Usage of Economic Calendar in Binary Options
Trading necessities have certain considerations like trading markets which affect every trader based on the economic news which are released on a certain period of time. Whenever you want to trade using binary options anchored on a currency pair, it is important that you should consider this currency pair since it is represented by two diverse economies. This is where economic calendar comes to play. For instance, the EUR-USD pair, which is the most traded currency pair in the trading market, is also affected by the US and Eurozone economies which are very different. Hence, interpreting as well as analyzing the diverse economies is something that traders need to consider. This is to predict the movements of future prices caused by the changes in the currency pairs.
What Is Our Economic Calendar?
It is a systematic device that is primarily used by brokers or traders in every transaction they make in the trading market, be it commodities market, forex market, or the options market. It is a calendar of economic indicators that are made available to the market in a certain period of time. The full calendar of your trading month is presented to the traders through a variety of sources online. Most of these news releases have news events with high-impact results that create a marking on the volatility of the trading markets.
It is important that you should keep track of your trader’s calendar. Every trader must never ignore it because it provides an important update on the fundamental analysis of your trading system. It should be noted that a lot of the rallying and reversing events and market stopping are concentrated in your calendar. News events may include matters such as semiconductor sales, inflation, job creation, unemployment claims, and housing start-ups or sales. These news events can have greater impact on the individual stocks and the entire market in several ways.
It is also noteworthy that this calendar is easy to use. It can also easily interpret every data because it has clear guidelines on showing the history of the economic release, importance of the economic release, standard interpretation, currency that is going to be renewed or revised, and the time of release of the economic news. Traders or users of this calendar can go back in time and determine the data presented before. In this way, a plan can be organized and the trader can identify the possible weakness, growth, and trend in the market. Hence, economic calendar investing is imperative in trading.
There are tons of matters to search for when studying the economic calendar Forex. However, in binary options, the following comprise the checklist you should consider when using this particular calendar. First, there is the date that the trader is concerned with, as it is not only displaying the economic news events that are theoretically to be released in the near future. It also shows the previous economic news events. Hence, if the trader is concerned in finding a trend or what the old data was and he or she is considering any assessment, then you can choose the desired period.
Second, it is important to know the influential currency. Last, every trader must look at the previous economic news releases as well as the forecasted and actual values of those releases.
Using the Economic Calendar
The Economic calendar may differ when used in Forex or binary options. Thus, here’s how to use it when it is used for purposes of binary options. Any broker or trader who trades commodities or currencies should be capable of understanding the outcomes of the news releases. But, trading using the economic calendar is an ability on its own. If you are using technical analysis solely whenever you trade and normally rely on indicators, this calendar will display a ‘when not to trade’ option. The reason behind this is because the markets may momentarily display huge price fluctuations wherein there are no indicators that can be programmed to determine the results in advance.
Nevertheless, you may select an option for you to belong to a particular group of brokers or traders that can give more emphasis on these economic news releases. You can even capitalize on the resulting price actions if you want to. And as a binary option trader, it is highly recommended that you look at the currency live charts to determine occurring events which were shown before and after each news release. You will occasionally notice that there is a change in the price movements before the actual numbers are shown in the calendar. This may be due to temporary market uncertainties and investor speculations up until the information is essentially released. Likewise, you will also observe that more often than not, the currency pair will be in an oblique market for about 30 minutes before an important news economic release was shown.
Economic Calendar Indicators
There are several indicators being used by your economic calendar. An example is the GDP report. It lets the investors measure the status of the economy. It also allows them to adjust their expectations. Another indicator is the retail data. It enables the trader to show the turnover at retail suppliers and is capable of indicating the level of every consumer purchase.
There is also producer price index. It helps the trader gauge the supply and demand. The indicator can also show the pricing power of every company. Falling power prices would normally show that there is a weakened demand for industrial items. In addition to the list of indicators, the purchasing manager’s index is also one important indicator. Just like the GDP report, the purchasing manager’s index also measures the status of the economy.
Moreover, CPI inflation rate is also an indicator when using an economic calendar. Since inflation rate is normally shown in the context of monetary policy, CPI inflation rate indicator can be of great use. If the CPI is lower based on the monetary policy, there is a greater possibility that the equities in the stocks will rally. However, it would still depend on the communication released by the central bank.