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Why Binary Forex Options are better than Spot Forex

  • #21
  • Edited 3:10am Jun 7, 2009 2:39am | Edited 3:10am
Mhh haven't found very promising articels about Binary Options.

The death of Fixed Return Options:
http://www.theoptionsinsider.com/brokerage/?id=1458

Most of the time People complain about high spread (thinly traded) commission etc which makes trading Binary Options a pain in the ass.
  • #22
  • Jun 7, 2009 5:25am Jun 7, 2009 5:25am
I am not so sure that Binary options is the way to go.......... looks like a fast way to blow the account... better to learn a simple price action based trading method
  • #23
  • Jun 7, 2009 6:07am Jun 7, 2009 6:07am
Hi Yoda

You've let the cat out of the bag.

I've been trading Spot FX for 4 years and came across Binery trading recently and i've been hooked ever since.

I have only been trading the up/down daily ladders and only entering only a matter of seconds prior to closing and the profits have been sensational, however am i correct in saying that if you do get it wrong you can lose a whole lot more?

Cheers
  • #24
  • Jun 7, 2009 6:55am Jun 7, 2009 6:55am
This thread smells a bit like marketing...
  • #25
  • Jun 7, 2009 6:59am Jun 7, 2009 6:59am
Quoting Tjpld
Mhh haven't found very promising articels about Binary Options.

The death of Fixed Return Options:
http://www.theoptionsinsider.com/brokerage/?id=1458

Most of the time People complain about high spread (thinly traded) commission etc which makes trading Binary Options a pain in the ass.
Hedgestreet charges $2 per trade every time, no matter what you're amount is, that's it. It's a flat fee. There is no spread pricing at Hedgestreet. In fact, Hedgestreet said that their pricing is going to get cheaper!



IG Markets, however, does charge for spread.
Binary Options Trader
  • #26
  • Jun 7, 2009 7:01am Jun 7, 2009 7:01am
Quoting Blaiserboy
I am not so sure that Binary options is the way to go.......... looks like a fast way to blow the account... better to learn a simple price action based trading method
Like all trading, Money Management applies with Binary Options. Just don't risk more than 3% - 5% of your account per trade. Trading is 10% strategy, 10% Money Management and 80% discipline/self control. You can't get wiped out fast on Binary Options unless you LET yourself get wiped out fast.
Binary Options Trader
  • #27
  • Jun 7, 2009 7:07am Jun 7, 2009 7:07am
Quoting fxterrapin
This thread smells a bit like marketing...
If you know of any Binary Forex Option brokers please let me know, because I have simply mentioned all of the Binary Forex Option brokers that I know of: Hedgestreet and IG Markets. Although I trade with Hedgestreet, I never told anyone to go with one broker over another.

The subject of this thread is why Binary Forex Options is better than Spot Forex.

The reason why I made this thread is because the more traders know about Binary Options, the more liquidity we can bring into the market and the more other brokers might want to offer Binary Options as well...which would mean better pricing for all of us.
Binary Options Trader
  • #28
  • Jun 7, 2009 7:23am Jun 7, 2009 7:23am
I don't agree with you all, binary forex options.. come on learn to trade the real market instead of loose your time with this crappy things..!
  • #29
  • Jun 7, 2009 7:24am Jun 7, 2009 7:24am
Quoting Levendi88
Hi Yoda

You've let the cat out of the bag.

I've been trading Spot FX for 4 years and came across Binery trading recently and i've been hooked ever since.

I have only been trading the up/down daily ladders and only entering only a matter of seconds prior to closing and the profits have been sensational, however am i correct in saying that if you do get it wrong you can lose a whole lot more?

Cheers
It is incorrect to say that if you lose on Binary Options that you would lose whole lot more. You can only lose what you paid for in contracts. In fact, Spot FX is more risky than Binaries because a sudden price gap that extends beyond your stop loss will actually cost you more than what you wanted to risk. A lot of traders don't realize that a Spot Forex stop loss is not a guanrentee. IBFX sometimes talks about their infamous 200 pip price gap during an NFP new anncouncement once. Imagine if that 200 pip price gap went in the direction of your 40 pip stop loss? This can't happen on Binary Options, because you only lose what you pay for in contracts.
Binary Options Trader
  • #30
  • Jun 7, 2009 7:47am Jun 7, 2009 7:47am
Quoting tunera
I don't agree with you all, binary forex options.. come on learn to trade the real market instead of loose your time with this crappy things..!
Some real agruments would be nice.

@Yoda
Those OnTouch Options look promesing to trade. Just like a TP.

Do you offten sell your options before they expire?
  • #31
  • Jun 7, 2009 7:52am Jun 7, 2009 7:52am
i know i have been offensive in my last post, sorry i hope somebody understood my "humor sense", or what else it is..

Anyway, what i was meaning, is that of course spot is more riskious (and so more hard), but there are tons of things u can do in the spot market that simply with fixed options u can't do, and also the profit that can be achieved is much more high in spot market then in options one.

So, (at new traders) i would advice to study the market and learn to trade, instead of use the fx options, don't be scared from risk! risk can and should be managed and understood, pratice pratice pratice!
  • #32
  • Jun 7, 2009 7:53am Jun 7, 2009 7:53am
Yoda Glenn -

I’m a little confused by your hedge description above. Basically I will short a binary contract when I enter a long spot position, and I will only do this when I am expecting low volatility. (I can’t stress that enough.) If the market goes up, my option is paid for, and if the market goes down, especially by a small amount, the binary kicks in a nice pay out.

By the way, thanks for starting this topic. I have not seen much info from other traders who may have some good ideas on using binaries, whomever their broker may be.

siafx
  • #33
  • Jun 7, 2009 8:21am Jun 7, 2009 8:21am
Quoting Tjpld
Some real agruments would be nice.

@Yoda
Those OnTouch Options look promesing to trade. Just like a TP.

Do you offten sell your options before they expire?
Honestly, I just started trading Binary Forex Options. I am new to them, so everyone here please take note of this. As for how I trade them, I just like to let them expire in the money for the $100 pay out per contract.

Also, please not some difference between IG Markets and Hedgestreet (even though IG Markets now owns Hedge street.)

IG Markets has better trading hours than Hedge street. Basically, you can't trade Binaries at Hedgestreet during the London open, but you can at IG Markets.

Hedgestreet has a flat fee per transaction, whereby IG Markets has some very large spread pricing. IG Markets is more expensive to trade with.

IG Markets has a monthly one touch Binary, Hedge Street doesn't.

Hedgestreet has a weekly Binary that pays out at the end of Friday at 3 p.m. IG Markets does not.

Hedgestreet market has more "strike prices" than IG Markets on any given currency pair. This could be seen as a plus or minus.

Hedgestreet allows you to place open orders for the price that you want to pay for a contract(s). IG Markets does not. So if a contract is selling for $30 and you want to buy it for $25, simply place an open buy order for $25 and your order will be filled once that contract's "drawdown" brings it to $25.00. And vice versa for selling the contract and making a profit.
Binary Options Trader
  • #34
  • Jun 7, 2009 8:31am Jun 7, 2009 8:31am
Quoting siafx
Yoda Glenn -

I’m a little confused by your hedge description above. Basically I will short a binary contract when I enter a long spot position, and I will only do this when I am expecting low volatility. (I can’t stress that enough.) If the market goes up, my option is paid for, and if the market goes down, especially by a small amount, the binary kicks in a nice pay out.

By the way, thanks for starting this topic. I have not seen much info from other traders who may have some good ideas on using binaries, whomever their broker may be.

siafx...
A. Buy a Monthly One Touch.

B. Open a sell order on your Spot Forex account, in the opposite direction of your monthly one touch.

C. Set the stop loss of your Spot Forex position at the "one touch" price of your monthly one touch contract. This way if your Monthly One Touch is hit, your hedged spot forex position will close out.

D. Set the take profit level of your spot Forex position to the opposite length of your stop loss...or simply don't set a take profit on this side at all. This is in case your currency pair goes in the "wrong" direction on your Binary side.

But then again, why even use Spot Forex for a Hedge? Why not just SELL a Monthly One Touch that is in the opposite direction of your BOUGHT Monthly One Touch?

Buy Monthly One Touch @ 25$ per contract = possible payout equals $100.

Sell Monthly One Touch @ 25$ per contract = possible payout equals $100.

The only way this stratgey can lose is if the price of a currency pair stays in between your two monthly one touch prices....for the entire month!
Binary Options Trader
  • #35
  • Jun 7, 2009 10:04am Jun 7, 2009 10:04am
Dear Yoda Glenn. I already read this thread. I want to ask question:
1. For newbie, what should we choose binary forex option or spot forex?
2. could we bet less than US 25$?thx for sharing
  • #36
  • Jun 7, 2009 10:59am Jun 7, 2009 10:59am
I honestly think you should trade Spot Forex first before trading
Binaries. This might sound like a contradiction on my part, but Binaries requires that you understand the TIMING of the Forex market (as well as its volatility patterns.)

My Binary thread is really intended for Spot Forex traders who have at least
one year of live experience trading spot Forex.


But, who knows...maybe you can be that total newbie who goes right into
Binaries....give it a try.

And to answer your second question....you can buy (or sell) a Binary contract for as little as $1.00. But keep in mind that the cheaper the contract is, the less likely it is to hit its strike price. But this conversation is moot anyway because you need at least $100 to start a live Binary account.
Binary Options Trader
  • #37
  • Jun 7, 2009 12:25pm Jun 7, 2009 12:25pm
One more thing....when choosing between Hedgestreet or IG Markets for Binaries keep this in mind:

Hedgestreet reports your earnings to the IRS, IG Markets does not.
Binary Options Trader
  • #38
  • Jun 7, 2009 12:35pm Jun 7, 2009 12:35pm
Yoda when you buy a binary at $80 is the market liquid enough so that you can buy lets say with 10 min left for expiration? In other words lets say you buy u/j strike 98 for a 2 hour time frame expiration & you see that u/j is at 98.50 with 1 hr left or even less time will the market be liquid enough for me to get in at $80?
  • #39
  • Jun 7, 2009 1:04pm Jun 7, 2009 1:04pm
Quoting ferndog
Yoda when you buy a binary at $80 is the market liquid enough so that you can buy lets say with 10 min left for expiration? In other words lets say you buy u/j strike 98 for a 2 hour time frame expiration & you see that u/j is at 98.50 with 1 hr left or even less time will the market be liquid enough for me to get in at $80?

>>Yoda when you buy a binary at $80 is the market liquid enough so that you can buy lets say with 10 min left for expiration?<<

Oh yes, definitely.

>>In other words lets say you buy u/j strike 98 for a 2 hour time frame expiration & you see that u/j is at 98.50 with 1 hr left or even less time will the market be liquid enough for me to get in at $80?<<

Well, in this scenario a binary wouldn't be able to be bought at $80. It would look more like $90 or $95, in which case you would be risking 90$ or $95 just to make $10 or $5 profit. If the price of u/j dips below your strike price, then you're out of $90.00. Keep that in mind.
Binary Options Trader
  • #40
  • Jun 7, 2009 1:14pm Jun 7, 2009 1:14pm
Whats intersting is when the price is related to the chances of winning 0-100. When Price is at 25 you should have a 3:1 Risk Reward Ratio. You risk 25 Points per Contract but on strike you could get 100 USD - 25 = 75.
Now if you take this trade 100 times. You should end up with 25 Winners and 75 Losers? 25 * 75 = 1875 Profit and 75 * 25 = 1875 Loss. You'd always end up Break Even? Just some thing that went through my mind. I'll definately play around with IG and hedgestreet the coming week. I think I got the concept.
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