)Traders can now use Fair Binary Options site to access the economic calendar below and get information on all the important market updates as they happen. The economic calendar is a much used tool by major investment firms and most successful individual traders in binary options but in finance in general since it is the easiest way to track what is going on in the market. This great tool allows traders to pinpoint the exact time an event will happen, how important it is, what are the projections and which assets will it reflect on.
Trading Market Events and Announcements
Event trading can be highly lucrative since the market moves most predictably when major events occur. Drivers of the large market movements in binary options are the same as in any other trading art. Major monetary policy decisions, trade balance, GDP, inflation and other reports, Markit PMI indicators, consumer sentiment indicators … all these reports move the market since traders get more information on what is happening in the economy.
Individual earnings calls for companies do the same. If the announced profit and revenue are predicted right, especially if the moves around consensus are significant, traders stand to earn huge returns, and what more important, returns that carry less risk since moves seem to be well directed depending on the report relative to market expectations.
ECB Quantitative Easing Announcement as Example
A great example is the recent ECB QE announcement. While much of the QE expectations was already priced in the market, the surprise move by the European Central Bank to essentially print over 60 billion euros a month until it reaches its objective had predictable consequences even before officially announced and also later. EURUSD fell to its lowest level in 9 years on the expectations ECB is depreciating the currency. On the other side, as QE boosted the expectations of nominal incomes in the future stocks rallied in response. So people who were entering positions by shorting the EUR before the policy announcement at 14:30, or even the day before stood to gain from such positions. It is similar with stocks and indices.
Long term players could have used the same event, however, with far more predictive insights. First, they should have understood the importance of inflation expectations in the way ECB conducts policy. While 5year inflation expectations were stable, ECB mostly did not initiate any forceful action. With the fall in the measure of expectations derived from the inflation swaps indicating that inflation pressure continues to weaken and the policy rate already in negative territory, an asset purchase program has been rumored since the second half of 2014. This prompted traders to bet against the EUR already in the last quarter of 2014. It was only a matter of time when ECB will start the Expanded Asset Purchase Program, as it is called officially. Those who bet against EUR with long-term options could have earned significant money.