A fraction of a pip in the right direction at expiration with binary options and you are profitable. Hence, releases that are not expected to create great volatility are more advantageously traded using Binary Options rather than conventional Forex.
A perfect example of using Binary Options with announcements that aren’t expected to create volatility is this Thursday at 12:00 GMT, when the Bank of England will release its Official Bank Rate. As the new rate is usually already priced in the market, this release is not expected to create great volatility in the GBP/USD.
Trading the GBP/USD with a Binary Options as opposed to conventional Forex warrants profits that are usually fixed at 81% of the amount invested. Compared to conventional Forex, one would have to leverage 100s of times the investment to reach still smaller profits for a small pip move. For this reason, when a news event is about to be released which is not expected to create great volatility, such as this Thursday’s release regarding the BoE Offical Bank Rate, trading GBP/USD with Binary Options can be more profitable.
To exemplify this correlation, in the chart above we can see how the EUR/USD reacted at 14:30 to the unemployment claims data. A great rally ensued but then reversed almost to the breakout point.
If you had believed that the direction of the rally would continue beyond the breakout point then placing a PUT Binary Option trade (A PUT Binary Option trade is considered ‘in the money’ if the price of the underlying closes below the strike price at expiration) would have returned an 81% profit, despite the reversal. On the other hand, a conventional Forex trade would have been very tricky to exit with a sizable profit, and an 81% return would have required significant leverage.
With Hourly Forex Binary Options there is no need to place a Stop-Loss order as there would have been in this example had you chosen conventional Forex. Since Binary Options expire at the end of the hour there is no fear that a Stop-Loss order will shake you out of our position due to volatility related to the news event. With Binary Options, all that is needed is for you to decide on the direction of the news event rally, and the Binary Option will do the rest.