USDCHF Signal for Binary Options Trading

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7 Binary Options

The USD/CHF is a major pair in the binary options market, and it is actually a special pair. The main reason for this is because the Swiss Franc is considered to be a safe haven asset, which means it is a currency that can be trusted during market turmoil. When there is a crisis or a weakening sentiment in the US and European markets, people look for safe haven assets to protect their investments, and the Swiss Franc is one of such instruments. To understand what the safe haven asset means, think about gold. Whenever there is are troubles in the Forex and stock markets, people tend to buy gold in order to protect their funds.

However, the Swiss Franc seems to be special because people trade it even if the Swiss interest rate is negative, reaching -0.75% at the moment, which is a record low. The Swiss central bank cut rates because they consider the currency is overvalued and the bank decided to stimulate the domestic economy. The negative rate means that whenever the client wants to deposit Swiss Francs to a bank, he will have to pay for it rather than get a percentage as a gain.

In fact, people are not such familiarized with negative rates because this approach is recent. Whenever we think about a deposit, it is easy to imagine a percentage gain, right? Well, things are different with the Swiss Franc, which makes it unique and challenging for trading.

The USD/CHF price performance is tracking the economic differences between the Swiss and American economies. So, whenever there is a sharp change in interest rate in one of the countries, a sharp price movement of the USD/CHF pair should follow as well. For example, when the Swiss rate was cut to negative territory, USD/CHF lost over 16% in a single day and then recovered some losses.

As for the US, the most important economic reports and news are the following: the Federal Open Market Committee meeting and press conferences with the minutes, consumer price index, Fed member performances, Nonfarm Payrolls report, GDP growth report, ISM index in the manufacturing and non-manufacturing sectors, applications for unemployment benefits and retail sales.

The Swiss economic news and reports are focused on the Swiss National Bank rate decisions since they are the main drivers. Additionally, you should look for the KOF index, which is a kind of PMI-like index, and also the consumer price index that shows the inflation.

You should understand one particular thing about the USD/CHF pair – the Swiss National Bank (SNB) is the boss there, and whenever you note a sharp movement in the pair that seems to have no visible fundamental covering it, you should check if the SNB intervened with some policies.

Trading USD/CHF

To understand how challenging the USD/CHF pair is, you should know that in early 2020, the Swiss National Bank made a decision to cut rates to the negative territory, which pushed the USD/CHF pair down by 16% within a day. The brokers were hit from behind and had to cover the losses of their customers.

The SNB is very active in the domestic market, so, as a Forex or binary options trader, you should know that this bank is the main driver of the USD/CHF pair.

Traders also enjoyed how the USD/CHF pair correlated with the EUR/CHF pair. The pairs are inversely proportional, and Forex traders along with the binary options traders used to open positions in opposite directions.

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Important Economic Releases To Watch In Switzerland

The Swiss Franc reacts to the domestic economic changes, which is natural for any other national currency. Switzerland is an exporting country and it is not part of the European Union. To understand the export level, you should know that the chocolate industry is one of the most important in the world. The currency value is quite essential for the national companies. This is why the central bank is always trying to devalue the currencies – the bank has to support the domestic companies by doing this.

As you can guess, the Swiss National Bank meetings end with press conferences and whenever there are big surprises for the general public, the currency may be shaken in one direction or another. The curious fact is that despite the negative rates for over 2 years, USD/CHF is still traded below parity, which means traders still have much confidence in the Swiss currency and buy it without considering the difficult circumstances.

As mentioned above, you should also keep an eye on the consumer price index and the KOF indicator, which may give you ideas about the future direction of the Swiss economy and the USD/CHF price as well.

Important Economic Releases To Watch In United States

In the US, which is the largest economy in the world and which comes with major reports every week, the most important economic indicators are the following: Nonfarm Payrolls, released monthly, and the consumer prices index, which shows inflation and has a big share of the GDP. Additionally, you may watch the ISM index (from the Institute for Supply Management) in the manufacturing and non-manufacturing sectors, GDP growth, retail sales, producer price index (PPI), ADP’s private payrolls, applications for unemployment benefits, durable goods orders, and more.

What To Expect From Economic Releases

In conclusion, the most important things to watch are the central bank decisions in the both countries – the Federal Reserve in the US and the Swiss National Bank in Switzerland. The Federal Open Market Committee (FOMC) of the Fed is holding meetings every 6 weeks and come with detailed minutes that show the future projections. During the press conferences following the meetings, the USD may record sharp moves against its rivals, including the CHF.

As for the Swiss bank, we don’t know what to tell you since the bank is known for making unexpected and surprising decisions.

A Guide to Trading Binary Options in the U.S.

Binary options are financial options that come with one of two payoff options: a fixed amount or nothing at all. That’s why they’re called binary options—because there is no other settlement possible. The premise behind a binary option is a simple yes or no proposition: Will an underlying asset be above a certain price at a certain time?

Traders place trades based on whether they believe the answer is yes or no, making it one of the simplest financial assets to trade. This simplicity has resulted in broad appeal among traders and newcomers to the financial markets. As simple as it may seem, traders should fully understand how binary options work, what markets and time frames they can trade with binary options, advantages, and disadvantages of these products, and which companies are legally authorized to provide binary options to U.S. residents.

Binary options traded outside the U.S. are typically structured differently than binaries available on U.S. exchanges. When considering speculating or hedging, binary options are an alternative—but only if the trader fully understands the two potential outcomes of these exotic options.

Now that you know some of the basics, read on to find out more about binary options, how they operate, and how you can trade them in the United States.

U.S. Binary Options Explained

Binary options provide a way to trade markets with capped risk and capped profit potential, based on a yes or no proposition.

Let’s take the following question as an example: Will the price of gold be above $1,250 at 1:30 p.m. today?

If you believe it will be, you buy the binary option. If you think gold will be below $1,250 at 1:30 p.m., then you sell this binary option. The price of a binary option is always between $0 and $100, and just like other financial markets, there is a bid and ask price.

The above binary may be trading at $42.50 (bid) and $44.50 (offer) at 1 p.m. If you buy the binary option right then, you will pay $44.50. If you decide to sell right then, you’ll sell at $42.50.

Let’s assume you decide to buy at $44.50. If at 1:30 p.m. the price of gold is above $1,250, your option expires and it becomes worth $100. You make a profit of $100—$44.50 = $55.50 (minus fees). This is called being in the money. But if the price of gold is below $1,250 at 1:30 p.m., the option expires at $0. Therefore you lose the $44.50 invested. This called out of the money.

The bid and offer fluctuate until the option expires. You can close your position at any time before expiry to lock in a profit or a reduce a loss, compared to letting it expire out of the money.

A Zero-Sum Game

Eventually, every option settles at $100 or $0—$100 if the binary option proposition is true and $0 if it turns out to be false. Thus, each binary option has a total value potential of $100, and it is a zero-sum game—what you make, someone else loses, and what you lose, someone else makes.

Each trader must put up the capital for their side of the trade. In the examples above, you purchased an option at $44.50, and someone sold you that option. Your maximum risk is $44.50 if the option settles at $0, and so the trade costs you $44.50. The person who sold to you has a maximum risk of $55.50 if the option settles at $100—$100 – $44.50 = $55.50.

A trader may purchase multiple contracts if desired. Here’s another example:

  • NASDAQ US Tech 100 index > $3,784 (11 a.m.).

The current bid and offer are $74.00 and $80.00, respectively. If you think the index will be above $3,784 at 11 a.m., you buy the binary option at $80, or place a bid at a lower price and hope someone sells to you at that price. If you think the index will be below $3,784 at that time, you sell at $74.00, or place an offer above that price and hope someone buys it from you.

You decide to sell at $74.00, believing the index is going to fall below $3,784 (called the strike price) by 11 a.m. And if you really like the trade, you can sell (or buy) multiple contracts.

Figure 1 shows a trade to sell five contracts (size) at $74.00. The Nadex platform automatically calculates your maximum loss and gain when you create an order, called a ticket.

Nadex Trade Ticket with Max Profit and Max Loss (Figure 1)

Free Signal 24.02.2020 “USD/CHF sell” – details

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Caution: Trading involves the possibility of financial loss. Only trade with money that you are prepared to lose, you must recognise that for factors outside your control you may lose all of the money in your trading account. Many forex brokers also hold you liable for losses that exceed your trading capital. So you may stand to lose more money than is in your account. FXPROfitSignals.com takes not responsibility for loss incurred as a result of our trading signals. By signing up as a member you acknowledge that we are not providing financial advice and that you are making a the decision to copy our trades on your own account. We have no knowledge on the level of money you are trading with or the level of risk you are taking with each trade. You must make your own financial decisions, we take no responsibility for money made or lost as a result of our signals or advice on forex related products on this website.

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Best Binary Options Brokers 2020:
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    Binarium

    Best Binary Options Broker 2020!
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  • Binomo
    Binomo

    Good Choice For Experienced Traders! 2nd place in the ranking!

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