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News Trading and Binary Options

The first Friday of every month is always an interesting time to trade on the binary options market. This particular day is known as Nonfarm payroll. If you’re new to the markets this is one of the biggest moving days of the month. If the news release carries a lot of weight price action should see significant moves in one direction or the other. This makes trading around news time a dangerous proposition. We like to wait at least thirty minutes after the report is handed out. This gives us enough time to digest what’s happening in the overall economy and how other people are taking the news.

We took our trade just over one hour after the news was released. Price action had moved up fairly nice to the North Side and was way above resistance three. We talk about extended moves all the time at resistance three or support level three, but on Nonfarm Payroll day these theories can be thrown out the window. If news is significant price can definitely move outside its normal range. We don’t even consider these extended moves as areas of reversal for this reason. A lot of times price will go heavily to one side and then continue later on that day. Getting caught on the wrong side can hurt any type of trader.

On this particular pullback we looked at an area of support that occurred just prior to our entry. Although there was a better price a few pips below where we entered, this particular area still had solid support as well. Price ended up closing just under three pips in our favor. We did not suffer through much pain except at the beginning. Although the price wasn’t jumping for the fences for us, it definitely showed that this price level was holding strong. These are the types of trades you want to look for after a major news event and follow the trend if possible.

The image below shows how price then moved down to the other support level that we really liked around the news trading event. We threw a purple line on the chart to show where price could get back to and how it should hold. We mentioned in the video about this area of support and this was the one place where a call option trade could have been taken. Notice how price came down to this line and never looked back. At around 11:13am which is over an hour since this particular area was hit, price moved now up nearly 50 pips from this purple line. It actually got stalled out at a whole number on the EURUSD. Make sure you keep up with the latest Non Farm Payroll trades.

This Support Line Holds Nice
This showed that the momentum on the EURUSD is pretty strong to the North Side and could form a strong rally for the euro all next week. Anytime a significant move occurs in one direction or the other it could mean tides are changing. Be aware of all market conditions and the events that are coming up as they can play a huge role going forward. Try not to get stuck behind a news trade. Binary option traders seek good trades at certain times. This should be your motto for your trading.

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