Currency is considered to be one of the most popular assets of financial market. Trading in currency market is realized by the main participants, with the help of currency pairs combination, for example – EURUSD, AUDCAD, EURCHF – where the price of one currency is fixed by the price of the other currency. That is, how many Euros you should spend to buy one dollar, so it is EURUSD. There are a lot of such currency pairs. There are approximately as many currency pairs as national currency in the world.
The popularity of currency pairs and trading itself in currency market is explained by the following factors:
- perfect liquidity and volatility;
- direct dependence from macro economical market news;
- a big choice of trading instruments;
- inter correlation of different currency pairs;
- wide choice of trading ways.
On screens, quotations of currency market major are depicted - EURUSD – the most popular currency pair of Forex, its amplitude of moving during a day reaches up to 70-80 points
and one of the most volatilized and zealous currency pair GBPJPY, the amplitude of its movement for one trading session reaches 150-200 or evenи 300 points.
Binary options for currency pairs
Binary option trading for currency pairs doesn’t differ from trading by any other financial instrument. However, currency pairs, all the same, are the most popular object for trading. Why? The answer is in the main tendencies, which are characteristic feature for this kind of asset:
- currency pairs are volatilized and they let close a lot of deals by binary options during a day;
- wavy movements of currency pairs let apply additional options of binary options, with the help of which, you can turn positions, double deals, and also stop them ahead of schedule, as a result (if you use them right) you can get out of slumps and manage your own capital.
Strike price – is used in all kinds of binary options, except “Classical” and “60 seconds”. Such price level is set, more often, by brokerage company as an aim , and if an investor-trader achieves this aim, he gets the profit. This level usage lets traders get profit, which is 600% from the sum, which was invested in the deal.
Option type – PUT or CALL. This rule is for all types of options without exception and gives the right to a trader to buy and sell trading assets. For example, in the result of done technical analysis of the price of currency pair AUDJPY, a trader found a bounce from price level and made a decision to buy. In this situation Call-option is used.
Or a trader, during the analysis of currency pair EURAUD, found the quotations of the pair in the zone of outbiddness, and if there is a falling trend, he will use PUT-option (sell).
Expiration date – this condition of binary option is used to any financial assets trading, including currency pairs. From technical point of view, it is an automatic finishing of a deal by binary option, as a result, bought currency pair is sold again (but the price difference is fixed) or the sold currency instrument is bought again (with profit and loss fixation). It is rather interesting technology, but it is used, because in fact a trader doesn’t buy the currency or currency pair itself, but he just bets on its increasing or decreasing.
The main strategies of binary option trading for currency pairs
A special popularity of the given asset led to the development of different trading strategies, with the help of which, traders get profits from their own trading. The most popular among them are the following:
1. Trading on news – because of the fact that currency pairs are sensitive to macro economical news. This kind of trading is called high-frequency and nowadays is used by about 60% professional traders of stock - exchange markets. The main particularity is to be a first person to push the button – to sell or to buy, and that’s why such kind of trading in trading slang is called “high- frequency”.
2. Purchase and sale of currency pairs on the basis of fundamental forecasts. This type is also called long-term trading. Deals are closed for the term up to half a year.
Moreover, traders, using additional software, together with web-terminals, realize trading according to:
- indicators strategies – they get signals about purchase and sale from technical indicators, which are set on the diagram of instruments quotations;
- mathematical strategies – they use them as signals of entries into the market, data of mathematical calculation about the places of entries, place of averaging and so on.
- non-indicated strategies – is trading according to price patterns – figures.