It is a well-known fact: when big political, social, or financial news breaks, the market can go into an absolute frenzy. This is because there is typically a swift response to the news that has been released.
Now, this doesn’t always spell good news for traders or even the general public. However, if you know how to analyze the situation, you can actually create a lucrative trading opportunity for yourself. Here is how you can take advantage of significant market events with binary options trading:
Stay Up to Date
The most important thing here is that you always have a finger on the pulse. If you react too late, you will lose a great many opportunities. If you strike at the opportune moment, however, you are more likely to make a large profit. Now, you can’t absorb any old news.
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It is important to ensure that your sources are reliable and they too are tapped into what is going on. There are several information suppliers that you can depend on. This includes celebrated news sources such as Reuters and Bloomberg. At the same time, you should make a note of anything that might be taking place on the yearly economic calendar such as the non-farm payroll.
Understand What the News Means
Now, you are quite certain that the market is going to be affected by a specific turn of events. What you really need to know, however, is how this will affect the asset that you are interested in. Will your asset appreciate or depreciate in value?
This is what you will need to know to make sure that your trade ends up in the money. Let’s look at a couple of examples for further clarification. The Brexit was one such event. As many people were against Britain leaving the EU, the markets saw a considerable devaluation of the pound sterling. A similar thing can be seen for the few weeks leading up to the US presidential elections. Due to the uncertainty surrounding the events, the dollar tends to fall. If you can figure out what kind of impact the event will have, you will be able to make a profit.
Know Your Timeline
Even the biggest market events have a shelf life. It doesn’t matter how unexpected, how consequential, or how far reaching something may be. At one point or another, this news will no longer be interesting or relevant. As binary options trading relies heavily on time, it is up to you to decide just how long an event will be news worthy for.
This often depends on the asset that you are trading with. Imagine stocks, for instance. If a famous brand is going to be releasing a new product or service in the near future, you can expect their stock to skyrocket. Nonetheless, following this initial boost, the stock may fall later on. This could be due to certain flaws or problems experienced by the consumers.
Is It Right For You?
This method is not for the faint of heart and it is certainly not for beginners. This is because there are a lot of moving parts to contend with. Not only do you have to compile a considerable amount of research, you also have to know how to analyze it.
On top of that, you need to figure out the implications of your investigation and risk money on it as well. Last but not least, you also need to get your timing absolutely right. If you are not comfortable with any of these elements, it is best not to partake in such a venture.
This is how you can take advantage of significant market events. Although it may not be easy, it definitely could prove to be quite lucrative.