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How to use oil in news trading? How to profitably trade oil on the output of macroeconomic indicators? Is the trading strategy profitable in this way?
Having a huge number of different trading strategies to choose from, which are built on the principles of technical analysis and indicators, Forex traders completely forget that there is also binary options trading on the news, which is able to show the highest results.
However, the reason for this is very banal - the speed of making a profit on the news on forex raw materials in classical trading, without using the program autoclick or FlashNewsTrader rather low, since the movement is not sharp, as on currency pairs, but protracted, but long.
However, this way of trading is fundamental for a trader who wants to become a binary trading professional. Therefore, today we will introduce you closer to the mechanism of the profitable use of news market trading on binaries for raw materials.
news trading strategy
This trading approach is based on tracking macroeconomic news publications, the data of which are signals for trading.
It is macroeconomic statistics that have a global impact on the demand and supply of the market for a particular asset.
Trading binary options on the news is most effective on commodity assets such as oil or gold (often used as a safe-haven asset).
These underlying assets are most affected by individual news publications of statistics and the news background of the market.
That is why this system has several requirements for its use:
- Firstly, the broker you trade with must provide the right positions in their arsenal of assets.
- Secondly, the options on the broker's platform must have a high yield - this way you can increase your capital as quickly as possible.
- Thirdly, taking into account the high speed of the market reaction to the release of statistical data, and how impulsive the movement of quotes can be at the time of the publication of statistics, the trading terminal must execute trade transactions at the maximum speed, otherwise the trader may simply miss the right moment to draw up a contract.
Well, the final condition will be that the broker has favorable conditions (with minimal financial requirements) for capital management.
Read also - How to profitably trade oil on binary options?
As a suitable broker, which is able to provide all of the above for profitable trading on the news, you can choose a company FinMax.
- The list of assets required for trading;
- Profitability level on options of commodity assets up to 70%;
- Registration of contracts in 1.7 ms;
- Convenient trading conditions: $10 - initial deposit, $1 - minimum trading lot.
Let's start with oil as the underlying asset for trading, and consider what data most influences its price fluctuations, as well as how best to trade on such statistics:
So, the cost of any trading asset determines the demand or supply for it.
That is why the most influencing fluctuations in the quotes of this asset are publications regarding an increase in demand for this asset, or regarding a decrease in the quantity of this product on the market (supply).
These publications include:
- Strategic stocks of crude oil in public storage (for example, the United States, which is the main consumer of this resource);
- Indicators of a decrease or increase in hydrocarbon production by the OPEC cartel;
- Decrease in explored oil reserves;
- Indicators of decrease or increase in the number of drilling rigs.
And this is just a short list of publications that have a global impact on oil prices.
Let us now consider the mechanism of option trading on the news.
First of all, the main role here is played by the trader's awareness of the calendar date and time of publication of statistics.
You can find a calendar of macroeconomic publications in the commodity and financial markets on any thematic information portal. In such a calendar, it is necessary to mark the date and time of the release of the above indicators.
Only after that you can start news trading.
The mechanism of trading binary options on the news is very easy to understand - positive data contribute to an increase in the value of the asset, which means that contracts are drawn up with a forecast UP, and negative data contribute to a decrease in the value of the asset, and then contracts are drawn up with a forecast WAY DOWN.
Let's look at an example of how this looks in practice.
United States crude oil inventories indicated a decrease, indicating an increase in demand for this asset. Therefore, the market immediately reacted to this by increasing the cost of oil:
And since we know exactly when such statistics will be released and how they will affect the value of the specified asset, we can, at the time of the release of statistics and after a quick analysis of it, make a deal with a forecast UP (and a series of 5 option trades at once is more effective). Then such an increase in quotes will bring us a guaranteed profit!
Forecast WAY DOWN in the deal being concluded, it is necessary to do in the event that the data is released worse than the previously predicted values by specialists.
With such a trading approach, you can achieve 95% trading efficiency, since the market reaction to statistics is always predictable. Moreover, using news publications as a signal to trade, you can minimize all risks.
Trading with the minimum amounts on the trading deposit (like this broker – 100 dollars or 6000 rubles), for all trade transactions it is necessary to set a minimum value of 5 dollars.
But having a larger amount on the deposit for trading, you can make deals worth 5% of the amount available on the trading deposit.
Choice of expiration
A suitable expiration for trades would be between 15 minutes and 1 hour. Such a trading mode will allow you to exclude possible losses that may appear due to the volatility of quotes at times when uncertainty appears on the market.