There are many traders out there who consider trading binary options by news events. For example, if the company reports a profit, then the price of that specific asset goes up. If a company reports a loss, then, the share price of the company goes down.
The truth is that if you trade assets based on news events, then it has its set of risks also. The reason is that you do not have a clear idea about how much the price of an asset will increase or decrease. You will also be unsure about how long the price movement will last.
However, you can increase your chances of success by making use of smart trading strategies.
Strategies to Use Based on Event Updates
Going for Candlestick formations
To understand Candlestick formation you first need to understand the concept of an asset price chart. This asset price chart looks quite similar to a line chart. It shows the price of an asset at each point of time.
When you look at the price chart of an asset over the month, then it shows you the closing price of an asset on each day. Let us move to the concept of Candlesticks now.
You get to see the Candlestick representation on the asset chart over a passage of time. When you look at the bottom of the Candlestick, then it shows the lowest price it reached in a certain time frame.
The upper part of the Candlestick is used to show the highest price it reached in a certain time frame. The Candlestick helps you see the price fluctuation within a certain time frame.
This means that Candlesticks can be quite helpful when you have to predict the price of an asset.
Using the Boundary Options
If you are sure that the price of an asset will move, but you are not sure about the direction, then you should try out boundary options.
For example, you expect news about a certain asset, but you are not sure whether the news will be positive or negative. When you make use of the boundary options, then it gives you a chance to define two target prices.
The differences between the two target prices are known as the price channel. If the price of your chosen asset easily hits any of the two target prices, then you win the trade. If the prices of the asset stay within the channel, then you end up losing the trade.
This strategy works quite well when you are sure that there will be significant movement in the price of the asset.
The best approach is that when you decide to try out the mentioned strategies, you should invest a small amount. This way you will not have to worry about massive financial losses coming your way.
When you want to indulge in news based trading, then you should try out all the strategies mentioned above and see what works best for you. This way you will be more confident when you place your trades.