Binary traders need several attributes to trade in profit. As binary trading requires a deep understanding of the markets, it is important to understand the impact news has on market movements. The periodic financial statement of companies, change of monetary policies, amendments of economic reforms and lot of other events can affect market movements.
Just understanding these technical indicators is not enough. It is necessary understand other aspects of the markets as well. Knowing about events that affect market movements gives a trader the confidence to best effect. The macroeconomic environment, as well as the general sentiment of traders, affects market movements and news is the best way to keep track of these movements and events.
What is an Economic Calendar?
The economic calendar is a periodic release of economic indicators that are published for the market. The list of indicators contained in the economic calendar is used by traders to inform their investments. These indicators, added to the anticipated calculations and previous period data gives the best prediction of market movements. In this way a trader maximizes profit from trade investments. However, not all events listed in an economic calendar have the same impact.
News Contained in an Economic Calendar
As we have already mentioned impact levels can be different. It is important to understand which events will make what impact on market prices. Based on their potential for volatility economic calendar events are divided into three categories.
These events are the basis of fundamental analysis and are the focus of investors. Around the globe millions of investors, speculators and traders closely monitor these indicators that can cause some of the biggest movements in the market. With such a high following rate these events hare highly volatile.
Depending on how you interpret the data these events can be profitable or cause severe losses. Interest Rates, GDP, Trade Balance Report, CPI and Retail Sales are all high impact events.
Marked in orange or yellow on an economic calendar these events occur much more frequently but have no substantial impact on market movement. There are some cases, however, where these events can be very profitable if data released indicates predictions well above or well-below forecast. If data like this takes traders by surprise it will trigger movement in the markets.
Marked in green on an economic calendar these events have no impact at all on market movements, in most cases.
Trading Binary Options Using the Economic Calendar
Understanding the data provided by the economic calendar can be of great advantage in binary trading. Understanding what impact a news release will have on the markets will make outcomes a lot more predictable.
The best way to use an economic calendar is to be aware of the exact time of the release of data. Start tracking the price of the underlying asset before the data release and if you are sure that the price of the asset will be impacted by the data release then wait for that data to be published. Observe whether there is any strong movement in the market in either direction. Based on the movement of the price and the analysis data a trader can use this information to his advantage.
Using this data for binary trading maximizes profits and reduces risks. Proper knowledge and understanding of the events that affect market movements will help you to make more accurate trading decisions.
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