, such as better than expected housing, employment, or economy data.
Risk Appetite is different from Risk Aversion whereas Risk Aversion will be followed with strength in both JPY and USD currencies, while Risk Appetite will not only promote carry trades, but all high-yielding currencies in general. Risk Appetite will likely to promote stable market condition and normal daily volatility
CPI q/q
0.3%
50 pips Interest rate 0.25% 70 pips
Retail Sales
0.5%
40 pips GDP q/q 0.3% 40 pips
Australia Reports Tradable Trigger Movement Range
Interest rate
0.25%
70 pips Employment Changes 27K 60 pips
GDP q/q
0.3%
50 pips Retail Sales 0.6% 50 pips
CPI q/q
0.3%
50 pips
Basic Trading Methods
Let’s start by defining few important terms:
Forecasted (Consensus or Expected) Figure: This is usually derived from a survey done by financial news organizations such as Bloomberg, Reuters, etc… Usually they get a number of economists, anywhere from 20 to 240, and ask them what number they think it will be. After getting all of the numbers, the highest and the lowest are taken out with the rest averaged out to a single “averaged” figure. That is why with different news organizations will have a slightly different consensus number.
Deviation: is the difference between the actual release number and the forecasted number. Let’s say that CPI is expected to be 3.0% and the actual number came out as 3.3%; the deviation is then 0.3%.
Actual Figure: This is the actual release figure from the official source of the information.
Revision: This is the revised change done for previous release figure, usually the month before. It could sometime impact the market greatly if the revision is huge. Usually if we have a good deviation with a good revision number, the market will react even more.
Fundamental Trading In a Nutshell: Every major news release has a forecasted or consensus figure determined by economists beforehand. If the actual release figure is different from the consensus or forecasted (or expected) figure, the market is surprised and will react to the release immediately. The bigger the surprise, or deviation, will produce bigger reaction. Based on historical data, we can predict that a particular deviation will trigger a minimum amount of pips movement. If a news release consistently moves over 40 pips with a particular deviation, we expect that a similar deviation in the future will likely to cause the market to move 40 pips.
Although we have to be flexible in our trading, news trading requires that a specific plan to be followed with specific set of rules to protect our investment. Itis particularly important that we only take a trade when our expected deviation is hit, not we get a close enough deviation.
For example, if you have promised your teenage son a car on his 18th birthday on the condition that he gets straight A’s in school this semester, and he came home with a couple of B’s, you wouldn’t have to give him a car. We must regard news trading with the same kind of discipline because sometimes almost still means no.
To further drive this point, consider that since the forecasted number is an average, many fund managers or banks might be expecting a slightly different number than you and I, and if we take a close enough deviation to trade, we might just be going in the opposite direction against some of these big fund managers.
For example, if the upcoming ISM Manufacturing Index has a forecasted number of 52.5, and our standard deviation is 3.0. The actual release came out as 50.3… what is our course of action? The actual deviation is 2.2, about 0.8 points away from our tradable deviation, but it’s close enough… so you enter a short trade. But Mr. Big Shot at ABC Hedge Fund may also be looking at release of 50.3, which still means expansion in the sector (above 50 means expansion, below 50 means contraction), and decided to go on a long trade. This could be devastating for your account. Remember, the deviations that we trade are “safe” deviations, they have been proven to work in the past and that is why we trade them.
It’s time to lay down some ground rules before getting into the actual trading methods. Remember that the following are extremely important and you should always keep in mind when trading the news, no matter what kind of news releases or how huge the deviations are.
1. It doesn’t matter whether or not the market reacts the way you expect it to react. You have to remember that nothing is absolute in trading, especially with Forex.
2. We do not form an opinion before the news release; we will wait for news release to come out, and then trade according to plan.3. We are only looking for the probability of the combined reaction of the market in the short term, within the first 30 minutes up to 2 hours immediately after the news release.
4. We must be flexible in trading. If market sentiment, technical analysis, and the news release numbers all point to one direction but the market still react in a completely opposite direction, we must also act accordingly. It is most likely that we’ve missed some underlying reason to this reaction, and we must respect the market.
5. We only concentrate on the news that has most impact to the market with most predictable reaction.
6. We always assume that the market will overreact to the news.
7. Study the reaction of the market after news release. You will see the “underlying market” sentiment.
Ok, it’s time to talk about the actual fundamental news trading methods. Remember to always prepare a plan by writing them down on a piece of paper; do not get into the market unprepared.
It is important that you get a news wire service, such as tradethenews.com if you want to trade fundamental news. Do not use those free news wire services or news feed from your broker. Every second counts in news trading, you could make up 10 times the money you pay for the news feed service with justFundamental Trading Methods
TRADE THE RETRACEMENT
We wait for the news release to come out. Based on the release number we will determine “where” to get into the market if our expected deviation is hit.
We will wait for the market to retrace back within 10~15 pips of the pre-release price level. Sometimes when we have a huge deviation, we can enter the market at 20~30 pips from the pre-release level, but it would be based on discretion. Market will usually retrace within the first 5~30 minutes, if a retracement is to take place.
A stop/loss will be placed at 35 pips or less from the entry price. Therefore, it is very important to wait for the market to come back because if we enter too soon, we might get stopped out.
This type of trading is much easier than trading the spike, but sometimes we might not get a retracement at all or big enough and miss this trade altogether.
There are literally hundreds of financial news events released around the clock from all over the world. The key is to concentrate on news releases that have an immediate impact on the market. There are about 5 to 10 important news from U.S., and about 3~5 each from UK, EURO Zone, Australia, Canada, and New Zealand. These news releases are usually scheduled monthly or quarterly; they will repeat every month around the same day of the week or day of the month.
We only trade news releases that are currently considered as “hot”, meaning that the market is particularly interested in it. For example, a few years ago during the real estate boom, U.S. Housing Start, Existing Home Sales, and New Home Sales were constantly ignored and no one was paying attention to it. Why? Because at the time economy was doing good, home sales were always better than expected, and market just assumed the best and basically ignored the numbers. Look at the same news releases today in mid 2008, Housing news releases were particularly important because the economy is suffering, any signs of rebound from the housing sector signals improvement in the economy, as many market analysts pointed out; therefore, housing data is currently “hot”. Similarly, the weekly Jobless Claims just became “hot” recently because of former Fed. Chairman Greenspan talked about it in his book…
Other news releases such as consumer confidence, current account, and even the TIC Net Long-Term Securities are currently being ignored. But they will eventually become hot again, as many of these news releases and market focus work in cycles, just as the fashion industry.
The key to trading economic news successfully is to be selective with news releases to trade. As stated before, with hundreds of news released monthly, why risk with less important news releases and gamble your hard earned money when you can trade with news that have a higher probability of success? Therefore, I have compiled a list of news releases that have a high probability of success (at least 70%) backed by solid track record.Another important “hot” factor in today’s market is RISK. There are basically two different reactions to Risk, one being “Risk Aversion” and the other “Risk Appetite”.
Risk Aversion basically means to avoid risk. Market will react go with the safest route, selling high yielding currencies and buying low yielding currencies, such as BUYING CHF and JPY while SELLING GBP and AUD. Few instances recently of extreme market risk aversion, GBP/JPY pair have been documented losing up to 1000 pips in a 24 hour period.
This is an extreme example but not an isolated case, we have seen risk aversion taking over market sentiment and dropping USD/CHF, GBP/JPY, AUD/JPY 200 to 500 pips a day.
What kind of news sparks Risk Aversion? The answer: Any news that creates risk (or rumor of risk) in the market, for example:
1. Geopolitical uncertainty – Rumors of war or actual terrorist attack.
2. Subprime Mortgage Write-down – Bear Stearns, Fannie Mae, Freddie Mac, etc…
3. Major industry sector negative earning/forecast report. Such as AIG (insurance), Bank of America (finance), GM (Auto), etc…
4. Or any huge surprise in fundamental news that reminds the market of the condition our economy is currently in. Such as a worse than expected Housing Data, a worse than expected employment data or unemployment rate, etc…
What to do in a Risk Aversion situation? The best answer is to stay out of the market or take a short position!News Profiteer’s Guide to Fundamental News Trading -Lite
Page
10
Risk Appetite means market willing to take on risk. What is considered risk? When the market is buying high-yielding currencies such as GBP, and selling low-yielding currencies, such as JPY, it is considered as Risk Appetite. Therefore, when carry trades (JPY based trades) are winding, or going up, it is a sign of Risk Appetite.
What kind of news sparks Risk Appetite? Basically any news that promotes:
1. Geo-Political Stability – Peace Treaty, peace talks, etc…
2. Good Earnings Report from major sectors.
3. Good Surprises in fundamental news, such as better than expected housing, employment, or economy data.
Risk Appetite is different from Risk Aversion whereas Risk Aversion will be followed with strength in both JPY and USD currencies, while Risk Appetite will not only promote carry trades, but all high-yielding currencies in general. Risk Appetite will likely to promote stable market condition and normal daily volatility
CPI q/q
0.3%
50 pips Interest rate 0.25% 70 pips
Retail Sales
0.5%
40 pips GDP q/q 0.3% 40 pips
Australia Reports Tradable Trigger Movement Range
Interest rate
0.25%
70 pips Employment Changes 27K 60 pips
GDP q/q
0.3%
50 pips Retail Sales 0.6% 50 pips
CPI q/q
0.3%
50 pips
Basic Trading Methods
Let’s start by defining few important terms:
Forecasted (Consensus or Expected) Figure: This is usually derived from a survey done by financial news organizations such as Bloomberg, Reuters, etc… Usually they get a number of economists, anywhere from 20 to 240, and ask them what number they think it will be. After getting all of the numbers, the highest and the lowest are taken out with the rest averaged out to a single “averaged” figure. That is why with different news organizations will have a slightly different consensus number.
Deviation: is the difference between the actual release number and the forecasted number. Let’s say that CPI is expected to be 3.0% and the actual number came out as 3.3%; the deviation is then 0.3%.
Actual Figure: This is the actual release figure from the official source of the information.
Revision: This is the revised change done for previous release figure, usually the month before. It could sometime impact the market greatly if the revision is huge. Usually if we have a good deviation with a good revision number, the market will react even more.
Fundamental Trading In a Nutshell: Every major news release has a forecasted or consensus figure determined by economists beforehand. If the actual release figure is different from the consensus or forecasted (or expected) figure, the market is surprised and will react to the release immediately. The bigger the surprise, or deviation, will produce bigger reaction. Based on historical data, we can predict that a particular deviation will trigger a minimum amount of pips movement. If a news release consistently moves over 40 pips with a particular deviation, we expect that a similar deviation in the future will likely to cause the market to move 40 pips.
Although we have to be flexible in our trading, news trading requires that a specific plan to be followed with specific set of rules to protect our investment. Itis particularly important that we only take a trade when our expected deviation is hit, not we get a close enough deviation.
For example, if you have promised your teenage son a car on his 18th birthday on the condition that he gets straight A’s in school this semester, and he came home with a couple of B’s, you wouldn’t have to give him a car. We must regard news trading with the same kind of discipline because sometimes almost still means no.
To further drive this point, consider that since the forecasted number is an average, many fund managers or banks might be expecting a slightly different number than you and I, and if we take a close enough deviation to trade, we might just be going in the opposite direction against some of these big fund managers.
For example, if the upcoming ISM Manufacturing Index has a forecasted number of 52.5, and our standard deviation is 3.0. The actual release came out as 50.3… what is our course of action? The actual deviation is 2.2, about 0.8 points away from our tradable deviation, but it’s close enough… so you enter a short trade. But Mr. Big Shot at ABC Hedge Fund may also be looking at release of 50.3, which still means expansion in the sector (above 50 means expansion, below 50 means contraction), and decided to go on a long trade. This could be devastating for your account. Remember, the deviations that we trade are “safe” deviations, they have been proven to work in the past and that is why we trade them.
It’s time to lay down some ground rules before getting into the actual trading methods. Remember that the following are extremely important and you should always keep in mind when trading the news, no matter what kind of news releases or how huge the deviations are.
1. It doesn’t matter whether or not the market reacts the way you expect it to react. You have to remember that nothing is absolute in trading, especially with Forex.
2. We do not form an opinion before the news release; we will wait for news release to come out, and then trade according to plan.3. We are only looking for the probability of the combined reaction of the market in the short term, within the first 30 minutes up to 2 hours immediately after the news release.
4. We must be flexible in trading. If market sentiment, technical analysis, and the news release numbers all point to one direction but the market still react in a completely opposite direction, we must also act accordingly. It is most likely that we’ve missed some underlying reason to this reaction, and we must respect the market.
5. We only concentrate on the news that has most impact to the market with most predictable reaction.
6. We always assume that the market will overreact to the news.
7. Study the reaction of the market after news release. You will see the “underlying market” sentiment.
Ok, it’s time to talk about the actual fundamental news trading methods. Remember to always prepare a plan by writing them down on a piece of paper; do not get into the market unprepared.
It is important that you get a news wire service, such as tradethenews.com if you want to trade fundamental news. Do not use those free news wire services or news feed from your broker. Every second counts in news trading, you could make up 10 times the money you pay for the news feed service with justFundamental Trading Methods
TRADE THE RETRACEMENT
We wait for the news release to come out. Based on the release number we will determine “where” to get into the market if our expected deviation is hit.
We will wait for the market to retrace back within 10~15 pips of the pre-release price level. Sometimes when we have a huge deviation, we can enter the market at 20~30 pips from the pre-release level, but it would be based on discretion. Market will usually retrace within the first 5~30 minutes, if a retracement is to take place.
A stop/loss will be placed at 35 pips or less from the entry price. Therefore, it is very important to wait for the market to come back because if we enter too soon, we might get stopped out.
This type of trading is much easier than trading the spike, but sometimes we might not get a retracement at all or big enough and miss this trade altogether.
creating wealth as discipline trader,and best tool they use
It’s been 20 years since I ended a 5 year run as the host of the Risky Business radio show.
It was a daily 60 minute show where I gave my opinion of various markets… mostly commodities… and I interviewed guests for their opinion.
I was watching a clip from Jim Cramer’s show yesterday and he was commenting on one of my favorite analysts…one whom I interviewed at least a dozen times on Risky Business.
Her name is Carolyn Boroden and she had a newsletter called Synchronicity, which was all about repeating patterns in the market.
In this Cramer piece that I saw he commented on her consistency in her S&P market calls, as she looked for the same corrective action to repeat itself, followed by a rally.
I said to myself… all she is really doing is honoring the trend.
I look at it this way… There’s an undercurrent in every market that is the trend. You can have counter action above the undertow, but when the undertow is hit, it supplies support to that general trend.
On a move like we’ve seen in the S&P market over the last 5 or 6 years, we’ve seen a strong trend up.
Every time it’s starts a correction, we think, “This could be the big one.” .. and the longer the trend goes, the more we feel the market is OVERDUE to correct, so this correction HAS TO BE the big one.
Winds up it usually isn’t.
Carolyn is smart about her market calls. She doesn’t predict. She lays out specific points of probability if this happens or that happens… and that’s what we ALL should be done.
I’m recording this 4-Minute Drill on Friday, July 10th, 2015 at about Noon eastern. The market is having big up day so far, bouncing off a support level.
Is this the end of the current correction and there for time to buy? Maybe? Maybe not? It’s up to your trading plan to tell you that.
But smart trading plans honor trends, knowing that we humans are the ones that cause these trends.
As we invest in a direction for the market, we defend that direction because we want to be right. The higher the commitment in that direction, the harder the trend is to break.
Interest rates are low… so the stock market is an inviting place to get a return. There are a lot of people defending that notion… that’s why this current S&P trend is a tough one to break.
With rising rates seemingly on the horizon, is this the big correction happening now?
Only time will tell… but for now I’m going with the trend, and the fact that for 6 years, every correction has met with new highs. But I have my stops in.
And so should you!
OK.. that’s it for this addition of 4 minute drill for traders… so, until next week… Stay disciplined!
Never Seen Before! This Smart And Easy To Use Software Is Helping Forex Traders To Increase Their Profitability With Any System. Killer Copy, Awesome Conversion And Highest Commission! Recommend A Product That Your Subscribers Will Appreciate.Never Seen Before! This Smart And Easy To Use Software Is Helping Forex Traders To Increase Their Profitability With Any System. Killer Copy, Awesome Conversion And Highest Commission! Recommend A Product That Your Subscribers Will Appreciate.http://5d662g-amraubt0r3172opnmxo.hop.clickbank.net/
It was a daily 60 minute show where I gave my opinion of various markets… mostly commodities… and I interviewed guests for their opinion.
I was watching a clip from Jim Cramer’s show yesterday and he was commenting on one of my favorite analysts…one whom I interviewed at least a dozen times on Risky Business.
Her name is Carolyn Boroden and she had a newsletter called Synchronicity, which was all about repeating patterns in the market.
In this Cramer piece that I saw he commented on her consistency in her S&P market calls, as she looked for the same corrective action to repeat itself, followed by a rally.
I said to myself… all she is really doing is honoring the trend.
I look at it this way… There’s an undercurrent in every market that is the trend. You can have counter action above the undertow, but when the undertow is hit, it supplies support to that general trend.
On a move like we’ve seen in the S&P market over the last 5 or 6 years, we’ve seen a strong trend up.
Every time it’s starts a correction, we think, “This could be the big one.” .. and the longer the trend goes, the more we feel the market is OVERDUE to correct, so this correction HAS TO BE the big one.
Winds up it usually isn’t.
Carolyn is smart about her market calls. She doesn’t predict. She lays out specific points of probability if this happens or that happens… and that’s what we ALL should be done.
I’m recording this 4-Minute Drill on Friday, July 10th, 2015 at about Noon eastern. The market is having big up day so far, bouncing off a support level.
Is this the end of the current correction and there for time to buy? Maybe? Maybe not? It’s up to your trading plan to tell you that.
But smart trading plans honor trends, knowing that we humans are the ones that cause these trends.
As we invest in a direction for the market, we defend that direction because we want to be right. The higher the commitment in that direction, the harder the trend is to break.
Interest rates are low… so the stock market is an inviting place to get a return. There are a lot of people defending that notion… that’s why this current S&P trend is a tough one to break.
With rising rates seemingly on the horizon, is this the big correction happening now?
Only time will tell… but for now I’m going with the trend, and the fact that for 6 years, every correction has met with new highs. But I have my stops in.
And so should you!
OK.. that’s it for this addition of 4 minute drill for traders… so, until next week… Stay disciplined!
Never Seen Before! This Smart And Easy To Use Software Is Helping Forex Traders To Increase Their Profitability With Any System. Killer Copy, Awesome Conversion And Highest Commission! Recommend A Product That Your Subscribers Will Appreciate.Never Seen Before! This Smart And Easy To Use Software Is Helping Forex Traders To Increase Their Profitability With Any System. Killer Copy, Awesome Conversion And Highest Commission! Recommend A Product That Your Subscribers Will Appreciate.http://5d662g-amraubt0r3172opnmxo.hop.clickbank.net/
Category: 4-Minute Drill for Traders, Trading Discipline
binary trading strategy and best tool for profit
Beginner Binary Options Winning Strategy - 80% Guahttp://6588a9x5n0hx4v39-11lwgtdus.hop.clickbank.net/ranteed Win
There is actually no clear name for this strategy however its accuracy has been proven on multiple occasions in the binary options business. In order to use this strategy you will only have to use a total of 4 indicators on your chart.
The great advantage of this newbie binary options winning strategy is the fact that it always promises proven results in around 75%-90% of the time you are trading. If you use this strategy well, you may as well achieve a winning ratio of above 90% all the time.
So, below you’ll find the complete description of this strategy as well as tips regarding its applicability. Follow these guidelines you trade next time and you will be able to win the majority of contracts you purchase.
UPDATE: There are now tools out there that will automatically execute this strategy for you in your binary broker account. These are called signals and bots. The best one of these is Signals365. The good thing about Signals365 is that it does not force you to sign up at any specific broker. You can use your own broker. It also has an accuracy of around 70% (which it actually achieves, unlike other tools).
These tools will basically scan the charts and use the strategy described in this article (and also other strategies) and based on those they will automatically execute trades or make predictions which you have to manually execute yourself. You'll of course be able to adjust how much they will be allowed to trade and how frequently.
I recommend using this strategy with one of the brokers in the list below, especially Cherry Trade (global) or 10Trade (non-USA only, licensed broker). I selected this list based on the availability of the indicators mentioned in this article (not all brokers have them - so you can end up not being able to use it at some brokers), reputation, easiness of withdrawal and payout rates.
UPDATE 2 - February 2015: I've decided to describe yet another beginner binary options strategy that I believe works perhaps even better than the initial Bollinger band strategy that this article was about. This strategy involves using long-term binary options and news trading in order to make very accurate predictions (i.e. you know that Apple will release a new iPhone next week, and as such predict that its stock prices will rise by next week). Check at the bottom of this page to read more about this strategy.
Related Article: Can you really make money in binary options?
Related Article: List of approved and secure binary options brokers
Related Article: Calculating your breakeven ratio when trading binary options
Payout
Deposit
Beginner Binary Options Winning Strategy
It’s a little bit awkward to talk about a particular and well-established binary options winning strategy given the fact that this strategy doesn’t really have any name at all. However, let’s call it beginner binary options winning strategy, because effectively this is what it is. Read below to find out how this could be the best binary options strategy for beginners and what you will have to do in order to use it.This strategy works by predicting the future movement of an asset taking in consideration the data supplied by four financial trading indicators. These indicators are mentioned below.
The indicators listed below are automatically generated by the charting feature offered by mist binary options brokers. It is extremely important to only register at binary options brokers that have these indicators (like the ones we listed on the right menu) otherwise you will not be able to use this strategy.
It’s also not really necessary to fully understand what these indicators precisely are in order to be able to use this strategy. If you want a full description about these indicators please check out our related article.
You can find the indicators listed below:
13 Exponential Moving Average (EMA)
20 Simple Moving Average (SMA)
26 Exponential Moving Average (EMA)
These three indicators are represented by three lines that are moving around surrounding the line on the charting platform that represents the value of the asset itself.
Bollinger Band
The Bollinger Band however is represented by two lines. The middle of these two lines is the average of the position of the above mentioned three indicators. So, basically the Bollinger Band has two boundaries, an upper boundary and a lower boundary in which the above-mentioned three indicators are positioned.
How to use:
Now, lets talk about the actual strategy itself. As explained, with this strategy you will be able to predict the future movement of an asset.
In order to use this strategy, you will have to activate the above-mentioned indicators on your charting interface.
First you will have to watch out for the following things:
– The 13 Exponential Moving Average (EMA) crosses the 20 Simple Moving Average (SMA)
– The 26 Exponential Moving Average (EMA) will cross the 20 Simple Moving Average (SMA) AFTER WHICH it will cross the 13 Exponential Moving Average (EMA)
If the above conditions are met, then in about 95% of the cases the following will happen:
– The value of the asset will go outside of one of the Bollinger Band boundaries.
You will be able to tell which boundary the asset will cross based on the direction of the general movement of the above-mentioned three indicators.
If in average the three indicators (except the Bollinger Band) move up, then the asset will break the BB’s upper boundary. If in average the three indicators will move down, then the asset will break the BB’s lower boundary.
Like mentioned, the above outlined scenario will happen around 90%-95% of the time.
Applicability of this Strategy
So, now you would want to know what exactly you would have to do in order to use this strategy to your advantage. There are actually multiple positions you could open in such cases. Let’s take the example below.– The exchange rate of EUR/USD is at 1.35 at this moment.
– The upper boundary of the Bollinger Band is at 1.37
– The lower boundary of the Bollinger Band is at 1.33
Now, you notice that the 13 EMA has crossed the 20 SMA and that the 26 EMA crossed the 20 SMA and is about to cross the 13 EMA soon.
You also notice that the three of these indicators are moving downwards.
In this case you will know that during the next 15-30 minutes the value of EUR/USD will bounce BELOW the lower BB line, in other words, it will be below 1.33.
You will have to remember that after a short while the value of the underlying asset will always return back into the two boundaries of the Bollinger Band. There are basically two choices you can make in this situation.
a.) Buy a boundary option or a one-touch option and bet on the fact that the value of EUR/USD will hit a low boundary of at least 1.33. Remember, using the newbie strategy you were able to predict that the asset will ~90% go below 1.33 the next 15-30 minutes.
This choice is a bit risky because you cannot know exactly when that event will happen during the next 15-30 minutes. However, purchasing a boundary option or a one-touch option can offer you extremely high payout rates of up to 500%.
b.) Buy a simple high/low option and bet on the outcome that in 15-30 minutes the value of the asset (in this case the exchange rate of EUR/USD) will be BELOW the current line (in this case 1.35).
This choice is less risky because the value of the asset will definitely go down during this time frame. By choosing a high/low option it is not relevant if the value of the asset will reach a specific value (in this case 1.33); it only matters that its value will decrease – and as the data from the strategy told us, the value will indeed decrease.
Best applicability
So, at first read the strategy might sound a little bit complicated to total newcomers who have never traded binary options or other instruments online. However once you try it out yourself it’s actually very easy.You will only have to watch the movement of the three indicators (13 EMA, 20 SMA, 26 EMA). You will only have to enable these indicators on your charting interface in order to use them.
You will be able to tell which is which based on the color of the line representing them. You will only have to remember which color is which after which with a little practice you will be able to recognize them with ease.
Here is a color reference for these indicators:
13 EMA – Blue
20 SMA – Red
26 EMA – Cyan, light blue
The colors are usually the same at all brokers.
So, after watching these indicators, and you see the pattern mentioned above (13 WMA crossing the 20 SMA, 26 EMA crossing the 20 SMA after which crossing the 13 EMA) you will be able to predict the movement of the underlying asset.
If these three indicators collectively move up, then the asset will break the upper boundary of the BB (Bollinger Band). If these indicators show a downward trend movement, then the value of the asset will break the lower limit of the BB.
And it’s really this simple. Use this, and you will be able to win 75%-95% of the time you trade. We believe that this is probably the best binary options strategy for beginners that is at this moment out there.
NEW: There are now tools out there that will do this process for you. These are called binary options signals. The tools are apps that will scan the charts at various brokers and when they discover the trends described above, they will automatically make the correct investment for you. The best tool of this kind that I found is Signals365. Unlike most other signal apps, this one does not force you to sign up at any broker. You can use any broker you want and simultaneously use the signal app as well.
In order to be able to execute all the above, you will also have to find a binary options brokers that has all the mentioned indicators and charts. One of the legit brokers we found to have all this is Cherry Trade. Cherry Trade is also the only broker available that has a same-day withdrawal policy (i.e. the broker will send you your winnings within a maximum of 24 hours after you’ve requested it).
New: Long-term Binary Options Strategy for Beginners
As written in the final paragraph of the intro, I decided to also talk about a different beginner binary strategy. This strategy specifically focuses on binary options with long expiration times. The reason this wasn’t included in the initial version of this guide was because long-term options are only a recent addition to brokers’ services.Essentially, this strategy works by you having to follow major news events related to the stocks of important companies and then make accurate long-term predictions.
Below you will find one example of how this strategy works:
You know that Apple will launch a new iPhone on October 1st. You also know that usually this will always result in an increase in Apple’s stock prices the next day.
Around two weeks before this event takes place, you buy a binary options contract that predicts that Apple’s stocks will increase by October 2. And boom, you just won because this prediction will extremely likely come true.
You can do this strategy with hundreds of other companies and with other assets as well than stocks. You need to check which major news events are upcoming during the next few weeks and months and make long-term predictions.
I actually believe that this strategy is even easier than the initial Bollinger band strategy described above. With this strategy you don’t have to use charts and indicators; you’ll only have to wait for major news events to happen (expected product launches by companies, annual revenue reports, etc.).
You can find a full description of this strategy by reading this article. Like said, I actually think this method is actually easier then the one described here in this page initially, so definitely check it out.
Learn More About Binary Options Strategies
This is just one of the many binary options winning strategies for beginners available. We left that this was one of the simplest strategies available, so if you are new to binary options then you should begin with mastering this strategy.After you have mastered this strategy come back to our site and read about additional and more advanced strategies that will increase your winning margin even further.
Remember, binary options trading is not about luck, it’s about strategy and practice.
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bollinger band
The Bollinger Band however is represented by two lines. The middle of
these two lines is the average of the position of the above mentioned
three indicators. So, basically the Bollinger Band has two boundaries,
an upper boundary and a lower boundary in which the above-mentioned
three indicators are positioned.
FUNDAMENTAL TRADING
Trading the News – Forex Trading Strategy
So far we have discussed many Forex trading strategies
that allow us to analyze the price action from many different angles.
These strategies give us the technicals but there's one factor that
always has the potential to make all of the technicals irrelevant and
just take the market in every way that it likes. Big announcements or
news coming out of different countries can have a huge effect on the
market, rendering all our analyses meaningless.
The
Forex market is a 24-hour market and news can always come in from all
over the world. Trading based on economic news and data can fit any kind
of trader wherever he might be and whichever currencies he chooses to
trade. If you're in Asia and like to trade the YEN, then there's news
from Japan almost every day. If you like AUD or NZD then you have to
watch out for news out of Australia, New Zealand and China. Same goes
for EUR, GBP and USD; you have to check the news during the morning and
the afternoon if you live somewhere close to European time zones.
In
stocks, major news is considered the announcements of company earnings,
profits, profits per share, industry, macro-economic data etc. In
Forex, news that moves the markets is Central Bank minutes and members
press conferences, inflation reports as well as national and
international economic news and data. One of the first lessons for new
traders is that when trading you should keep out of the market during
major news releases. Nevertheless, we often find ourselves trading
during the news and most of the time it's not simply a matter of greed.
Some like the adrenaline, some are addicted, but the majority of traders
just like the profits. After all, we are in this business to make money
and the risk is just a necessary aspect of that.
Trading
currencies always involves two currencies, so when a trader plans to
open a position both country's upcoming news should be taken into
consideration. Other international news that can potentially affect the
pair should be considered too. For example, if you decide to trade
AUD/JPY, apart from valuating possible outcome of the news out of Japan
and Australia and the effect that it might have on the pair, you should
consider important upcoming news from Europe, USA or elsewhere because
that news might give a shock to the financial markets. For example, if
there was really good economic data released from China, the pair would
rally because it means that demand for Australian products will most
likely increase. The opposite would happen if there was really bad news
from Europe; it would shock the global financial market and the traders
would run for safe heavens like YEN and CHF.
Below
are the most important economic data and news and their effect on the
country's currency if the numbers beat expectations:
GDP –> (+) Good
Unemployment Rate –> (+) Bad
Inflation (consumer and producer prices) –> (+) Good
Interest Rates –> (+) Good
Trade Balance –> (+) Good
Retail Sales –> (+) Good
Services and Manufacturing PMI –> (+) Good
Consumer and Business Sentiment –> (+) Good
Unemployment Claims –> (+) Bad
Home Sales –> (+) Good
Now
that we've established the importance of understanding the news and the
effect it might have on the price, we have to learn how to use news
releases to our advantage. There are two ways to trade the news, long
term and short term.
Long Term News Trading
When
looking for long term trading opportunities based on economic news we
should try to collect the previous and current data and analyze it to
see the bigger picture and the effect that it might have on the
currency. The long term trends are created by fundamental factors, which
are many economic pieces over a certain period of time, because
sometimes news needs days and months to be absorbed by the market.
Looking
at the GBP/USD chart below we can see that an uptrend started to form a
year ago and it has been a one way journey since. Similarly EUR/GBP has
been in a downtrend for about the same period. But these things didn't
just happen out of the blue. The economic data that came out of Britain
during the past 2 years or even longer has made this possible. Most of
it has been pointing out a recovery of the British economy way before
the trend started to form. If a trader read and analyzed the data
correctly, he/she would have bought the Pound during last summer and
pocketed about 2,000 pips.
GBP/USD weekly chart demonstrates a year-long uptrend which could have been foreseen by analyzing the news out of UK.
EUR/GBP
weekly chart similarly shows a downtrend that could have been foreseen
by understanding and analyzing the news out of UK.
Sometimes
the long term trends are created by a single news event, especially
when that event is what the market is most sensitive to at that moment.
Such was the case when the ECB announced it would expand the monetary
policy, would cut Refi rates and introduce negative deposit rates. That
meant that more Euros would be in the market and we know that when
something is in excess it becomes cheaper. The market was waiting for
that event for quite some time. We see from the chart below that Euro
fell about 160 pips during that day and about 500 pips in total. It has
formed a downtrend since then, breaking level after level with no
technical being able to stop it.
Only
a big news event can affect the market in such a way, the price breaks
every support level lying in its way on its long way down.
Short Term News Trading
Trading
news intraday is a bit harder because of the volatility and tighter
stops. Usually 1-2 minutes before and after there are whipsaws, with
price moving frantically in both directions. Short term news trading is
split into several strategies which we will now go over:
Selling bad news spikes –
One way is to sell the spike after a worse than expected news or vice
versa. Sometimes even after really bad data the price jumps for a few
seconds or minutes. That's the best time to sell, especially if it's at
some big level or resistance. After the FED Chairman Yellen failed to
deliver on the Tapper on June 18, which is dollar negative, USD/CAD
jumped 30 pips to 1.09 only to reverse on a 150 pip fall.
Momentary peak follows news that should cause a downtrend, indicating the best time to go in short.
Buying after bad news –
Because of past good data a pair forms an uptrend. Though sporadic,
worse than expected news cannot be ruled out, it won't affect the
overall outlook of the situation. So after the initial fall we should
look to buy the knee jerk reaction. This happened to the USD/CHF on June
25 when the US GDP was much worse than expected. The pair had been in
an uptrend for about two months with really good data, so one piece of
news wouldn't change this by itself. The pair fell about 30 pips
immediately, and then bounced right back.
Bad
news don't always lead to a long downtrend, the fall can be momentary
and then the price starts pushing up back to its previous level.
Trading breakouts
– Prior to important news, the price often gets confined in a tight
range, uncertain of which direction it should take. This scenario is
best traded with pending orders on both sides, sell a break below and
buy a brake above. It's advised that the orders be placed considerably
away from the range, so that we avoid whipsaws. The chart below shows a
good opportunity on USD/CAD on June 23 when retail sales and inflation
CPI came out much better than expected.
Price
gets stuck in a range before the big news announcement and then
suddenly jumps in one direction after the news is announced.
News anticipation –
Anticipating the news and reading price action is not easy to do but
like all things, it gets easier with experience. It's a very profitable
strategy and personally I really prefer this strategy over the other
ones. On May 1st
at 8:30 am GMT there was manufacturing PMI to come. The market
consensus was for a lower read but with the recent good data, chances
were that the expectation would be exceeded. Looking at the 15 min
candle on GBP/USD right before the release, it jumped some 25 pips,
which suggests that the data will beat expectations and so it was. So I
bought during that jump and locked it at breakeven. Then the news came
and the rest is history.
First candle jumped 25 pips, indicating that the news would be better than expected.
The
same happened on April 16 with the GDP numbers. The 3 hourly candles
prior to the release were really bullish, pointing to better than
expected data. So I bought in the middle of the second candle and closed
some profit in before the news release. After the news it popped
another 60 pips.
Each candle is more bullish than the one before, great opportunity to make an easy profit.
Trading
the news is actually not only another Forex trading strategy to add to
your arsenal but another method of trading Forex altogether. In order to
fully master Forex trading this must of course be combined with other
Forex trading strategies that rely on technicals rather than
fundamentals and you should place trades based on all of that data,
factored together.
how to trade fundamental
- Trading news is dangerous as wild and erratic price movements can extend against the trader
- Traders need to be vigilant with risk management, looking to capitalize when on the right side of the move
- We share three different types of strategies for trading during news
The big day is here, and the Non-Farm Payrolls report that much of the world has been waiting for will finally be unveiled tomorrow morning at 8:30AM in New York.
News announcements of this nature can take on a life
of their own with the amount of interest they receive. But it’s
important to note the danger and risks of trading on such events. Nobody
in the world has any idea the way that NFP will print… and even if they
did, there is no way of knowing exactly the way that the market will
price that data.
What follows are three ways that traders can look to trade around high-importance news announcements like NFP.
But, before we get into the strategies, I’d like to
stress the danger of trading in such environments. Many professionals
choose to avoid trading during high-impact news announcements just
because of how dangerous or erratic they can be.
If you’ve never traded during one of these events,
or if you don’t feel comfortable taking on the extraneous risk that is
inevitable with such a high-impact announcement, trade on the demo
account or sit on the sidelines. There is absolutely no shame in having
fear of a market; this is what helps keep traders alive. Bravado or
machismo is absolutely worthless if you drain all of your equity. You
can get a demo account completely free-of-charge at this LINK.
The ‘Slingshot’ Strategy
This strategy looks to capitalize on the mayhem that
may ensue during an especially strong print. In this strategy, the
trader wants to look to go into NFP with their full position(s), so that
if the volatility created around the announcement may be able to push
their trade deeply into profitable territory, they can look to take
advantage of that.
The slingshot looks to scale out of winning positions as
the trade moves in the trader’s favor, and a variety of entries or
entry strategies can be used to trigger the initial position.
Support and resistance identification is a necessity
before opening any positions. Traders can also take this a step further
by looking to the hourly or four-hour charts to determine any trends
that may exist leading into the announcement. This way, if the biases
going into NFP take place after the data is released, the trader can be
on the right side of the move.
Support and Resistance is so important because
that’s the ‘cut point’ with which the trader can close off the position
if prices are going to move too far against them. Stops for long
positions can go below support, and stops for short positions can go
above resistance so that if either of these levels are broken, the loss
can minimized.
The Slingshot looks to capitalize from extended moves in the trader’s direction
Created with Marketscope/Trading Station II; prepared by James Stanley
Traders can even incorporate a technical-trigger
into the trade with an indicator like MACD like we had explained in the
article, MACD as an Entry Trigger.
A key note here: Traders are advised to investigate
stop distance on their positions ahead of a data announcement as heavy
as NFP. Spreads can widen very quickly as market makers don’t want to
take a loss on the print just as much as retail traders. When spreads
widen, stops can be triggered before prices begin trending and this can
be disastrous for the trader.
Imagine the scenario in which you went into NFP with a long EURUSD
position carrying a 20 pip stop… If spreads widen out to 40 pips, that
would trigger your stop and execute the stop order ‘at best.’ This could
entail additional slippage beyond your 20 pip stop.
But, if prices then trend up 150 pips on the EURUSD
you have no position remaining even though you were right in the long
position.
Unfortunately, it’s impossible to know how widely
spreads might spike during any given news release, NFP especially.
Traders generally want to investigate a minimum stop distance of 40 pips
or more, and even then quick volatility may make the position
vulnerable.
This is but another reason that trading in news
environments is so dangerous; but the potential rewards could be huge if
the trader can find themselves on the right side of the position, and
that’s what the slingshot is all about.
If the trader is able to navigate this terrain
without getting a stop hit, that’s where the slingshot comes in as
traders can scale out of profitable positions as prices may surge in
their favor.
The News Reversal
Trading reversals
is inherently dangerous in a normal environment; but when adding in the
additional risk around news announcements, it can make this type of
strategy very dangerous.
Strong money and risk management is a requirement
for success in these environments, because you’ll never be sure of which
reversals may follow-thru.
Like the Slingshot strategy, traders want to go into
the release with support and resistance levels identified. Then they
wait for the news.
In the immediate period following the news
announcement, the trader can watch prices to see if those longer-term
support or resistance levels come into play. And if they do, the trader
watches to try to get an idea as to whether or not those levels are
going to hold.
The News Reversal
Created with Marketscope/Trading Station II; prepared by James Stanley
Price action
can be of huge help here. Traders want to see support coming in to the
market at these longer-term levels before triggering a long position
with a stop below support. The key here is fitting in tightly so that if
the reversal doesn’t play out, the position is taken out quickly. But
if that support level does hold, the trader can begin scaling out once
the position starts moving in their favor in an effort to capture as
much upside as possible.
The ‘Use the News’ Long-Term Strategy
Non-Farm Payrolls can be a game changer. A big beat or miss can stop a trend dead in its tracks and create massive reversals.
But this doesn’t happen every month. In many cases,
enormous volatility is created around the announcement with perhaps some
slight follow-through thereafter; only to see trends resuming their
previous trajectory.
This can potentially be a huge opportunity for
longer-term traders to pick up or add positions at a much more favorable
price than they would have otherwise been able to. Let’s look at an
example for more clarity.
Let’s say that Joe is bearish on the EURUSD for whatever reason. Perhaps he’s just a really big USD bull, or maybe he’s a non-believer in the European Recovery. Whatever the reason, Joe knows he wants to get short EURUSD.
But after spending a month confined to a meager
range near long-term support, Joe hasn’t had a compelling entry
opportunity in the pair.
Joe can go into NFP looking to do some
bargain-hunting. He can look at his longer-term chart to establish some
resistance levels in which he’d like to sell if prices can make their
way up there.
The next step in the process is to wait for the news
to come out to see if prices can move up into this resistance zone so
that Joe can enact an order.
The ‘Use the News’ Long-Term Approach
Created with Marketscope/Trading Station II; prepared by James Stanley
Once price moves into resistance, Joe can begin
looking to sell with a stop above the resistance zone. Traders can look
at a shorter-term chart to look for price action indications of bullish or bearish reversal patterns to increase the potential effectiveness of the strategy.
--- Written by James Stanley
James is available on Twitter @JStanleyFX
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