News trading is one of the most popular strategies of binary options trading. Non-farm (Nonfarm Payrolls) is one of the strongest news of the economic calendar in the U.S. that allows you to bring if not the greatest, but easy and steady income.
In Forex, the strategies based on fundamental analysis, are able to generate income, but they belong rather to scalping strategies, because in the medium term, the market restores the previous position. Binary options with expiration term, for example, of 5 minutes are able to generate income on news factor, because here is the principle of trading to predict the direction of the trend. All the most important news are published in the economic calendar and marked by “badges” signifying their power. If you don’t consider yourself a professional, then we recommend you to pay attention only to those events, near which there is the “triple” marker.
The strongest market surge in the currency and the stock market is influenced by changes of interest rates by leading Central banks of the world. Then there are monthly reports on GDP, unemployment, level of employment in individual sectors, the consumer price index.
A few features of news trading:
- the opening of an option before the news is possible with expiry time after the publication of the report. Often report is published several minutes and is accompanied by a press release. Press release can expand quotes in the opposite direction, because the expiration time should be chosen as accurately as possible (depending on the type of news factor);
- before opening a position, be sure to check this factor as “Expectations”, which is also published on the economic calendar. For example, if investors expect U.S. GDP growth of 3%, and in the report in fact the growth is only 2%, despite the positive news, pullback of the US dollar is possible — you need to open Put option;
- focusing on a specific news, check is there is a simultaneous strong piece of news. Example, the change of the interest rate in the USA at the end of last year, had a less significant market impact than the change in the discount rate of the European Central Bank. The reason: investors realized that the fed just raise the rate and has laid idle in quotes. But the ECB’s decision came as a surprise.
Strategy of binary options trading on Non-farm news
Nonfarm Payrolls — employment report of the US population in non-agricultural sector. Reflects the economic processes taking place in the largest economy in the world and is considered one of the most important fundamental indicators. The report is published on the first Friday of each month at 16: 30 Moscow time.
Before the news release the market may be sluggish, whereas after the publication of the news immediately there is a burst of activity. The report is very clear: if the unemployment declines – everything is fine in the US economy, the growth is bad. Note that some reports are not so easy to treat – in the market, arises a situation when after the news the market becomes volatile, investors are unable to decide how to interpret the information.
Important: very often the first strong movement of the trend is short, and only the second subsequent movement may be the main one.
Simple and profitable strategy for binary options trading:
- we fix the price for a few minutes before the report is published. we do not enter the trade 60 minutes before news release because of the weakness and unpredictability of the market;
- a few minutes before the news release we customize the input data of binary option;
- after the publication, look at the market reaction, and determine the direction of the trend, buy a put option for 15 minutes.
The point is simple: if the report is negative, you need to sell, positive — buy. The main thing in this strategy is the reaction rate, because the news trading market is very impulsive.
Advice: on this news indicator it is recommended to trade only the classic options, which can be closed prematurely
Non-farm indicator refers to the strong ones, as the agricultural market refers to seasonal and greatly distorts the statistics. While the state of the labor market in production signals about changes in GDP. Moreover, the decline in unemployment along with GDP growth and slowing inflation suggests that the discount rate will soon be increased.