Earnings season is a wonderful thing for those who trade binary options. While standard market traders are often frightened of the data that is released each quarter by the companies whose stock they own, the options trader cares not whether the stock price moves up or down as profits can be earned either way.
They key to earning is preparation. You need to know exactly which companies will be releasing their new data each day and must know the exact time of these releases. If you do not have an economic calendar, now is the time to find one that you like. An economic calendar will provide information on not only company-specific earnings announcements, but country-specific economic data releases as well. This tool will be especially helpful when earnings season hits.
The strategy us simple. Read up on what analysts are predicting in terms of numbers and then compare the actual data to these expectations. Market traders place a lot of weight on analysts expectations and therefore market sentiment will be swayed in one direction or the other when earnings results exceed or fall under expectations. When numbers are disappointing, be watching for Put opportunities. When numbers are favorable, be watching for Call opportunities. It’s that simple.
Whenever earnings results are nowhere near the numbers forecast by analysts, be looking for price trends. Powerful, long-lasting price trends could set up when the actual data is not close to the predicted numbers. As all binary options traders know, price trends can provide plenty of chances to trade for profit. Even better, trends are extremely easy to spot in charts, making them an easy choice for novice traders who are in search of reduced risk trades.
Earnings reports are heavily publicized, so finding the information you need will be easy. While big-name companies tend to make a bigger splash, don’t ignore the chance to trade with lesser known companies. For every stock there are buyers and sellers and many investors steer clear of stocks that have reached levels at which they are no longer affordable. When trading binary options, the profits derived from trading with lesser known companies can be just as large as those derived from trading with stocks such as Apple, Facebook, Microsoft, and more.