Binary Options Currency Pairs and Volatility

Binary Options Currency Pairs and Volatility

Submitted by adil on Wed, 04/30/2014 - 06:59

Binary option trading is performed on many assets including currency pairs. The most famous currency pairs with exceptional trading volume include:

EUR/USD: This currency pair is ideal for new traders as this pair offers stable movements over a long period of time. This is one of the reasons why most traders prefer trading on this currency pair.

USD/JPY: This currency pair receives high trading volume just because of its predictive behaviour. The Japanese government performs actions to strengthen Japanese Yen from time to time which creates easily identifiable trend.

USD/CHF: This currency pair has a negative trend in relation to EUR/USD. This is the reason both currency pairs should be followed regularly no matter which of the two currency pair you chose to trade on.

GBP/USD: This currency pair is also very predictable as the British Pound Sterling usually moves higher in relation than USD. Trading on this currency pair has high profit potential and considerable risk too as a slight change in trend leads to big losses.

Trading binary option on currency pairs offers added advantage to the traders in many ways including:

More exposure: Currency pairs offer the trader to experience the behaviour of two completely different markets. The trader will get an insight how news from another region can affect the asset prices of a completely different region.

More trading opportunities: As the market is global, the prices move more than other trading assets. There are more market factors involved in currency pairs; hence more trading opportunities can arise in less time.

Round the clock trading availability: Are you a 9-5 office worker? You prefer to do binary option trading in the evening or in the night before going to bed. But trading on local assets is not available at those times. Your problems have been solved! As market for currency pairs is worldwide, binary option trading can be available on specific pairs due to different applicable time zones.

Volatility in binary option trading:

The tendency or probability of an asset to change its behavior and trend due to changes in market conditions is known as volatility. Currency pairs have higher volatility as compared to other trading assets because the market is huge; and the asset price controlling factors are also numerous.

Traders can prevent volatility affecting binary options currency pair trading by using best indicators. The most common indicators used in currency pair trading are:

Moving averages

Bollinger bands

Candlestick formation

The most popular of these indicators are the “moving averages”. Yet most of the professional traders rely on more than one indicator to make sure of their trades.

Keep up to date with latest news items: As currency pairs usually involve foreign currencies, knowledge of foreign affairs is very important to trade successfully. A trader trading with currency pairs should be following at least some of the following news items:

Inflation reports

US core retail sales

GDP numbers

Interest rates

Employment data

Traders should always combine these news items with technical analysis to get the best profits from trading currency pairs. Binary option trading is very straight forward and profitable if done with proper strategy. Trading on an asset like currency pairs with binary options will prove to be a good learning curve for every trader.