Regardless of where you obtain your stock market trends from, most traders and investors often wind up carefully watching news channels and browsing through the evening news bulletins for updates. Trading binary options using news releases hinges entirely on how the stock market fluctuates as per global trends, as relayed by news agencies.
The stock market is open to all interested in trading and investing. When an individual makes the decision to trade currencies or stocks based on international politics and news releases, they may wait for a specific time period to pass before deciding to purchase stocks.
The stock market is inherently of a sensitive nature. Going ahead with trading methods, such as the binary options trading process, opens up any buyer to potential risk. When events with potentially global implications are being covered by news agencies, buyers and investors keep watchful eyes on stock market trends. When economically-catastrophic events are forecasted to take place, stock markets usually experience heavy fluctuations and currencies in developing counties take a major hit in terms of devaluation.
As in the case of the June 2016 Brexit referendum, the British Pound dropped to the lowest it had against the Dollar in over three decades. Following the announcement of Donald J Trump being voted as President-elect on Tuesday morning, the Dow Industrial Jones average plummeted by 200 points, and several global currencies faced devaluations.
Rumors often have as much weight in buying stocks as actual news does. A popular phrase, “buy on the rumor, sell on the news” more or less confirms this. Forecasts and predictions do not always necessarily mean a hike in stocks; positive rumors may allow brokers and investors to lay out hopeful structures. When the rumor rings true, the stock may experience the slightest of dips. Just the same, rumors can also drive up stock prices. The way headlines are phrased and delivered greatly impact stock quotes and trading.
Buyers often keep careful watch over international trends to ascertain when is the correct time to buy stocks, usually via Forex. The more experienced brokers understand how to navigate volatile binary markets. However, the inexperienced buyers may find themselves being baited by appealing payout structures; they often end up on the nil side of the “all or nothing” end results of binary trading.
Trading Binary Options
A payout structure refers to the projected financial return on any investment in the market. These may be represented as percentages of the original investment amount, or as direct Dollar amounts. Payout structures are dependent on time brackets, and how valuable certain investments may be in particular time frames.
When trading news releases, time becomes key. Brokers may pull out, or go all in, depending on economic forecasts available through news releases. When the market is particularly volatile and unpredictable, brokers may choose to wait out until certain events occur; as in the case of global wars, referendums, or elections, majority of the stock market activity takes place in the stages during and immediately after the event takes place.
Trading binary options revolves around a concept of “all or nothing”, often leading inexperienced and shaky buyers to lose everything during times when the market is under high duress.
Trading binary options also takes place in a limited period of time, concentrating on the underlying value of the assets. The more seasoned brokers may project extreme payout structures to bait these buyers into bad investments. The experienced buyers themselves maneuver around unstable markets by making a retracement ratio of price.
A retracement ratio is produced by taking two major points on a stocks chart and then dividing the vertical distance by the key Fibonacci ratios.
Practiced brokers pay close attention to candlestick chart analysis when dealing with binary options trading and volatile markets. This analysis dates back centuries, when a man in Japan deduced that the correlation between the supply and demand of rice was dependent on the fluctuating emotions of the traders. Today, brokers use the same principle of assessing global sentiment and emotion when buying assets. Fear, panic, and optimism can all change the way the charts shape up during such times. Candlestick charts today inform investors whether a closing price was higher or lower than the opening price on a stock.
Trading binary options may whittle down to being a waiting game. Brokers wait for the long bearish candle closing. The closing price is valued as a temporary support zone. If the support zone holds after two more candle closings, the investors can make the decision to trade. This method hinges on not only the Fibonacci retracement ratios coasting around 50% of the retracement level, but also candlestick charts, cautious waiting, and a confirmation of the average hourly movement of the currency pairs exceeded at least 200 pips.
Variables to consider with Binary Options Trading
For a novice entering the world of binary options trading, a few key factors to consider are a must.
Newcomers are advised to only make trade decisions on actual news releases, and not rumors, press conferences, or rhetoric. It makes the market slightly easier to navigate. In case of an extreme stock reaction with prices going against them, traders are advised to not panic. It is wise to manage investment money and stop-losses beforehand; for new traders, the stop-loss percentages should be placed as far back as possible to allow more breathing room.
It is additionally recommended to keep a close watch on particularly volatile news reports. These include the NFP payrolls, retail sales, inflation reports, war, natural disasters, and politics.
It is also crucial to make a careful decision when choosing a currency pair. Choosing pairs with the most liquidity and fallback flexibility inevitably helps. EUR/USD, GBP/USD, USD/JPY, and AUD/USD are a few such reassuring pairs.