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Fundamental analysis is the number one way to turn knowledge into profits. It is the process of determining the true value of tradable assets by examining the real world factors that affect companies, industries, indices and economies. These can be company earnings reports, speeches by head of central banks or economic data releases and so on.

 

Economic Indicators

Whenever European Central Bank President Mario Draghi speaks, you’ll usually see immediate movement on the US Dollar or the Euro. Actually, central bank chief speeches are excellent opportunities for binary options traders. If you know that the Euro is trading too high, making Europe’s exports too expensive for other countries to buy, you can be sure that Dragi’s next speech would dampen optimism. You will actually be able to see the Euro drop with every word he says.

 

Non-farm Payroll

The monthly American non-payroll report or NFP is one of the biggest trading dates in binary options. Excluding farms and government workers, it is a measure of how many new jobs have been added or lost since the last report. Better than expected results show that more US companies are hiring, more people have salaries to spend on other goods and services. Obviously, a positive NFP leads to greater optimism in the US economy and the dollar gets stronger. Some events hit the market harder than others. Be patient and place your binary trades only when a price movement is both predictable and significant.

 

When you should trade?

Few moments before an important data release, it is ideal to a Call and a Put option on the affected asset. One of the two is going to be out of the money. However, the one that is in-the-money will be in at the perfect strike price. You double up on that trade and you’re guaranteed to win two trades out of three.

 

So how do you multiply your returns?

Let’s take us building permits as an example. If the building permits issued this month are higher than the ones issued last month then expect that the US Dollar will go up in value. If this happens, we know because it is inversely co-related with gold, that gold will go down. Based on this we know that we can place two trades on just one event.

With 24-hour global news and economic data releases every day, fundamental analysis should be the keystone of your binary options trading strategy. Stay informed, make the connections and strike quickly.
 

 

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