Binary options trading can be done using many financial assets including stocks, commodities, indices and currencies. Currency trading is quite popular among them. EUR/USD is the one of the most popular currency pair traded in both, binary options and other Forex platforms.
EUR/USD is the most popular currency pair for trading, because those currencies play a big role in the world market. The increase and decrease in their value can create intense movements in the economic market.
Even if one of the currencies strengthens, then there will be a significant impact on both the economies simultaneously, and vice versa. Traders worldwide can trade binary options online with this currency pair.
Euro is a solo currency that represents many countries, so is the power house of global economy. Euro came in the market in 1999 and drove 20 EU (European Union) member states to cease the use of their preceding currency in trade for a solo currency.
These countries include France, Germany, Slovakia and Ireland. Since then Euro has created a gigantic financial movement across EU regions.
Till date, the US dollar continues to hold its position as number one currency to trade. USD keeps growing day-after-day, as it continues to influence the world economy and demand.
How to estimate the value of EUR/USD?
In any pair, the first currency is termed as ‘base’ and the second is ‘quote’. For EUR/USD pair, euro is the base currency and dollar is the quote currency. In this case the value of EUR/USD is estimated as 1 EUR/X USD. The currency pair compares EUR value to USD.
For example, if exchange rate is quoted to be 1.2000 means 1 EUR will be traded for 1.2 US dollars. Alternatively, you will have to sell 1.2 USD to buy 1 EUR. Thus you can see that currency pair is considered as a single unit, albeit the trader is actually buying one currency and selling another simultaneously.
When you buy a currency pair you actually purchase base currency and consequently sell quote currency. Your bidding price to buy determines how much quote currency is needed to gain a single unit of base currency.
Binary option trade strategies for financial assets like EUR/USD
Most of the trading sites allow traders to bid on the popular currency pairs like EUR/USD with a potential of making 80% of profit in an hour. Therefore, for successful binary options online trading, it is vital to understand the potency of currencies and their relevant economies.
Before buying or selling the currency pair, a binary option trader checks the significant news release like interest rate, economic data or political event. For EUR/USD currency pair, your basic analysis concludes euro to be an upside pressure buy ‘call’ option. If you feel EUR price will fall, meaning the USD will increase buy ‘PUT’ option.
Set a time limit and wait for the price movement. If your option ends on or above the set price limit you receive 80% of the returns. Conversely, if your forecast fails you lose 85% from your investment. Thus, it is important that you study the market well, and start trading with small investments.