Best way to trade binary options.
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How to Analyze Binary Options?
First, you choose an asset and start parsing it, that is, figuring out why the price is going up or down. This is done in order to determine its future fate. But when you invest in a
binary option, you are imposing additional conditions on the asset, so it is important to analyze binary options on the terms of the deal.One of the main conditions for a successful investment is to accurately predict the price changes in the future period. Consequently, a thorough analysis must be performed before making an investment.
Fundamental analysis.
Fundamental analysis of binary options is based on various events and economic factors, supply and demand analysis. Fundamental analysis is basically a long-term analysis, as important events do not last for 15 minutes and problems of a fundamental nature are not solved quickly either.
Fundamental analysis for binary options can still be useful, especially if it is not about the economy as a whole, but about specific companies.
For a company, fundamental events can include a change in management, a mass layoff of employees, and all sorts of financial statements. Every quarter, all companies on the stock exchange publish financial reports with data on profits and losses, production volume and inventories, debts and companies' plans for the future. With over a hundred companies in assets and at least 4-6 reports each, that's about 400-600 reports a year on which you can make money. If a company's report says profits are up, it increases investor interest and the stock starts to rise, and vice versa, if a company reduces production, it signals a future decline in profits and the stock falls.
Fundamental analysis helps to understand the main trend of the national currency, the general direction of the market.
For example, if you do a fundamental analysis of Apple, you can see that the company is constantly evolving, the company's revenues are growing, as are their shares.
Based on all of this, we can conclude that in the long term, Apple stock will only rise. But from the technical analysis, we can see that sometimes Apple stock falls for a number of reasons. For example, falling sales in anticipation of new products or the impact of the U.S. currency.
You need to understand for how long to buy an option.
If the event is general in nature, like long-term growth, invest for longer periods. If the event is of a daily nature, invest for a couple of hours or a day. For example, the start of sales of an expected product, for which there are queues, is always conditioned on an increase in the price of the asset on that day.
In addition, these products do not appear on the same day all over the world, but on different days, for example the start of sales in America on the 12th, in Europe on the 17th, in Russia on the 21st. Thus, you only need to keep track of new products and know the start dates of their sales. Given the large number of binary options assets and news on them, this is not difficult at all.
Economic calendar.
The economic calendar will be especially useful for investors who conduct technical or fundamental analysis of underlying assets.
A binary options trading strategy can also be based on the economic calendar. The economic calendar is an interactive table containing data on the exact time of publication of significant macroeconomic news. It is updated online, which allows the trader always to keep abreast of the latest events. As a rule, the economic calendar is made for the working week, i.e. from Monday to Friday. The indicators of the coming week are usually published on Fridays. Thanks to this schedule, the trader can think how to trade during the next week, taking into account the received information. The calendar publishes news for different periods: month, year, and quarter.
The longer the period, the more important the news can have on the market. At first, the calendar reflects only previous indicators and macroeconomic forecasts for the future. Then, when the news is officially released, the actual value appears. At that moment, currency quotes change most rapidly. A high level of volatility of quotes can also be observed during speeches of heads of central banks or their meetings. These events are always reflected in the economic calendar. Thus, for traders, trading the news, the economic calendar is the first assistant. It is necessary to say that not only economical news influences the market. The psychological factor also plays an important role. The fact is that millions of traders around the world use the economic calendar. Among them there are market makers - players who have large sums of money. Of course, they are aware of how the market may react to this or that news. As a result, a huge number of orders will be opened in the same direction, even though the news itself is not that significant. Virtually all of the indicators on the economic calendar affect the market in one way or another.
For example, as a country's GDP rises, currency quotations will rise, and as inflation or the unemployment rate rises, currency begins to depreciate. But some news can have different effects on the market. For example, a country's central bank increases its discount rate in order to cope with inflation. In response there may be a strengthening of the national currency, although credit becomes more expensive and the attractiveness of the country for investors decreases. If you only use technical analysis in your work, the economic calendar will still come in handy. When an indicator or economic news is very different from previous/future values, quotes can change in spite of technical laws.
Trading the news is considered not a very risky tactic, so it is successfully used by professional traders. Let's see how the Forex calendar is used in practice.
To make it easier to work, you can use this sequence of actions:
Studying the calendar for several days ahead and identifying events that can change the market situation. A selection of currency pairs that can be linked to upcoming events. Monitoring the movement of the selected currency over a period of time. Search and study other trading signals. Tracking when news is published in the calendar online. Opening a deal in the desired direction after the release and analysis of fundam.
Technical analysis.
Technical analysis of binary options is based only on the price chart of the asset, on the history of its past price changes. Thus, you can see the history of price changes and trends on the chart. Through years of studying the charts, analysts have begun to find common patterns. Because of this, technical analysis in binary options has become really important and can affect the price of an asset. Technical analysis is most important for the most liquid assets like currencies.
Be careful when analyzing an asset.
If you are investing for the short term, you should open a chart for the near term.. If you are investing for a couple of days, you should open a chart for the last week, as events earlier in the day may not have a significant impact on the current direction.
Technical analysis can also be performed on price charts.For this purpose, charts and price history of an asset are used.
