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Why Binary Forex Options are better than Spot Forex

  • #441
  • Jul 27, 2009 11:08am Jul 27, 2009 11:08am
The dollar is rallying some today, so I took a look at USD/JPY. Would have expired at 100. Oh well, 21 points profit is totally acceptable.

Contract: Buy USD/JPY > .9518 at 12:00 PM
Size: 10 Contracts ($10/Point)
Entry: 75 Points
Target: Limit to sell 10 Contracts @ 96 Points
Result: Profit Target Accomplished

Coach
  • #442
  • Jul 27, 2009 11:48am Jul 27, 2009 11:48am
Here is my third trade. I did not want to take a chance with this trade. I noticed we were building some resistance on the 15 minute chart. With expiration of the option only 20 minutes away, it made sense to me to close the trade with 10 points profit.

Contract: Buy GBP/USD > 1.6479 at 1:00 PM
Size: 10 Contracts ($10/Point)
Entry: 78 Points
Target: Limit to sell 10 Contracts @ 88 Points
Result: Profit Target Accomplished

Coach
  • #443
  • Jul 27, 2009 12:12pm Jul 27, 2009 12:12pm
Sorry Yoda. I got to thinking this might be turning into a Coach journal rather than a discussion about the topic of the thread. I may decide to start a journal of my trades, which might be better than clogging this thread with my trades. In the future, I will limit my words to discussion of advantages and/or strategies of trading binary options. Thanks for starting this thread.

Sincerely,

Coach
  • #444
  • Jul 27, 2009 2:46pm Jul 27, 2009 2:46pm
Just trying to see what is better. Trading when there are a few hours left for expiration or if it's better trading when the contracts are opened for trading & you have about 20 hours to go. So i traded the e/u today & bought at 90 to close above 1.4200 before the u.s. stock market opened. The price at that time was about 1.4272. Home sales report was good & their was a spike up so i thought i am home free. Yea right! Next thing i know euro is going down. It went down as low as 1.4203 Yikes! I hate when that happens. I started thinking this might keep going down & i might have to close for a loss. But it never went lower. So finally with 1 hour to go it started going up & i was home free. So it got tense for a while.
  • #445
  • Jul 27, 2009 6:25pm Jul 27, 2009 6:25pm
Quoting ferndog
Just trying to see what is better. Trading when there are a few hours left for expiration or if it's better trading when the contracts are opened for trading & you have about 20 hours to go. So i traded the e/u today & bought at 90 to close above 1.4200 before the u.s. stock market opened. The price at that time was about 1.4272. Home sales report was good & their was a spike up so i thought i am home free. Yea right! Next thing i know euro is going down. It went down as low as 1.4203 Yikes! I hate when that happens. I started thinking this might...
I have had those trades. I personally trade as soon as trading is open for the next day. The reason is that when there are only a couple of hours left, you're getting prices like 90 at 70 pips away with 3 to 4 hours to go. I get in at like 93 at 160 pips in the money which over a day (based on ATR) is about 30 pips farther than the range for a day. The closer you get, the more the prices consolidate to the "gambling" numbers where it could go either way. By the time it makes it there, I'm already locked in because of how far from the strike price is from the current rate... That's my .02.
  • #446
  • Jul 27, 2009 10:05pm Jul 27, 2009 10:05pm
yea thats right lucashammer just remember the average is just an average.
Also when you start early that gives it more time to move one way or another. Some days they will break way over the average. Maybe not now because nothing is moving the euro. But as soon as some news comes out that moves it, then you can see bigger moves. But as long you are on the right side then you are good to go. If you are doing good thats great but just keep an eye.
  • #447
  • Jul 28, 2009 5:14pm Jul 28, 2009 5:14pm
Today I had my first binary loss, I took a trade with a with a 90% probability long. As the trade neared my maximum loss I decided to cut my losses and not risk taking the maximum loss. The trade later turned around and came back to be a winning trade by a few pips. So I loss on that position and won on my second position for an overall loss. I am happy to cut my loss, since if I took a maximum loss it would have cost my more than twice the loss I ended up with. I hit my maximum pain point and decided to act. Some say that is the best to act and protect your profits because of the terrible risk/reward to gain high probability. Others say hedge by opening more positions or just let everything play out. What do you think? I am perfectly happy cutting my losses and preserving my capital. If any one is interested I would be happy to start a thread for a shared binary trade journal.
  • #448
  • Jul 28, 2009 11:26pm Jul 28, 2009 11:26pm
extremely interesting trade guys!

Was looking to open an account at ig last week just to trade and suplement my income and saw this binary option and thought it sounded interesting.

And of course the broker's blurb on it was so attractive with some insane awesome r:r lol so i went and open a demo account to try and replicate it without really knowing

just for giggles i went long the entire demo account funds (100k) on some index to close above x, obviously it was far away and so i bought it at 3pips hoping to ride it to 100...

needless to say I lost it all ahah pure gamble but was interesting to see how it all works

And so I then did a bit of research and stumbled across here, which to say has been informative would be an understatement!

Till I have enough money saved up (yes I know i just need a few hundred dollars, but that's something I can't afford just yet), i'll happily trade demo accounts and look forward to conceptualising ideas and developing strategies with you guys!

Happy Trading!
  • #449
  • Jul 29, 2009 11:38am Jul 29, 2009 11:38am
Quoting ferndog
yea thats right lucashammer just remember the average is just an average.
Also when you start early that gives it more time to move one way or another. Some days they will break way over the average. Maybe not now because nothing is moving the euro. But as soon as some news comes out that moves it, then you can see bigger moves. But as long you are on the right side then you are good to go. If you are doing good thats great but just keep an eye.
Yeah, I definitely agree that it is only an average. I'm also using a 5/8 crossover on the daily chart to help find the trend to make sure even if it does move a lot, it's not in my direction, which saved my ass today. I've been staying low and buying the contracts, which on the E/U would not have been the best idea today, but the 5/8 SMA crossed down yesterday so I sold contracts 160 pips high and it went my way. Now, after a 20% drop in my account on the first day, in two and a half weeks, I'm up 30%. Just to think what I could've done had I not lost that first 20%...
  • #450
  • Jul 29, 2009 1:07pm Jul 29, 2009 1:07pm
Quoting cmoon10
Today I had my first binary loss, I took a trade with a with a 90% probability long. As the trade neared my maximum loss I decided to cut my losses and not risk taking the maximum loss. The trade later turned around and came back to be a winning trade by a few pips. So I loss on that position and won on my second position for an overall loss. I am happy to cut my loss, since if I took a maximum loss it would have cost my more than twice the loss I ended up with. I hit my maximum pain point and decided to act. Some say that is the best to act and...
cmoon10, How long have you been trading the binaries? Sorry about the loss, btw. Sooner or later it gets us all. My philosophy for trading the binaries has been to protect as many profits as possible because of the risk/reward. If you're making 7 points per trade, and lose 93 on a trade, so you have to win 14 out of 15 to make a profit. However, if you cut your losses at 63 points down (when the contract is at 30) it only takes 9 out of 10 to stay even, which from my personal experience is extremely doable in this game. Opening more positions could hurt you more than it helps, but that's just my opinion. That's how I ended up being down 20% after the first day. My opnion anyways. And we could start a shared binary journal. We did kind of hijack this thread...
  • #451
  • Jul 29, 2009 1:10pm Jul 29, 2009 1:10pm
Quoting jiroumi
extremely interesting trade guys!

Was looking to open an account at ig last week just to trade and suplement my income and saw this binary option and thought it sounded interesting.

And of course the broker's blurb on it was so attractive with some insane awesome r:r lol so i went and open a demo account to try and replicate it without really knowing

just for giggles i went long the entire demo account funds (100k) on some index to close above x, obviously it was far away and so i bought it at 3pips hoping to ride it to 100...

needless to...
Glad to hear it helped and welcome to the world of binaries. I've been trading a few weeks now (demo and live combined) and have my system worked out so I haven't had a loss other than the first day I traded. If you have any questions, post them on here, and we'll see if we can help. Glad to hear this thread has been informative already.
  • #452
  • Jul 29, 2009 2:32pm Jul 29, 2009 2:32pm
Well today was not a good day for me. It's much more fun to post when you do good. I had a good amount riding on EUR/USD closing above 1.4020. Actually I closed them a little early because I could tell there was no way price was going to close at 100. Just as I suspected, EU rallied within a few minutes after expiration to above 1.4220. I have found this to be a recurring theme for me. I have a trade where I stand to make a very nice profit, price is very close to the profit/loss point, and it closes a few pips below the target and I get zero. Then very soon after expiration there is a move that would have put me in profit. Obviously my system is flawed. I will continue to work on it.

I still maintain the best strategy for me is to trade the last 2-3 hours of the market. Most all of my losses have occurred when I took a position and held through the trading day. So the bottom line for today is roughly a 10% loss. No, it is not an insurmountable loss by any means. Just a good learning day . As I am writing this, EU has broken 1.4030, lol.

Congrats Lucashammer ! You're doing great!

Coach
  • #453
  • Jul 29, 2009 2:41pm Jul 29, 2009 2:41pm
Quoting Coach1959
Well today was not a good day for me....
When I get round to doing this live I'll probably carry on with the strategy that worked well on demo (you'll be lucky I heard them say) and that was to look for a decent S/R target that had potential and then play a one touch trade. The good thing about that, of course, is that price doesn't have to close above it, just touch it and you get your 100.

I'm not sure if that's an option with your borker but it is with IG.
  • #454
  • Jul 29, 2009 3:16pm Jul 29, 2009 3:16pm
Quoting Coach1959
Well today was not a good day for me. It's much more fun to post when you do good. I had a good amount riding on EUR/USD closing above 1.4020. Actually I closed them a little early because I could tell there was no way price was going to close at 100. Just as I suspected, EU rallied within a few minutes after expiration to above 1.4220. I have found this to be a recurring theme for me. I have a trade where I stand to make a very nice profit, price is very close to the profit/loss point, and it closes a few pips below the target and I get zero. Then...
I just increase my wager amount and take the safer trades. The 5SMA crossed the 8 SMA going down so last night when it opened I sold EUR/USD > 1.4320. The price dropped all day and my trade was locked in by about 8 a.m. this morning knowing I would make a profit. Thanks for the congrats. Hope that loss gets reversed quickly.
  • #455
  • Jul 29, 2009 4:17pm Jul 29, 2009 4:17pm
I sold euro closing above 1.4300. So today was as easy as it can get. I wish all days were like this! Oil plunged. Equities were lower. Oil inventories were 5 mil & so after that was announced everything started falling. Bearish day today.
  • #456
  • Jul 29, 2009 4:30pm Jul 29, 2009 4:30pm
Quoting reres
...does anyone know what is the limit when u buy binary options? can you buy 1000$ per point?

maximum i did was 100$ but i wonder if there is any limit and how this is processed? who takes the other side of binary option....in my opinion is the broker
Hi Reres,

Here is some info to answer your questions about about binary option trading. I have a demo with both Nadex and IG Markets. So far, I am leaning toward IG Markets for my live account. These points apply to IG. I have not talked to Nadex about this yet.
1) There is no limit to the amount of contracts you can trade. Your account just needs to be large enough for the margin requirements. So you could trade a $1000/point trade.
2) IG Markets is a market maker, so they take the opposite side of all trades.

Coach
  • #457
  • Jul 29, 2009 7:05pm Jul 29, 2009 7:05pm
Quoting Coach1959
2) IG Markets is a market maker, so they take the opposite side of all trades.
Coach
Is that good. Doesn't it mean that they lose if we win?
If slaughterhouses had glass walls, everyone would be a vegetarian!
  • #458
  • Jul 29, 2009 9:27pm Jul 29, 2009 9:27pm
The market maker will try to make profit on the spread. They will buy at a certain price from the client & sell at a profit when the client loses. Market makers will give the market more liquidity. Thats good for us because they make it easier for us to place trades i.e. we can find good prices to trade & trading is always available of course during normal trading hours. Without a market maker there would be no trading or we would have very few trades to chose from.
  • #459
  • Jul 29, 2009 11:05pm Jul 29, 2009 11:05pm
Only binary fx one touches are available to me on my platform, so just the past few days i've been mucking around with the hourly indexes (specifically australia200 cash and ftse100) to close above or below a certain line

I've had a few lucky breaks but pretty much I'm just purposely committing every single mistake I could do to understand my own psychological makeup if and when trading this live

i.e. blowing out my entire margin so it become more of a gamble
letting my losers run hoping it will turn around to a winner
not exercising any sorta risk control or money management strategy to name a few

but this to me is all necessary to prevent me further down the track blowing up real money.

For now I don't really have any working strategy.

But something that I've been thinking about is if on the hourlies, if a bar just wants to straddle along the line i.e. its fluctuating above and below could keeep buying and selling for maybe 10-20 pips and close out the position if it goes against you 10-20 pips. So usually price of the binaries there would be around 40-60.

Definitely not tested, and personally coming from an inclination of trend following this doesn't quite gel well.. but if it makes money more power to me
  • #460
  • Jul 30, 2009 8:48am Jul 30, 2009 8:48am
Well, new day, new trade. I took one last night that the EUR/USD wouldn't cross above 1.4200. Have a few hours left, but it just started dropping again so I think I'm going to do fine. I'm about 180 pips in the money now. This puts me 36% profit on my account in a little under 3 weeks. I can definitely deal with that.
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