News events have a large influence on financial markets. In this lesson Sam demonstrates how price behaves before and during schedule news events.
BO112 Lesson – Trading The News Transcript
Welcome to Binary Options 112 Trading the News Part 1. This is part of the Binary Options 100 training course brought to you by binaryoptions.education News events have a major influence on financial markets. In fact, the news has such an influence on financial markets, that some traders only analyze the news to make trading decisions. And this is called fundamental analysis.
News events impact market volatility, and hence impact price movement. Major news events can dramatically move price in some particular directions very quickly. The majority of news events are scheduled, and in part two of Trading the News, which will be in our Binary Options 200 training course, we’ll give guidance on where we can find information on scheduled news events.
Scheduled news events include GDP reports, Net Farm Payrolls, Manufacturing Figures. Retail Sales, and if we are trading shares, Profits and Loss Figures. In part two of Trading the News I will give more detail on these news events, and what they are.
So how does price generally behave in preparation for a scheduled news event, and when the news event happens? Generally 60 to 90 minutes before the news events, price goes very quiet. So if this was a 15 minute chart, our news event is here. Four candles an hour before the scheduled news events, there is very little price movement. And we’ll look at a price chart in a minute to demonstrate this further.
Once the news event has happened, we generally see huge movements of price, higher market volatility. And that is demonstrated by these two candles here. This is the British pound against the US dollar. This is a 15 minute chart. And right here, we have the announcement of a scheduled news event.
You’ll notice an hour before the news event is announced, price is a very quiet. The difference between the opening and closing price of these four candles is minute. And we have four doges. The news announcement was net farm payrolls, which has a major impact on the 4X markets. And it’s interesting to note, throughout the majority of the morning, even there was price movement, price was moving in a sideways direction.
Once the announcement was made price went on the downside and then shot on the upside. And we have this huge movement in price. From the bottom of these candles to the top, is about 130 pip movement. From the example of the pound against the dollar with the announcement off net farm payrolls, you should now have an insight to the impact that the news has on financial markets.
In part two of Trading the News, which is in our Binary Options 200 course, I will give more detail to trading the news. Thank you so much watching this video. As always, please check our our website. Please like and please subscribe.