Binary Options News Trading Strategy
The binary options news trading strategy is a popular approach that can be applied to forex, commodities, stocks and crypto assets. While there are no proven “best strategies”, this system has been around for many years, using public announcements and real-world events to inform investment decisions. This guide will review the tactics behind the binary options news trading strategy and explore how to optimise your accuracy, make the most of signals and apply risk management tools.
Use our list of the top binary options brokers below to get started with a news trading plan.
Best Binary Options Brokers For News Trading
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Established in 2017, Pocket Option is a binary options broker offering high/low contracts on forex, stocks, indices, commodities and cryptocurrencies. With over 100,000 active users and a global reach, the platform continues to prove popular with budding traders.
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IQCent is an offshore binary options and CFD broker based in the Marshall Islands. The brand continues to offer a range of unique account types with bonuses and perks, including payout boosts, TradeBacks and free rollovers. With 100+ assets, around-the-clock trading and 98% payouts, the firm is popular with aspiring short-term traders.
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CloseOption is a Georgia-headquartered broker with over a decade in the trading industry. The brand offers high/low binary options trading on forex and crypto markets, with decent payouts, welcome bonuses, 24/7 customer support and intuitive trading software.
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Grand Capital is a MetaTrader broker with welcome bonuses, trading competitions and an intuitive copy trading service. Several account types and 400+ assets provide trading opportunities for various types of investors and strategies. New users can also open an account and start trading in a matter of minutes.
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Dukascopy is an online broker operated by a Swiss-regulated banking group. It offers a good selection of 500+ markets, with forex, stocks, gold, ETFs, indices, bonds and cryptocurrencies available. It also offers flexible trading opportunities through the choice of CFDs or binary options. Traders will use MetaTrader 4 or a proprietary platform that is well-suited to automated trading.
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Launched in 2017, Videforex offers access to stock, index, crypto, forex and commodities markets via binary options and CFDs. The proprietary platform, mobile app and integrated copy trading are user-friendly and will suit new and casual traders, and the market analysis tools and trading contests provide good ways to improve your trading skills.
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Focus Option is an offshore broker that specializes in binary options as well as CFDs. Binary options trading on forex, cryptos and three commodities is done through the broker's simple web-based platform with average payouts between 70% and 95%. The broker also offers a mobile app for trading CFDs, with 300+ tradeable instruments.
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RaceOption is a binary options broker operating from the Marshall Islands. With over 1,500 clients, the broker aims to offer fast funding, low fees and a secure trading environment. Traders can access over 100 binary options and CFDs, plus copy trading and weekly prizes.
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BinaryCent is an unregulated binary options broker that offers 24/7 trading on forex, cryptos and stocks with payouts up to 95%. Despite its lack of regulation, this broker takes client security seriously and stores client funds in European banks. The broker also offers CFDs with very high leverage up to 1:500.
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World Forex is an offshore broker registered in St Vincent and the Grenadines, offering commission-free trading with a $1 minimum deposit and 1:1000 leverage. Digital contracts are also available, offering beginners a straightforward way to speculate on popular financial markets.
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AZAforex is a multi-asset broker founded in 2016. The brand offers a sophisticated proprietary platform, ECN trading and 40+ deposit methods. The brokerage has 120,000+ registered customers with copy trading and a VPS.
What Is The Binary Options News Trading Strategy?
The binary options news trading strategy is an investment system that aims to take advantage of opportunities that arise in an underlying market when relevant data, publications or information is released. By definition, a news trader is an investor who makes trading decisions by following significant broadcast statements. For example, an announced change in a country’s interest rates will often cause a surge in volume and a notable trend in that currency’s value.
In particular, the best trading times for the binary options news trading strategy tend to be when the market is still highly reactant to the latest announcements. This may be straight after a release or moments before the expected forum. For beginners, this hack can work as a simplified version of often complex binary options strategies with no need for technical analysis. This means no difficult installation of online indicators, complicated stats and metrics, or advanced chart reading requirements.
Evidence also shows that results can be just as profitable as using other winning signals and indicators, such as Heiken-Ashi candlesticks, the zig-zag indicator or the Martingale strategy.
How Does It Work?
The binary options news trading strategy involves investors making somewhat well-versed decisions on the market movements that are likely to occur before or after the news announcement. This means opening or closing a binary options contract to react to the predicted price trend changes.
Supply and demand can often influence the price of an underlying asset and following this can bring an understanding of whether the news was as good or bad as anticipated. Often the numbers show that the price of an underlying asset will rise in reaction to good news and fall in reaction to bad news. Simply explained:
- If you anticipate bad news is going to be published, you may go short before the live publication to profit from a price drop
- If you know positive key figures are due to be released or a good news story is going to be made, you may invest in rising prices before the publication
Types Of News
In practice, there are two types of news categories, scheduled and unexpected. Examples include:
- Scheduled: An announcement that happens after a set period, such as quarterly company performance results, interest rate changes from the Bank of England or governmental changes
- Unexpected: Often occurring suddenly without any real anticipation, such as the global Coronavirus outbreak in 2020 or a natural disaster
The type of announcement will impact an investor’s anticipation or reaction to an event and, therefore, the type of binary options news trading strategies to execute. As scheduled announcements are expected, they can be tracked much more easily and risk management tactics can be applied. On the other hand, unforeseen events can throw traders into fight or flight mode following the initial publication. It can be much more difficult to speculate with these events and stories as it is unclear whether the market shifts are here for the long or short term.
How To Use The Binary Options News Trading Strategy
Our experts have trialled and developed a simple binary options news trading strategy to help you get started:
- Open A Binary Options Account: First, find a suitable binary options broker and open a live trading account. The best choices for this strategy will offer integrated live news streams, competitive payouts, advanced analysis tools and real-time price quotes.
- Track An Event Or Story: Follow the upcoming story, announcement or market noise. Economic calendars are particularly useful here as you can filter information directly related to the asset in question, such as a FTSE-listed stock. It is worth checking this daily or more frequently if an announcement is anticipated.
- Identify A Trend: Use the latest price action figures to determine whether interest in an asset has increased or decreased. Use graphs and charts to view this in a simplified visual form. You can quickly identify price swings if investors have already started reacting to an imminent event.
- Combine Analysis: Consider adding technical analysis to your fundamental trend hunch. This can confirm a trade opportunity and provide additional evidence. Some binary options news trading strategies can also provide important support and resistance levels that can be used as stop-loss targets.
- Open A Trade: Once you have established a trade idea, it is time to enter the market. Remember to choose an appropriate expiry time identified using the binary options news trading strategy and make use of risk and money management tools, meaning you do not lose more than you can afford.
Remember, you can place trades before, during or after the news announcement with the binary options news trading strategy. Purchasing binary contracts before a news publication is brave but, if you are correct, you will earn a lot more from it.
Positions made during a current affairs event are very practical as you can make use of accurate figures as they change. Placing trades after a news release is an interesting concept often used by those with longer-term goals. This is because you will have ridden out the initial shift until a clearer trend is established.
Comparing Binary Options News Trading Brokers
One of the key aspects of a successful investor is using the right brokerage. When we used the binary options news trading strategy, we found the considerations below to be some of the most important.
Trend Tools
The best firms for the news trading approach will provide access to live price reports with daily updates. The top binary options brokers will also host webinars, live streams and analysis sessions from professional investors and analysts. It is also worth looking out for software that can support your investing strategy. This can include robots or signals.
There are many paid or free indicators and algorithm-based bots available to download directly from the internet. Alternatively, the News Trader Expert Advisor (EA) integrated into the MT4 platform enables investors to discover opportunities following macroeconomic releases.
Demo Account
The best platforms will also provide a virtual trading environment in which to practise the binary options news trading strategy. It will be important that these binary options demo accounts provide live market data, so you can determine positions whilst live events occur. You can also practise investing with signals, platforms and tools, learning what works best for your goals.
Fees & Payouts
Return on investment is important when following a binary options news trading strategy. You need to ensure as much profit is retained when a successful position is made, as a reward for the risk you took. For example, Quotex offers generous payouts of up to 100% on some assets.
Education
Whether you are a new or experienced investor, access to resources with which to finesse your binary options news trading strategy will be a great help. These can include integrated YouTube video content, quiz games, e-books, tutorials and quiz games.
You may also want to document successes, strategy updates and errors using an excel spreadsheet or journal, so you have something to refer back to when trading in a live environment.
Binary Options News Trading Strategies
The critical points of a binary options news trading strategy are the entry and exit points. That is to say where the put or call investments are opened and the expiry timeframe. For most investors, the entry signal can immediately follow the event, though some may want to wait to see the impact of the announcement on the market.
Straddle Strategy
A popular tactic with the binary options news trading strategy is the ’straddle’ technique. This involves buying and selling positions at the same time. The approach is typically used when an investor predicts a market move but is unclear on the direction.
For example, an investor could speculate on the FSTE 100 index following a Bank of England announcement in both directions at the same time, aiming to profit from one and absorb the losses from the other. The end goal is to outweigh the losing investment with the profits from the successful trade.
Pinocchio Strategy
The Pinocchio approach to binary options news trading comprises intentionally speculating against a current trend. For example, if the share price of company A increased as a result of the publication of positive Q4 results, you would purchase a short/low binary options contract expecting the price to drop.
Of course, it gets tricky when deciding on expiry times as it is hard to know when the initial rise or fall will reverse. Thorough research of historical trends based on previous publications is important to make this work, particularly when opting for a 1-minute, 15-minute or 30-minute contract term.
Breakout Strategy
A breakout is a sudden directional move of price caused by heightened volatility and increased market participation. If the price of an underlying security breaks the support or resistance level, it indicates a breakout in the market. At this point, investors wanting to benefit from the breakout binary options news trading strategy would open a position following the trend. If there is enough momentum for the breakout, your position would expire in the money. We recommend sense-checking the data before executing a position as a false breakout is a real possibility.
This strategy works best when used with news events that are anticipated to generate a predictable price movement of the underlying asset. For example, a currency pair including the GBP may significantly decrease in value on the back of an announcement of governmental failure.
Benefits Of Binary Options News Trading Strategies
- Multiple events are scheduled spanning various instruments and instruments
- Lots of resources, ideas and discussions leading up to an announcement
- Can plan your binary options news trading strategy in the lead-up
- No advanced technical analysis required
- Easy to understand for beginners
- Often significant price impacts
Risks Of Binary Options News Trading Strategies
- Payouts may be reduced during scheduled events
- Understanding of underlying markets required
- There is lots of news to stay abreast of
- Reactions often need to be quick
- False breakouts are common
Top Trading Tips
Signals
Many successful investors implementing the binary options news trading strategy will make use of automated signals that can help make decisions on whether to enter or exit a position. These may be integrated within proprietary software or accessed via third-party packages often with a free download. Pocket Option, for example, offers free signals by way of the MetaTrader 5 (MT5) platform.
Remember, while algorithms and auto tools are excellent methods of improving efficiency and accuracy in your binary options news strategy, they do not guarantee success. It is worth backtesting signals and strategies before applying these findings to your live trading profile.
Be Active On Social Media
Social media channels can be a great help when trading the news using binary options contracts. Many platforms offer direct access to live news streams as they happen. Look out for profiles that provide stock and forex market insights and tactics that you can add to your investing plan.
Awareness
The binary options news trading strategy requires investors to have a finger on the pulse at all times to succeed. Some prefer to look at pictures, diagrams, social media posts or even full articles. However, being able to digest the latest news coherently is key, so find something that works for you.
The TradingView platform offers a comprehensive live ‘news flow’ page, with posts of market snapshots as they happen in real-time. Alternatively, the server hosts market news ‘snaps’ created for time-conscious investors. It summarises the latest daily stock and cryptocurrency news into digestible snippets.
Money Management
It is also important to learn when enough is enough. The news is unpredictable and often an image of how you think a trade will pan out is not the case. An initial display of market movement following an announcement can quickly disappear as things begin to settle. While using the binary options news trading approach, we found that 2% could be invested in each position to balance risk and reward.
So, consider all outcomes, trade strategically and stop when you hit a pre-defined maximum risk.
Bottom Line On Binary Options News Trading
The binary options news trading strategy is an interesting concept that can provide some exciting investment opportunities. To succeed, you will need access to live news feeds and integrated economic calendars to keep on top of events. Look out for a binary options broker that provides a stable platform and supports signals, bots, indicators and customisable charts to boost your chances of profits and gains.
FAQ
What Is The Binary Options News Trading Strategy?
The binary options news trading system takes advantage of price movements that arise following data publications or news announcements, such as a new product release or a rise in interest rates. Binary investors can hedge bets that the price of an asset will either rise or fall following a scheduled or unexpected event.
With Which Brokers Can I Use The Binary Options News Trading Strategy?
You can use the binary options news trading strategy with almost any broker that offers binary options contracts. To be successful, you should look out for integrated live news streams, an economic calendar and comprehensive educational resources. Pocket Option and Quotex are two highly rated brokers.
Is The Binary Options News Trading Strategy Safe?
No investment strategy is 100% safe, as profits are never guaranteed. Reactions to news events and publications can differ significantly from the anticipated market shifts, so never risk more than you can afford to lose. Beginners should make sure they have a plan for binary options money management.
How Can I Stay Up To Date With The News When Executing A Binary Options News Trading Strategy?
Social media channels such as Twitter provide access to live news streams. Many of the top binary options brokers also provide running news commentary and integrated economic calendars so you can stay up to speed.
Is The Binary Options News Trading Strategy Suitable For Beginners?
The news trading approach can be simple in some markets and complex in others. While it can be difficult to keep on top of all the news surrounding an asset, binary options beginners can still make an impact using the strategy.