It happens four times a year, earnings season on Wall Street is a time when high frequency traders can make or lose an entire years worth of profits.
There is so much action on the street with as many as one hundred companies announcing results on a given day. The official start of earnings season has traditionally been when Alcoa reports earnings (This year was Oct 8th). As a member of the S&P 500 and a large manufacturer, traders would look to Alcoa for guidance of the overall global economy.
Binary options trade on popular stocks but not all three thousand public companies, so what signal should a trader look for?
The simple answer which is not really a helpful answer is to look at the earnings dates of the various stocks that have binaries listed on them and trade the stock the day before and the day after their earnings announcement. Most companies announce earnings before or after the bell and almost never during regular trading hours. This means there is no way to trade binary options exactly when the earnings numbers are release.
Let us introduce a different signal to use. Using individual stocks as a signal for trading binary options on the index.
For example, When Google (Ticker: GOOG) or Apple (Ticker: AAPL) announce earning, because they are such a large component of the Nasdaq 100, the way their stock responds to the announcement will affect the price of the Nasdaq and sometimes the S&P 500 also. Many time over the past earnings announcements of Apple, we have seen the Nasdaq move in perfect correlation with Apples stock price.
When trading binary options in multiple markets, it is important to research the correlation of various underlying commodities. In essence, what is causing what to move. Did the price of oil drop because of fundamental data or what is due to weakness in the Euro. Did the US Dollar index cause gold prices to surge? When there is an economic announcement, the smart way to be prepared is to know which binary option you will trade.
Plan accordingly for macro economic events by consulting the binary option traders calendar. Plan for micro events on individual stocks but checking the earnings release date.
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