The economic calendar is an important tool in the binary options market. It helps an investor to identify trading opportunities, provide information about the right times to trade or how to adjust trades. The news events that are provided by the economic calendar follow a specific schedule to enable all investors to benefit. The calendar is regularly updated to capture recent economic events which have an impact on the market. The release of key figures might cause the market to become volatile which affects a trader’s decisions. When trading with the economic calendar, a trader must take note of the schedule, the impact grade and the forecast.
The Economic Calendar Features
The economic calendar has various features which are very useful to the investor. These features assists an investor in making decisions about binary options trades. These features include:
There is a column in the economic calendar that shows a trader when a news event will occur. The time is generally given using the GMT zone but can easily be changed to a trader’s local time zone.
It shows the amount of time left before an event starts or if the event is finished already.
It shows which event is planned for release and in which country the event will take place. Examples of such events include policy meetings, industry activity indexes and many more. These events do have an effect on the commodities, stocks and even indices.
This refers to how a market event is significant to an investor or trader. There are four significance levels: High, Low, Medium and None. An event that is more important has a higher impact on the markets.
This is a section on the economic calendar that provides the latest historical results of an event. This provides an opportunity for one to make comparisons between previous results and the latest trends to make predictions or projections about the direction of the industry.
The main point for why the release of the dates and times of news events is planned in advance is to inform all investors to expect the releases so that they can plan their trades in relation to the dates provided. The GMT is the standard time zone used in the economic calendar. A trader can select his/her local time zone using the drop down menu at the top of the calendar. The schedule of the economic calendar highly influences the time an investor will trade. This therefore shows how the economic calendar is important in the binary options market as it determines the time in which trades are placed.
Trading with the Economic Calendar
When trading with the economic calendar, a trader should take note of 3 elements that are important. These elements include:
The Impact Grade
The impact grade helps an investor to choose a trade by determining what is worth and what not worth to trade. Most investors will only trade when the news items are high impact ones. The high impact news items have the capability of creating market movements and shifts. This makes it easier for a trader to predict the outcome of certain trades.
The variation between the real outcomes of a news announcement from the projected one is the reason that brings about volatility which makes the news item either be tradable or non-tradable. A greater variation brings about greater movements or shifts to the currency or asset in question. This makes the news item more tradable and thus useful to the trader or investor. There are also some type of news releases which have an impact on, not only one, but many markets. For instance, a news item related to crude oil will have an impact on the crude oil price and also on currency pairs and stocks of companies which trade and produce that asset. Trading robots will take news into account before executing.
How the Economic Calendar Influences Trade
Investors use the economic calendar by comparing current figures with those of the previous period and also factoring on analysts estimations. These enables the investor to know whether the new data exceeds expectations or is disappointing. This knowledge will determine whether the investor will trade in the market or not.
Political news and economic announcements might lead to a change in the direction of specific currency pair. The use of an economic calendar will enable an investor to detect a possible change in the market faster and to act promptly than other traders in the market.
The trader should be able to tell if a news release is able to trigger some form of volatility in the market or if it will be high. The trader’s position or placement of protective stops will determine his/her response to the news announcements. By using a broker like IQ Option, you will help. This is the reason why leading indicators are significant in the decision making process.
In conclusion, it should be said that the economic calendar greatly influences trades in the binary options market. It is a necessary tool for every trader or investor in the binary options market. It controls the way the market behaves and this is important for the trader because it determines how he/she will trade in the market. An investor or trader who does not use the economic calendar can be compared to a traveller without a map.