Long Term vs. Short Term Horizon

When considering taking fundamental analysis into consideration when trading one has to differentiate between the economic releases that have a short term impact on the financial product to be traded and the news that have a long term implication for the future evolution of that respective product.

In the case of currency markets, these being one of the most traded products on the binary options trading platforms, the fundamental news/economic releases can be classified as having a short term impact on the general trend the currency pair is in and news that can influence/change a trend, this news being, of course, the long term impact news that affect a currency pair.

In the category of news impacting trade on the long term horizon, meaning news that are most likely to end/to start a trend, the following should be considered, only to name a few:

  • interest rate decisions;
  • speeches/conferences regarding future monetary policy changes: ECB press conference, Fed members speaking, EU Summits, etc.;

unemployment rate/jobs data in the United States (this is especially valid these days as the quantitative easing program is strongly tied by the unemployment rate reaching 6.5% so markets are more likely to be highly sensitive to any news related to changes in the general trend jobs are heading).

For the short term horizon, news like the level of the factory orders, or the industrial production and capacity utilization in a specific country/area should/could influence temporarily the way an asset moves.

In other words, depending on the type of economic releases expected, when trading binary options one has the opportunity to adapt and take the appropriate decision regarding what type of option to buy.

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