Economic Calendar for Binary Options

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In the EU, financial products are offered by Binary Investments (Europe) Ltd., W Business Centre, Level 3, Triq Dun Karm, Birkirkara, BKR 9033, Malta, licensed and regulated as a Category 3 Investment Services provider by the Malta Financial Services Authority (licence no. IS/70156).

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Learning to use the Economic calendar in binary options trading

The economic calendar is a systematized resource in which to store information about the world news of the economy, finance, indicators of the movement of economic trends, data on events in the world’s largest markets. Also, as a rule, these sites contain a lot of statistical information, as well as many indexes and indicators that will be useful for each trader.

How to use the economic calendar

Any economic calendar carries in itself useful information that you need to learn how to apply correctly. But, in order to apply it, you first need to learn how to correctly filter these data for our needs.

In trading binary options, owning an economic calendar will quickly help you master the basics of trading knowledge with binary options.

To use it, you will need to learn how to segment information by date, country, level of importance, and other useful categories.

One of the most notorious strategies that have been used in trading binary options relate to forecasts of volatility. This is a very good thing that will help manage your risks even better. Now let’s talk about the news. Orient an unprepared person in the economic calendar will not be so easy. But everyone can learn.

On an example investing.com we will select the most important moments of orientation on an economic calendar:

– The most important news is highlighted by three special symbols. They symbolize the news with the highest level of volatility.

– News that do not carry a particular importance is highlighted with one special symbol.

– Each economic report is marked with “optimal values”, which is indicated when the data given correspond to the norm for the reported indicators.

– Comparison of expected and actual results. And also the comparison of data with the levels of historical highs and lows.

– Track economic reports and news for certain countries, they will affect the currency pairs that are of interest in trading binary options.

– The reaction of the market to this or that news will be a signal to the trader for binary options to open new positions.

There are different opinions about these news from traders by binary options and not only by them.

– In the first case, traders recommend to extract from such news a maximum, proceeding to trade based on the so-called newsfactor.

– In the second case, traders recommend waiting for a favorable environment, when the news factor will not affect the process of trading binary options.

Do not forget that you can not focus on the news factor fully, because there are many other factors that affect the binary options trade in general. The news factor has a high level of unpredictability and volatility. Rely only on it is not worth it.

The most valuable events in the economic calendar

These are the messages that provoke fluctuations in the exchange rate of 75-155 points within a short period of time. The rest of the news of the economic calendar does not have such a strong impact on the market.

Appointment of the head of the Central Bank

For each country, this event brings with it changes in the financial policy of the country. What they will be – all this will depend on the elected head and the vector in which he will implement political reforms. The interest rate is one of the key economic factors, which can be affected by the decision and policy of the new head of the central bank. The change in the interest rate level, as a rule, will immediately become known after the meeting of representatives of the Central Bank.

Press conference

At a press conference, the leaders of the Central Bank provide general information on the situation that has developed to date.

The minutes of the meeting of the CEOs of the Central Bank

This information gives the trader a better understanding of what is happening, after the Central Bank has solved the problems for a short term. In voyu turn, it gives an opportunity to understand in what direction a long-term solution will be made.

Changes in the interest rate level

This phenomenon occurs as a result of previous factors. Also, interest rates are influenced by GDP and other indices, which reflect the level of the economy in the country. The lower the interest rate level, the better the level of economy in the country is expected to be.

The rate of inflation

The level of inflation reflects the general welfare and general level of purchasing power of citizens of the country. The lower it is, the more valuable the money. This, in turn, does not allow the money to depreciate. The state also has its own advantage, since people can spend more money. Taxation only benefits from this.

Gross domestic product

It is the equivalent of all services and goods that are produced within a particular country in a certain period of time. The higher this indicator, the better the level of the economy in this country. Excessively large values ​​of this indicator can provoke a sharp drop in GDP.

Labor market

The labor market can have different values ​​from deficit to surplus. These two phenomena can be displayed both by employers and by workers. The state always strives to keep this market within certain limits. Since, lack of jobs as well as their excess can lead to not the best results.

What we have in the end

The news factor is actively used by a large number of traders. Many of them have learned to turn this factor into the secret of success in trading binary options. This factor can successfully diversify risks when trading binary options. And also, it is perfect as a comparator when applying certain trading schemes.

“General Risk Warning: Binary options trading carry a high level of risk and can result in the loss of all your funds.”

NOTE: This article/material is not an investment advice.

HOW TO USE THE ECONOMIC CALENDAR IN BINARY OPTIONS TRADING

The decision to trade a financial product comes because of either technical or fundamental analysis. Or, both.
While technical analysis deals with interpreting chart patterns or technical indicators, fundamental analysis consists of trading based on interpreting the economic news.
For this, the economic calendar is key. Consulting it should be part of every trader’s ritual.

The thing is that the economic calendar is for free. Simply go on the Internet and search for it. The information is the same and the interpretation similar.

How to Interpret the Economic Calendar

A binary options trader uses the same information when buying a call or an option, like any other trader. It doesn’t matter if you trade equities, gold, oil, indexes…the economic news part of the economic calendar will move the overall markets.

As such, traders must know what to look for in the economic calendar and how to interpret it. It all starts with the red events.

Find the Central Banks Meetings

The economic calendar comes with a color code. This code splits the news into three categories: red stands for very important ones, market-moving news, orange for 2nd tier data, and yellow for 3rd tier news.

From the start, you can scratch the yellow news. Focus only on the red ones. These are the ones that will make prices travel.

When trading, everything is about the interest rate. Namely, what the central bank will do next time it meets to set the monetary policy. As such, the first piece of economic data you’ll have to mark in the economic calendar is the central banks meeting dates.

These meetings have different names in different countries. In Australia, the RBA (Reserve Bank of Australia) interest rate decision is called the Cash Rate, in Eurozone is the Minimum Bid Rate, in the United States is the FOMC (Federal Open Market Committee) Meeting and so on.

Central banks meet regularly to set the monetary policy for the period ahead. Some major central banks meet monthly (RBA, Bank of England), and others meet every six weeks (ECB – European Central Bank, Federal Reserve in the United States), or even quarterly (SNB – Swiss National Bank).

From a trader’s point of view, these dates are crucial. Any economic news or piece of economic data in between these dates, allow for traders to have an educated guess about what the central bank will do next.

Focus on the Red Events

After the main central bank’s meetings are identified, traders focus on the red events. These economic news show how an economy changed between two central banks meetings.

As such, traders use them to form an idea about the next move in the central bank’s interest rate decision,

The economic calendar gives the time when the news is released (this is very important because trading algorithms are responsible for the huge spikes right at the top or bottom of the hour), the currency it refers, and the interpretation: why the news matters, why the traders care, and so on.

Moreover, the previous data is known in advance, together with an estimation or a forecasted value for the current data. And then the interpretation is made between how the actual differs from the forecast.

Look at What Matters

For all traders, no matter the financial product traded, interpreting news is the same. For any economy, simply search for the red events that show the changes in inflation (CPI), jobs data (actual numbers and the unemployment rate), GDP (Gross Domestic Product – the total value of goods and services an economy produces), retail sales, and the PMI’s (Purchasing Managers Index).

Next, look at their evolution when compared with the previous central bank’s meeting. If the general tendency is bullish, the chances are that the central bank will have a hawkish tone at the next meeting. Hence, this is bullish for the currency, economy, and so on.

If not, look for the opposite.

Conclusion

There’s plenty of information that can be obtained from the economic calendar. Binary options traders must understand that the market, in general, is highly dependent on this news.

We live in a time when humans follow robots in trading, as algorithmic trading dictates price action. As such, we must look at the same things as robots do, and interpret them on their own.

It is the only way to set the proper expiration date for your binary options.

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