You will learn about the following concepts
- The number one asset class
- Importance of news in currency trading
- News related to GDP numbers, interest rates
The number one asset class
Binary options are a simpler and more flexible variation of Forex trading. When talking about binary options trading, it is inevitable to say that the most popular asset class among traders is certainly currency pairs. Statistics show that currency trading is responsible for a major fraction of the trading volume generated by binary option traders, so it should not come as a surprise that most novice traders start their careers by trading the most popular currency pairs.
In this part of our tutorial you’ll get familiar with 6 of the most popular currency pairs, namely the EUR/USD, USD/JPY, USD/CHF, GBP/USD, AUD/USD and USD/CAD currency pairs. You’ll learn how each currency pair is influenced by news and you’ll also learn which technical tools will help you gain the most valuable information about each pair.
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Trading currency pairs by using binary options is not difficult at all, as long as you have some basic understanding of technical and fundamental analysis. Thanks to these two lines of study, traders can spot signals that help them to predict the price movement of a specific currency pair. Keep in mind that despite the fact that there are over 30 currency pairs available, most traders only stick to a maximum of 3-5 crosses to achieve the best possible performance. We recommend you to do so as well, because this way it is much easier to track signals and perform thorough fundamental and technical analysis on each pair.
Although technical analysis is preferred by many traders, fundamental factors have a major impact on specific currency pairs to an extent that pure technicians often abstain from trading during days when crucial economic data, especially from the US, are due to be released. Keep in mind that some news don’t have an impact on currency pairs at all, while others influence can send waves through the the global financial markets. Some of the most important news that traders should follow are:
- Unemployment Data
- GDP Numbers
- Retail Sales
- Inflation Reports
- Central Banks Interest Rate Decisions
- Manufacturing and Services Purchasing Managers Indexes
- Housing Data
- Consumer Confidence Reports
- and others
Keep in mind that trading with the help of news can be risky, especially if you are using the services of an unreliable broker. Some brokers temporary block specific currency pairs when they see that the latest news may have a major impact on their price.
Currency pairs trading is a great way to become better at binary options trading. However, don’t forget that in order to develop your skills and improve your knowledge, you will need to keep investing time in reading literature on the matter, analyze strategies and learn how to take full advantage of the technical tools. Also, as you become a more advanced trader, depending on the data you receive through technical and fundamental analysis analysis, you will begin to use more complicated binary options to adapt to the changing market conditions – for example, in some cases using the touch/no-touch options instead of the regular call/put instruments.