For every global stock, commodity or index, there is a world of information available.
As a trader, you can follow the price changes of your chosen asset moment
by moment, and even research past trends on any given date. With so much
information available for every single asset, it can be challenging to keep on top of all
that data. The best strategy for every trader is to choose which specific assets you
want to follow, and then spend some time getting to know the ins and outs of these
Your first important tool is your economic calendar, which will offer you important
information to help you understand your assets. Every day, companies and
governments report important economic data. This could be an earnings report, a
plan to expand, a statement on interest rates. This is the information you need to
understand how your chosen assets will respond to changes in global markets.
Commodities, Currencies, Stocks and Indices
There are four basic classes of assets available for trading in binary options. Those
include commodities, currencies, stocks and indices. For each class, economic data
and reports will help indicate which direction the price of each asset is heading.
If a company is publically owned, it is required to publish quarterly reports indicating
the specifics of its profits, dividends and revenues. These numbers offer the best up-
to-the-minute portrait of the value of the company’s stock.
Good traders watch dividend reports closely to see if it is staying flat, rising or falling.
If a dividend report shows that a company is expecting to see strong growth and
high profits, that company’s stock is likely to rise in price, making it a good bet for a
profitable binary options trade. It is not a guarantee, but it is a good assumption.
If a dividend is staying stagnant for a long period of time, it is usually a poor sign
of long term growth. Strong sales may mean strong public support for a specific
company. A falling dividend is a bad sign of the financial health of the company. Even
worse is a report of eliminating dividends. All this information not only gives you hints
about how to trade on this company’s stocks, but it also gives you clues about its
Understanding market trends can also help you make good trading decisions about
commodities. When economies and companies grow, they have a higher demand for
certain commodities, which leads to rising prices. This can also mean higher volume
on certain indices.
Of course, a close eye on global headlines will also help you understand trends in the
relative value of global currencies.
The most successful traders know when the companies and governments they
are following are set to release their economic data, and they keep an up-to-date
economic calendar. They anticipate what they will do given the different possible
information that may be released. With binary options, it is possible to profit whether
the value of an asset is rising or falling.
The Economic Calendar
Here is some of the key economic data you will want to keep a close eye on:
Gross Domestic Product (GDP). This is usually what people think of
when they think of the health of an economy. GDP measures all aspects of
economic activity, both public and private. If GDP is falling, it is a strong sign
of economic trouble ahead.
The Consumer Price Index, or CPI. This index is the price of a grouping
of average consumer goods. Every country has a list of which goods are
included in their CPI, and issues a current report every quarter. If a CPI
goes up, it could signal inflation. If the CPI goes down a little in value, it could
indicate either economic stability or perhaps weaker consumer spending and
an economic downturn, depending on the size of the drop.
Factory Orders. These are orders for certain manufactured goods. If
the numbers are going up, it’s a sign of a healthy demand and a healthy
business. If the country where the company is located is in recession a rise in
factory orders could signal that it is emerging from the recession.
Housing Starts. This is one of the leading economic indicators around the
world. You should examine this alongside current demographic data to get a
clear picture of the trend, but strong housing starts mean a strong economy.
Job Creation, both private and public sector. When jobs are created in
the private sector, it is a good indication of a healthy economy. Public sector
jobs are less of an indication of economic health as the jobs are seen as less
productive in an economic sense.
Non-Farm Payroll or Employment. An increase in non-farm employment
(or non-seasonal employment) is a strong sign of a strengthening economy.
Seasonal employment is seen as less of an indicator because it can fluctuate
more rapidly than non-seasonal employment.
Consumer Confidence. Consumers are the life blood of any economy.
If people do not have jobs and are not spending money, their country’s
economy is in trouble. If they are showing confidence in their economy and
spending their money, it is a sign of strong economic health.
These are just some of the economic data you should be keeping an eye on in order
to maximize your profits from your binary options trades. Binary options are a great
way to take advantage of some of the short-term twists and curves in the economy
that happen when world news and business news break. If you’re smart, you’ll keep
an eye on the headlines and on the information available to come up with a great
strategy that works for you.
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