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The binary options market allows traders to trade almost all types of financial assets. One of the major asset classes which one can trade in binary options is currency pairs. The EURUSD is the most common currency pair traded and it offers traders immense opportunities to profit. Today, most binary options brokers offer a wide choice of assets to trade in and the EURUSD pair is definitely among the top assets traded worldwide on these platforms. The bottom line is if you want to trade binary options, why not give the EURUSD a try?
Why You Should Trade the EURUSD
The EURUSD is the most liquid and volatile asset in the financial markets. This is because the United States and the eurozone influence the global financial markets. Their official currencies are also the most widely used currencies in the world (both in circulation or reserve holdings). Money in binary options is made out of asset price movement and the EURUSD currency pair guarantees this throughout.
The EURUSD pair is also the most analyzed asset in binary options and traders can get expert ideas or commentary on its expected price movement daily. This can be found on many financial news sites as well as trading forums.
Because of its liquidity, the EURUSD also has the most transparent prices. This means that traders, especially those that trade short term, such as the 60 Seconds trade option, can receive great execution at all times.
The Advantages of Trading the EURUSD in Binary Options
Unlike in the forex market, traders trading the EURUSD in binary options do not have to worry about increased costs arising from factors such as price spreads, commissions, rollovers or swaps. In binary options, there are no additional trading costs other than the transaction amount. That is, a binary options broker does not usually charge any fees or commissions for trading and some brokers, such as Banc De Binary, offer lucrative trading bonuses on their platform as well.
Although the EURUSD is the most liquid asset in the financial markets, there are times when it experiences low volatility. In such times, forex traders don’t usually trade as it is not profitable doing so. On the contrary, binary options traders can still make money when there is low volatility because their contracts will end ‘in the money’ when the price closes even fractionally higher or lower than the strike price of this asset.
When trading the EURUSD, traders in the forex market can only place the traditional buy or sell orders. On the contrary, apart from the standard Call/Put contracts, binary options traders can trade the price movement of EURUSD using a variety of contracts such as One Touch options, No Touch options, Long Term, 60 Seconds, Boundary options and Ladder options.
Strategies for Trading EURUSD in Binary Options
In order to trade binary options effectively, many traders will use different risk management strategies and other effective trading techniques. The EURUSD can be traded profitably in binary options using different strategies. These strategies include:
The trendline strategy is known for its versatility in the markets. This strategy involves the use of trendlines which can help traders find quality entry points in any market condition. The strategy in a downtrend is to place Put orders whereas in an uptrend, traders seek to place Call orders. In a sideways market, the strategy is to place Call orders at support and Put orders at resistance. Due to its liquidity and volatility, the market conditions of EURUSD usually change multiple times and this makes the trendline strategy very effective for trading this pair. Using this strategy, quality and high probability entry points are identified when the asset price is at or near the trendline. These trades can be placed with ease on the trading platform of a binary options broker.
As one of the most watched assets, the EURUSD has a tendency of reacting strongly to key levels or psychological price points. Some of the psychological points for EURUSD include 1.2000, 1.3000 and 1.1000. In a strong trending market, these levels can become the price target for any particular move or act as significant support or resistance for the underlying move. It is therefore important for traders to watch price action of the pair and to look for trading opportunities when these levels are in sight. For instance, if the current price of the EURUSD is 1.1200 and the prevailing market condition is a downtrend, traders can place Put orders in the market with the expectation that 1.1000 price point will be achieved soon.
Economic data is one of the major drivers of price movement in the binary options market. Due to its significance, there is plenty of news released daily that impacts on the value of the EURUSD. When released, such news usually causes much volatility in this pair and this presents a great opportunity for binary options traders to make money. Traders need a news strategy that will help enhance their profitability when trading the EURUSD.
Traders can track the news that has the most impact on the price of this pair using tools such as the Banc De Binary economic calendar. The most important news to look out for includes: US and Eurozone GDP figures, Fed and ECB announcements, the German ZEW Survey, the US and German Consumer Price Index, the US Non-farm Payrolls and Retail sales statistics of the US and major European nations.
Asset Correlation Trading
Asset correlation is the degree to which the price movement of one asset relates to another. When using this strategy, traders first establish the correlation the EURUSD has had with other assets. They then attempt to predict the future price movement of the pair based on the price action of the correlated assets. For instance, the EURUSD is known to have a near perfect negative correlation with the USDCHF. This means that the prices of the two assets tend to move in opposite directions.
A trader applying this strategy can look at the price action of USDCHF before making trading decisions on EURUSD. For instance, if the price USDCHF is drifting higher while that of EURUSD remains stagnant, a trader can place a Put order on EURUSD with the expectation that its price will begin moving in the opposite direction of the rising USDCHF.
When to Trade EURUSD in Binary Options
Traders can place trades on the EURUSD at any time as long as the markets are open. As the most liquid asset, there is guaranteed movement on this pair almost every time. Nonetheless, the best time to trade the EURUSD is between 1200hrs-1600hrs when both the New York and London markets are open. The most activity and the biggest movements occur during this time.
The unique combination of liquidity and volatility makes the EURUSD a potentially very rewarding asset to trade in binary options. This leading currency pair is able to bring you a lot of profits if you take the time to learn more about the factors that move this asset’s price.