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CHAPTER 10: ECONOMIC CALENDAR AND TRADING SIGNALS
1. Chapter 10:
Economic Calendar
and Trading Signals
Economic Calendar and Trading Signals | Page #1
2. ECONOMIC CALENDAR AND TRADING SIGNALS
There are two important tools which binary traders have at their disposal and should always make full use
of, if they are to become more than average traders. These are the economic calendar and trading signals
services.
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3. ECONOMIC CALENDAR
With the financial markets easily influenced by the state of the economy and worldwide economic conditions, keeping
yourself abreast of these ever changing conditions is one of the foundations for success in binary options trading. The
economic calendar is an easy and quick method of keeping oneself updated with upcoming economic events that are of
significance to the markets as well as identifying profitable trading opportunities.
The economic calendar is also commonly known as the forex news calendar by many traders as it was the forex market that
initially started making heavy use of this popular tool. Of course, we would be remiss to call it a forex news calendar as of
course it contains news and events that impact other markets too.
So what exactly is an economic calendar? The economic calendar is essentially a schedule of upcoming economic and
political events which act as indicators for gauging the performance of a particular sector of an economy or its entirety. As
these results are indicative of how well a market sector or an economy is faring, traders use the information to help them
determine which way the market or a specific asset will move and this then helps shape their investment decisions.
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USING THE ECONOMIC CALENDAR
In order to get an idea of how the economic
calendar can be put to good use, letโs use an
example to illustrate how to trade the EUR/USD
forex pair using the economic calendar. A quick
check with anyoptionโs economic calendar reveals
that the next upcoming event within the next 30
minutes that would affect the value of the USD will
be the release of the ISM Non-Manufacturing Index
reading for the month of October.
The ISM Non-Manufacturing Index is defined by
Investopedia as โAn index based on surveys of more
than 400 non-manufacturing firms' purchasing and
supply executives, within 60 sectors across the
nation, by the Institute of Supply Management
(ISM)โ.
If the reading shows an increase, it is taken as
indicative that the stock markets will perform better
due to higher profits earned by the corporate sector.
This index draws more attention from analysts as its
figures are seasonally adjusted.
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As can be seen from the figure above, the
reading for the month of September was 58.5.
Based on our research, business confidence in
the economy is high as well as bullish. As such,
we expect the reading for the month of October
to be higher than 58.5. If the scenario turns out
as we expected, this means that the value of
the USD will go up in relation to the EUR.
Hence, we will place a put trade of 100 euros
for EUR/USD to be lower than 1.2488 when the
put option expires within the next 30 minutes.
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With the release of the ISM Non
Manufacturing Index reading at
23:00 GMT, the new reading of
59.6 proved that our assumption
was right about the direction
toward which the US economy is
heading towards to.
7. As expected, the value of the USD did rise in relation to
the EUR and hence earned us a nice tidy profit of 70
euros with our investment of 100 euros.
While we have stressed the importance and usefulness of
the economic calendar, we should also take note that
some skills are required before you can fully utilize this
tool effectively. First of all, the economic calendar is
purely an informational tool. It just provides you with the
economic data and doesnโt tell you how to interpret
them. So you need to be familiar with how each piece of
data can affect the market before you can start making
any trade using the information obtained from the
economic calendar.
Another thing to note, the usefulness of the economic
calendar will be dependent upon the speed it reflects the
changes in the market. A real time economic calendar like
the one provided by anyoption is always better than an
economic calendar which only provides historical data as
your trading decision can be based on updated market
info rather than historical data.
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BINARY TRADING SIGNALS
The idea behind trading signals is a very simple
one. Since each binary trade is essentially a
prediction about the direction of an underlying
assetโs price, binary trading signals help traders
by taking the element of prediction out of the
trading process. You might ask yourself, why
would anybody need a trading signals service if
binary trading is already so simple? The reason
is because analyzing as to whether prices are
going to rise or fall is a far more complicated
process. Hence, a trading signals service exists
to help traders through this process.
9. LEVERAGING BINARY TRADING SIGNALS SERVICES
Binary trading signals are basically expert recommendations that are sent through various communication
channels such as email, text messages or on voice mail. They help to highlight and recommend to traders what
trades they should be making. While providers of binary trading signals may differ in the way they transmit their
signals, their signals essentially contain the same kind of information. Traders will be informed of the type of asset
to buy, whether to place a call or a put trade, the expiration time and the strike price of the option.
If you are confident of the accuracy of the trading signals service that you subscribed to, you can simply make your
trades based on what the signal provider recommends. Alternatively, you can use the signals provided to
collaborate your own research. So rather than spending countless hours listening to the news and slaving over
your charts, you just outsource this part of the trading process to your signals provider. Consequently, you get to
free up your time and provided that your signals are also accurate, you will get to boost the returns on your
investments. Nevertheless, it should be noted that accuracy doesnโt necessarily guarantee a profit.
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ACCURACY IS NO GUARANTEE OF A PROFIT
While the accuracy of the trading signals that you
received plays a big part in ensuring the success of your
binary trades, it should be noted that it doesnโt
necessarily mean that you will get to profit all the time.
This is because the signals that you received from a
signals provider are meant to be acted upon quickly. Due
to the fast acting nature of the markets, you only have a
small window of opportunity to place a profitable
transaction. Most of the recommendations that you
receive will be valid up to an hour. However, it is possible
that also some recommendations will only be good for as
short as a minute. In short then, trading signals are only
useful if you able and willing act on them the moment
you receive them. Otherwise, your opportunity to profit
for the recommendations will just evaporate.
11. RELIABILITY OF TRADING SIGNALS
Apart from being able to act quickly on the signals that you receive from your signals provider, it should be borne
in mind that your signals are only as good as the people behind them. The people behind these trading signals can
either be a company which employs dozens of professional analysts or just veteran traders with years of trading
experience behind them. If you have any doubts about the reliability of your signals providers, a good way to
ascertain their reliability is to check online reviews about their services. These reviews are usually written by
traders who may have actual hands-on experiences with these signals providers and their insights could prove
invaluable in helping to size up the creditability of the signals providers that you are planning to subscribe to.
Another way is to check out their track record, meaning the performance of their signals over the last year or so.
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12. CONCLUSION
By now you should be familiar with what trading signals services is all about. To conclude this chapter, here are a
few additional tips on going about selecting a reliable provider:
โข DISREGARD PRICING
We say this because a higher pricing is not indicative of how accurate a signals provider can be. The fact that a
signals provider charges $500 per month as opposed to another provider whose monthly charges are $100 per
month does mean that the former is 5 times more accurate than the latter. Thus, you must resist the urge to use
pricing as an indicator of quality.
โข OUTLANDISH CLAIMS
If you come across a provider who makes outlandish claims about its services, than you should stay clear of them
or at least be very wary of what they have to offer.
โข BE WARY OF DOCTORED EVIDENCES
In this modern age of technology, anything can be doctored. So, be cautious of screenshots posted by signals
providers as proof of the accuracy of their services. Although these screenshots might be actual proof of their
quality of their signals, there is no certainty that they are unless you actually tried out their service.
โข SOLID REPUTATION AND TRACK RECORD
Finally, always look for a provider with a good reputation and sold track record among your trading peers. If you
find that many active traders praising a specific provider, then there is high likelihood that this provider meets a
certain standard.
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