Binary options euro dollar (EUR/USD): trading profitably and carefully
- VFX Blog
- For beginners
Choosing a trading asset that most closely matches the current market situation is not easy even for professionals, let alone beginners. You can open deals simultaneously on different instruments trying to reduce the overall risks, or choose one, concentrating all your attention and experience on it. These can be binary signals for the euro/dollar pair.
The Euro is the main competitor of the US dollar in the global economy, although in the last 2-3 years its position has somewhat weakened against the backdrop of the strengthening Chinese Yuan. Despite this, the currency pair remains the largest in the Forex market (23-25% of intraday turnover), plus active trading in derivatives: currency futures, CFDs and stock options
The pair lends itself well to any type of analysis due to the large amount, news, statistics and binary option trading signals. Strong reaction to any negative or positive trends in the economic and political spheres of the EU and the USA. Due to maximum liquidity, it has low spreads and broker commissions, and a high percentage of profit on options.
• European Forex session (07.00-16.30 UTC). The main period that accounts for the main volume of transactions. Until 10: 00UTC, the movement is more dependent on the actions of Asian traders who fix profits/losses at the close of their session. Before the opening of America, there is a short-term decline in the quote.
• Europe-America. (13.30-16.30UTC). Profit-taking and aggressive actions of American traders (60-70% of the total volume). In this period, most of the important fundamental events in the US are released, which can both strengthen and reverse the main trend. Not recommended for binary options!
• America (13.30-20.00 UTC). The dollar is strengthened by the movement of capital from the Euro to dollar currency and stock transactions. European stop orders are actively squeezed, which can be seen on the chart as sharp and frequent pullbacks. Choose an expiration of at least 3-4 hours for options signals and only if there is a clear trend!
• Asia (20.00-07.00UTC). EUR turnover falls to a minimum; we remain outside the market and wait for the opening of Europe
With any strategy and methodology for analyzing the current market, we must take into account the following indicators:
• Statistics and expert assessment of the global situation in the Eurozone and the USA;
• Reports of financial regulators, speeches of their heads and official representatives;
• Forecast of the monetary policy of ECB and FRS;
• Movement of major European stock indices (DAX, CAC 40, FTSE100)
• Prices for energy resources, commodity futures, consumer sentiment indices.
There is a long-standing debate as to whether a given pair belongs to “fundamental” or “technical”. Since it is the Forex leader in terms of turnover and influence on the global economy, fundamental factors certainly have a significant impact on its dynamics and can even lead to a complete reversal of the trend.
But at the same time, the pair is very "technical" and most of the trading day (especially in the European session and the overlap of Europe/America) indicators, technical and candlestick patterns are worked out "classic", which makes it possible to open deals for beginners while observing strict money management. Let's see an example in IQ Option signals software:
On the left, reaction to the news on NonFarm Payrolls (the number of people employed in the us non-agricultural sector): a rapid fall on bad data, followed by a recovery in the uptrend. If the broker allows you to open a tube option in the first seconds after publication, you can get a quick profit and even open in the opposite direction at the very beginning of the reversal.
On the right, trade on the trend using the alligator indicator - three moving averages (Moving Average) offset relative to each other. The strategy works exactly as bill Williams intended: we open a trade when all three lines have turned up or down, their intertwining means the end of the trend and the beginning of a sideways movement (flat).
If the volatility of a pair on a flat reaches 30-50 points, and this happens quite often, you can open binary options on rebounds from the boundaries of the range. At the same time, we look at the overbought / oversold oscillators, which should be outside their extreme zones.
Recommendations about use …
This section is usually done to tell you how good everything is and what can be done even better. We'll take a different route and take a critical look at EUR / USD:
• Let's start with a simple question "Why are you trading EUR/USD pair?" Leaving aside the time factor, when a trader is in the European region - the Asian and American sessions fall on the afternoon and night, this mode of life is not suitable for everyone. The answer is likely to be "because everyone does it." And you will be absolutely right: any learn binary options trading, strategies, advisors, websites, forums and YouTube channels constantly repeat the thesis about “profitable EUR/USD and you need to start with it”. Probably 99% of traders had their first deal here.
Even after the first deposit is lost, many continue to try to beat the market regardless of other assets. Be flexible, look around and open options where it is really profitable.
• The following stereotype: «pair has its own unique features, patterns and combinations of indicators. It is the leader in Forex turnover, so it is more profitable and safer to trade on it». If you seriously think so, it means that you are a beginner and you need to get rid of illusions as quickly as possible before the Deposit runs out. Let's see an example in IQ Option signals software:
We see the movement of the Euro and the Australian dollar on the same timeframe and interval of the trading day. The Australian is significantly inferior in terms of turnover and is generally the most volatile in the Asian session, when the Euro is “falling asleep”. Well, where are the individual characteristics? There are trends, pullbacks, sideways ranges, large candlestick shadows, and clear speculation on fundamental events. Include any other pair, the situation is the same.
Any instruction to a strategy or advisor containing a list of currency pairs should be perceived only as a recommendation and nothing more. Options signals give only the market and the chart!
• Moving on to the third myth: “The pair is maximally liquid, which means that the forecasts will be quite reliable”. Yes it is. There is enough liquidity; premiums from binary brokers are also rather big, in the range of 85-90%. But what about forecasting? Let's think logically: if there is the most money, then all the major market makers are there too. What this is fraught with for the binary option strategy, we read in the next paragraph for small and medium-sized Forex market participants.
• Since all major players are on EUR / USD, it means that their influence on the pair's quote will be the strongest and most private. This can be seen by looking at the sharp and often multidirectional impulses at the time of the release of important news and statistics on the EU and even America. Also, for experienced traders, it will not be a surprise to see large "spikes" in candles even with a large body – just market makers decided to throw in a little volume and briefly move the price in the direction they need, squeezing out the stops of the market crowd.
This does not mean at all that you need to give up the main currencies and indulge in exotic things like the Mexican peso and the Indian rupee. The situation there does not lend itself to any analysis, and practically none of the brokers offers options for them.
Before you open a Euro dollar option, be prepared for a sharp change in the situation and set an expiration of at least 5-7 bars of the working timeframe. So you can safely wait out short speculations and be in profit after the trend resumes.
Let`s summarize. Despite all this, binary signals for EUR / USD should be in the trading kit of all traders. Even if you do not trade on this asset, you need to understand all the factors behind it. The pair has been and will continue to be the most expensive and liquid, which means it will influence the entire Forex market and form both intraday trends and medium - and long-term trends.