Binary Options Trading

Hi all,

New to the forum and relatively new to Forex (been trading live with a small amount for about 3 months). I was just wondering if anyone knew much about binary options trading? I hadnt even heard of it up until about two days ago but although I still don’t really understand what it is, I have read a few things that have said it’s actually better to trade than forex.

Any information or thoughts would be great! :slight_smile:

If your talking about Binary Bets as in Fixed odd Bets then I would stay away from these.
Just trade the real thing, seriously?

hi,

thanks for your reply. why do you say that?

Well for you to understand this you need to look at the two aspects which are common when trading in the usual way, and then you need to realise that these are not included in Binary Betting.

These two aspects are Flexibility and Risk Management.

First let’s deal with Flexibility. I’m sure you have heard of the saying “let your profits run, and cut your losses”. With conventional trading this can happen, you as the trader have total flexibility and can edit your trade as and when you wish. However with Binary Trading you are simply choosing a predetermined outcome of the trade. The trade has to hit this outcome or you have lost your bet. And by the way, I can use the term ‘BET’ in this case as Binary Betting IS gambling. Just like on roulette you decide chose a colour, that is you predetermined outcome that must be met.

Also binary betting give you fixed odd’s, so if your chosen fixed outcome happens to be met, then you know how much you will be winning, or losing if it is not met. But, and this is the second problem with binary betting, risk management is not in your favour. The odds that are being offered to you are worse off compared to if you actually manually entered the trade though a conventional trading account. This is because the book maker, or broker offering you the option to place a binary bet has to have the odds in their favour, just like a house edge.

To some up, Binary betting in my view is for people who do not want to learn how to trade in the conventional way. And they have to pay the price for this lack of effort as binary bets are always worked against them. Sure you can win, just like you can win when you go to a Casino. But can you win each and every time you keep going back, of course not.

I’ll just say binary options can also be for those who like trading, have studied and practiced trading, but only have a few hundred dollars to work with and wouldn’t mind using their charting skills to win a bunch of binary options bets to gain enough real capital to do some real trading. That, at least, is the boat that I’m in.

If I were in this boat I’d open an account for $400 or so and save $25-$50 month (skip a few meals?) so that in a year or two I could start trading.
The odds are overwhelming, as a new trader, that you will be at BE/SmallGain or a loss for the first 2-5 years so there is no hurry :54:

With regular options you pay for the pleasure of not having money management nor exit strategy.
With binary options you pay only for the pleasure, Las vegas without the strippers.

Not the one asking advice, Sword. Sorry!

Any successful trading is simply well researched, educated guess wagering. Binary options is a relatively newer regulated investing system (with very limited licensure, albeit, and a very stripped down, simplified version of straight forward trading) but an investing system all the same. If you’re not into day or spot trading, binary options is not for you. If you are, you can use your trading knowledge and skills in binary options, understanding that your exit is predefined, and make quite profitable educated guess wagers - just like traditional trading. Call or put? Place your bet.

The clearest way to understand the value of a binary options trade is to compare it with a straight equity purchase and a conventional option trade.

Variables:

We are trading stock / options in Disney (“DIS”)
At 2:00 PM DIS shares are trading at $39.00 a share.
A $100 investment will be used for these examples.

Stock Purchase:
With $100.00 you could by approximately 2.5 shares of DIS. You would own the stock at a base price of $39.00 as the stock rises you make money as it goes down you lose money. The straight stock purchase has the least risk. The stock would have to go to $0 to lose your entire investment. You could also sell the stock at any point to minimize your loss. Of course to make 70% on your investment DIS would have to trade at $67.00. This could take a long period of time or may never happen at all.

Conventional Option Trade:
A short term call option with expiration date in 3 weeks and strike price of $39.00 costs about $1.00 per contract of 100 shares, so for $100 you could by 1 contract and control 100 shares for 3 weeks. In the conventional option trade the stock would have to go up more than $1 in the 3 week period in order to generate profit. If the stock closes below $39 at the expiration date than you lose your $100.00 investment. In order to make the same 70% return the stock would have to trade at $40.70 at some point before the expiration date. Two factors mitigate the risk. The option itself is trade-able before the expiration date and you can exercise the option at any time before expiration.

Binary Option Trade:
The investor purchases a Binary Option Call at a spot price of $39.00. The option expires at 2:30 PM. If DIS is trading above $39.00 at 2:30 you make $70 on the trade in minutes! If DIS is below $39.00 at 2:30 you lose your $100 investment.

Conclusion:
The Binary Option trade carries the highest short term reward. A return of 70% on your investment in a half hour. The trade off for this high reward is the risk of losing your $100 investment in the same period if the stock does not go above $39.00.

Or you can trade with a range you set, that is good for the day with a return of up to 2000% safe in the knowledge you can only lose the 100 you put at risk. You need to shop around with your broker because these up/ down for max 85% platforms are old news and gaming sites. Deal with regulated broker that has taken the time money and effort to build a real trading platform not an elaborate game of heads or tails.

With the platform I use I can build the option I want set the amount I want to risk for the return I am seeking… then sell out at any time to maturity to take a profit or limit a loss, I can also trade right in to the close… You need to shop around guys.

I would like to add some broker starts at 75 %,unless you reach vip status.your account start from 85% to 90%.I know a norwegian doctor who make $2000 per day

That conclusion pretty much sums it up. It can be quick money in a short amount of time. Some really talented spot Forex traders can probably and do emulate the same thing daily. Personally, option trading where you can’t benefit from time decay and really do proper analysis isn’t my cup of tea. I just buy plain vanilla boring options once a month and hold em for 3 weeks and just collect what the market is willing to give me. 10-25% isn’t unusual for a 3 week trade, for a month to me ain’t so bad. The only really annoying thing to me is the high commissions and cost. That’s where Spot fx really shines .

Not discouraging the Binaries. Best thing to do is give it a try with a broker that will let you demo trade it. I think you’ll find that it’s not as easy as it sounds. Spot is tough enough if you open a trade without a stop, imagine now that it has an expiration factored in.

I take it you’ve not won on binary options Mike?

I think Binary Option shares the same excitement of gambling, but with new functions set up by binary options brokers, such as Take Profit and Sell back, the traders probability of winning cash increases far beyond gambling probabilities.

Do you agree?

John

'To expect the unexpected shows a throughly modern intellect" Oscar Wilde

I thought that this is trading, so you suppose to know that you are winning or losing. as for in forex trading, do you wonder when you enter a market you are lost of how to exit, worst when you try to hold a losing position you tend to lost faster because you do not want to cut lost. how many people is so discipline when you enter a forex position you will definitely put a stop lost position but in binary option you would not this problem

I had been investing with Forex market for many years, and had spent a lot of $$ investing with “auto trade robot” and signals services, but trust me, nothing beats learning to trade yourself.

Anyways, I came to know about binary options a year ago, and had lost more than USD20K for the start before I sat down and re-learn everything from scratch.

Before you jump into binary options, you must understand that forex runs 24 hrs. round the clock, and different trading time have different market behaviour. My personal experience found out that Australia and Asia time are slower than Europe and US time, but Asia time are more predictable for beginner, while Europe and US time are for more experience trader because the market moved faster, it can turn from profit to loss in just a few minutes time.

Secondly, you must have a set of strict trading rules and money management rules to follow, many peoples lost their money in the market due to lack of discipline in these 2 rules. Many people forget to stick on to these rules after they are in the market, and instate of trading, it becomes gambling.

Thirdly, you must also learn to read the trading graph, either using Meta-trader software or other similar software, you have to know what setting to use, example “moving average setting” , “momentum” etc., Be-aware of the value of all these setting, some setting work well on normal forex trading may not work for Binary Options.

After many months of studying and live trading, now I have numerous live account with different trading strategy, not every day is a profit day, but in looking at monthly basis, all are in the profit of about 30% to as high as 200% monthly with only 5% margin risk on your account.

Worth reading this I feel, 301 Moved Permanently

As I had mentioned, trading normal forex and binary options are totally different ball games even thou they are both base on the same currency pair.

As binary options has a very short expire time normally 15 to 30 mintues, you CANNOT use your normal forex trading methods on binary options, if you does, you will mostly blow your account in just a few days time, which I falls into the same mistake at the beginning stage of my binary options life, but now I am on steady 5 to 10 percent profit margin everyday.

To summarise, you must do alot of study, have a positive mind set, good trading rules to follow and I can assure you success.

I don’t think it’s just the method of trading that people need to be wary of though. There’s A LOT of binary options brokers popping up that aren’t properly regulated and a lot are just white labels, i’ve heard people who’ve tried to withdraw money and struggled and also in trades the brokers moved the goal posts in various ways. Either way as Alfredloo says, study up, not just on trading but on the whole of Binary Options markets, brokers etc before jumping into it.