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EUR/USD trading - 6th and 12th Nov 2013

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How to react on the upcoming news

Trading currency pairs is not an easy job but you can profit if you know the market and how to read the news.

The brokers are offering fixed payouts on the EUR/USD which change during the day.

In this strategy we are showing two examples with candlestick charts that we have been trading this month. The idea is that you follow how we trade in such situations and try to repeat them in similar cases.

Example 1 from Wednesday 6th of Nov 2013

That day, as the hourly chart confirms, the EUR/USD price was moving in the range between 1.3455 and 1.3520 levels. The weekly lows so far were 1.3440 tested during the Asian Monday morning and 1.3448 in the early New York session. You can see both on the candlestick chart connected with the support line.

To see it in full screen - right click/view or open image

The already formed range is expected to keep his way with no major changes as there are no important events to follow during the day.

During such a calm day our strategy is to buy hourly calls if the price goes near to 1.3455-60 and buy puts if the price goes near to 1.3525-30 level. In other words we are not expecting the price to break the range. If the EUR/USD price goes closer to the support or resistance lines we would expect to bounce back.

Example 2 from Tuesday 12th of Nov 2013

The EUR/USD pair is moving slowly in the last couple of hours between 1.3340 – 1.3440. That day morning some negative news came from Germany about the CPI report but at the same time positive data from Italy on the same index. This leaded to some consolidation on the pair.

To see it in full screen - right click/view or open image

In the same time not much data is coming from US, except the CFNAI but with no forecasts provided.

Our strategy here is to buy hourly calls if we see break above 1.3410 and buy hourly puts if the pair succeed to break 1.3350. We believe that if it breaks the range the price will continue in the same direction.

How to set up your budget?

The problem in trading binary options is that the payout is less than 100% that means if you win one trade and lose the next one you will be in minus. This is why you need more than 50% winning trades to stay positive.

Payout on the EUR/USD pair is usually in the range between 80-85% if you invest $100 on each trade that means:

3 trades in the money: 3x$85 = $255

2 trades out of the money: 2x$100 = $200

Your balance = $55

The EUR/USD is very interesting for traders because there is a lot of action on it. News is constantly coming from US and EU and the traders go bullish or bearish according to them.