One binary options trading strategy that you can use is trading with the news. Let’s take a look at the news that came from Microsoft.
In 2007 Microsoft purchased aQuantive to boost online advertising as a counter measure to Google Inc. purchasing digital ad firm Doubleclick. Microsoft announced that it will write-off the 6.2 billion dollars of their initial investment. Microsoft stock which closed at $30.56 was trading at $30.28 in after-hours trading.
Microsoft bought aQuantive for $6.3 billion in cash. This is the second largest purchase for Microsoft, exceeded only by its purchase of Skype for $8.5 billion last year. This write off will wipe out any profit Microsoft would have seen this quarter. Analysts were predicting earnings of 62 cents a share, or $5.25 billion, on July 19. In addition to the write-down, Microsoft said, “lower than previous estimates” when referring to its expectations for future growth and profitability at its online services unit.
As a binary option trader you may feel that the momentum of the stock price is moving down. If the momentum continues you can take advantage of the speed and simplicity of binary options to capitalize on that move. You can make various “Put” purchases. One that you might want to employ is a 60 second binary option.
You can trade Microsoft today at Cedar Finance.
The only problem that I see with this strategy of ‘trading the news’ is that by the time the news reaches us normal traders, the market has already reacted, and the move is pretty much over. Of course, with short term binary options, a trader can take see the new trend as it unfolds, and can pick up some profit as the trend processes. Could you comment on this? How should we react to news events when the market has already repsonded before we even hear the news?
Hi Rob
Good question.
2 things to consider.
1 – no pips needed in binary.
2 – major news usually keeps the market moving in a direction even after the news is announced.
This is not my favorite strategy, but on big enough events and with quick reactions even a “normal trader” can ride the wave enough to see some serious short term gains off major news stories. For me the bigger issue is that it is not consistent as a source. Who knows when major news will happen?
What do you think?