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Using Economic Indicators To Trade With Binary Options

A common definition quite extensively prevalent in the United States for Economic Indicators is, "Economic Indicators are a series of numbers and statistics that give viewers some insight into the health of the economy." Usually in the United States, it is the US Census Bureau that calculates and releases these indicators on a monthly basis. These indicators are generally broad and wide reaching. They range from monthly estimates of the Gross Domestic product to data showing new home sales and monthly consumer spending. The importance of these indicators is shown by the fact that when these indicators are released in the media, the information usually tends to have an effect on most equity and derivative markets. This is because the economy as a whole is a large part of how those indicators are rated.

Economic Indicators can help investors to make smart moves. A smart trader is one who makes the best out of these indicators and chooses his moves accordingly. The volatility that is sparked by new economic indicators may cause higher risk trading conditions (some see this as an advantage).

Keeping the risk accounted in check by using binary options and binary signals is one way to trade economic indicators. These are some that help a trader by allowing him to bet on whether an asset will end up below or above a specified strike price, with a fixed outcome on both the win and loss side.

If you are interested in knowing about binary options contracts on specific companies, two especially useful economic indicators are retail sales and durable goods order. These goods can be understood as follows.

Durable goods refer to expensive, long term assets usually bought by businesses. Airplanes, electronic equipment, and vehicles are a few of the most well known.

Retail goods are, as their name implies, geared towards retail purchase items such as clothing, restaurant services, and even personal vehicles.

Generally as observed, significant month-over-month growth in either of these two economic indicators signals the trader to buy the stocks of companies in each of the industries. A worthwhile report is one that is durable enough. A great durable goods report, for instance, may grab the attention in binary options contracts for companies such as Boeing. Likewise, good numbers on retail sales helps retain the equity prices for the large retail companies that move with the sector as a whole (For example Target and Wall-Mart).

For binary options on assets other than corporate stocks, economic indicators can help make the market as well. Sometimes it may also be possible that a secondary "flight to quality" reaction can occur, where investors move away together to the U.S. Treasury securities - sending the U.S. dollar higher against other currencies.

Of course, none of these effects are absolutely correct! There are so many other issues and factors in pricing an asset to allow for these thumb rules to play out without exception. However still, experienced traders with a good understanding of economic indicators and market movement can make a considerable profit by trading in Binary options.

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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.