There are strategies that are based on the news. According to these strategies, a trader opens a deal before the issuance of news and waits for a momentum. In general, the interest rates binary options’ trading strategy belongs to this category too. However, it uses only one sort of news in its work that is the news on the interest rates.
Interest rates binary options trading strategy: description
The entire essence of this strategy consists in opening the deal before the publication of interest rates by the central banks. Therefore, this strategy can be used 7 times in a month. But this is compensated by the fact that this strategy is really profitable and works off its signals very well.
Seven largest world’s central banks, including the Federal Reserve System, European Central Bank, Bank of England, Bank of Canada, Bank of Japan, Reserve Bank of Australia, Reserve Bank of New Zealand, and Swiss National Bank, publish their interest rates during a month.
What can be expected after the publication of these interest rates? They can be raised, left unchanged, or decreased. The decision of the particular central bank is published once a month at the certain time, which is known to a trader beforehand thanks to the macroeconomic calendar. This is how the interest rates binary options trading strategy works.
As for the impact of this index on the currency market, everything is fairly simple here too. If the interest rate raises or stays the same, the currency’s price usually grows. If the interest rate is decreased, then the currency becomes cheaper too. That’s all. As you can see, nothing is complicated here.
Interest rates binary options trading strategy: trading signals
What are the signals sent by this strategy? All these trading signals don’t appear on a chart. And they are not needed in this case because trader’s attention is dedicated to the decision of the certain central bank regarding the interest rate. Of course, if a trader opens the deal before the issuance of the interest rate, he risks in some way.
But in the majority of cases, the interest rate in the current month is known beforehand. For this reason, risk of making the incorrect decision by a trader reduces substantially. On the other hand, the strong momentum appears in the market during the issuance of the interest rates, so a trader can earn on it really good.
Let’s look at the chart. We have intentionally marked the point of a time when the interest rates of the European Central Bank were issued, it has happened on Thursday, 05.12. 2013. As you can see, there was a growth in the market for the next few hours. For this reason, it is almost impossible not to earn using the interest rates binary options trading strategy. The fact that the European Central Bank did not change the interest rate allowed many traders to buy the Call option several times, so they’ve earned a fairly good profit.
If the interest rates are becoming lower in accordance with the decision of the certain central bank, then it is time for the Put option’s purchase. In this case, there is the possibility to earn on the descending movement.
Therefore, the interest rates binary options trading strategy turns out to be a good opportunity to earn a profit several times in a month. At the same time, this strategy is very simple and doesn’t require a trader to have any comprehensive knowledge, neither in the fundamental, nor in the technical analysis.