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Why Binary Forex Options are better than Spot Forex

  • #541
  • Edited Apr 15, 2011 12:01am Apr 14, 2011 11:50pm | Edited Apr 15, 2011 12:01am
Wow...now the same option that was 8 pips below and corrected itself, is now 10 pips above where price should be. What the frack is up??? I guess to make it fair, they swing it on both ends (lol).
"GIVE ME 3 POINTS IN SPACE IN TIME AND WATCH ME CREATE MAGIC."
  • #542
  • Apr 15, 2011 2:29pm Apr 15, 2011 2:29pm
Quoting kapital
I'm experiencing "spreaditis" rught now. The nearest option on the gbp/usd has about an an 8 pip spread below the correct price whereas the furthest option is displaying the correct price.

LOL...before I could finish typing this message, price has corrected itself on the nearest option and is now trading at the underlying (correct) price. Question: Do the spreads eventually disappear on all options before they expire, thus bringing price back in line with the underlying price?
Yes if you go to my trades while you have them open you will see the correct underlying but it updates slowly on that page. The expiry will be right on spot, but it may slightly one way or the other depending on which broker you are using to check it against, if you have big bucks you can get a Reuters feed which is what they use but I use FXopen and have found it to be extremely close to their prices, even on the super tight ones that could go either way the Fxopen feed is very close.
  • #543
  • Apr 16, 2011 2:52pm Apr 16, 2011 2:52pm
Do you use any particular strategy to give you an edge due to the spreads?
"GIVE ME 3 POINTS IN SPACE IN TIME AND WATCH ME CREATE MAGIC."
  • #544
  • Apr 17, 2011 8:51am Apr 17, 2011 8:51am
Quoting kapital
Do you use any particular strategy to give you an edge due to the spreads?
I almost always do the full hour trades, hardly ever the shorter term ones and on those you don't usually see a spread for the first half hour. Also as you mentioned before, you saw the spread bounce far from one side to far on the other, so if you see that happen, the spread can actually give you a better entry if it bounces in a way that favors the direction you believe it will go. For the most part though I open most of my trades within the first 10 minutes of a new hourly binary and in those cases there is almost never a spread.
  • #545
  • Apr 25, 2011 4:51am Apr 25, 2011 4:51am
This particular setup has been rewarding on the day. I'm currently in a short binary trade, set to expire at the top of the hour, from the encircled area .
Attached Image (click to enlarge)
Click to Enlarge Name: GU.GIF Size: 34 KB
"GIVE ME 3 POINTS IN SPACE IN TIME AND WATCH ME CREATE MAGIC."
  • #546
  • May 1, 2011 11:59am May 1, 2011 11:59am
The formula for 100% compounding of an investment (x) over a number of days (y) is:

(x) * 2^y

So, if my initial investment is $1, then after 5 days I will have:

$1 * 2^5
$1 * 32
$32

Breakdown
$1 + $1 = $2
$2 + $2 = $4
$4 + $4 = $8
$8 + $8 = $16
$16 + $16 = $32

Now, if this is applied to binary options, the profit potential is huge (and so is the risk). Since the payout for binary options isn't 100%, I'll use 81% as a real example. So, 81% of $32 is $25.92.

There are roughly 20 trading days in the month. If one trade per day is taken (using the entire account balance as margin) and every trade is successful, the profit at the end of the month is staggering.

Starting with $100:

$100 * 2^20 * 0.81
$100 * 1048576 * 0.81
$104,857,600 * 0.81
$84,934,656

Impressive...
"GIVE ME 3 POINTS IN SPACE IN TIME AND WATCH ME CREATE MAGIC."
  • #547
  • May 3, 2011 12:18am May 3, 2011 12:18am
Quoting kapital
The formula for 100% compounding of an investment (x) over a number of days (y) is:

(x) * 2^y

So, if my initial investment is $1, then after 5 days I will have:

$1 * 2^5
$1 * 32
$32

Breakdown
$1 + $1 = $2
$2 + $2 = $4
$4 + $4 = $8
$8 + $8 = $16
$16 + $16 = $32

Now, if this is applied to binary options, the profit potential is huge (and so is the risk)....
fairytales....
  • #548
  • May 4, 2011 5:46pm May 4, 2011 5:46pm
Quoting kapital
The formula for 100% compounding of an investment (x) over a number of days (y) is:

(x) * 2^y

So, if my initial investment is $1, then after 5 days I will have:

$1 * 2^5
$1 * 32
$32

Breakdown
$1 + $1 = $2
$2 + $2 = $4
$4 + $4 = $8
$8 + $8 = $16
$16 + $16 = $32

Now, if this is applied to binary options, the profit potential is huge (and so is the risk)....
It would take some serious stones to do this for one. Just when you got to say $10000 (which you would not be able to put on one trade anyways, it's too large), are you ready to plop that whole thing down on one trade? 100% risk per trade will lead to the inevitable account wipe out.
  • #549
  • May 4, 2011 10:15pm May 4, 2011 10:15pm
I know that there would be a maximum amount you would be allowed to trade. However, whatever that max is, still would allow for nice profits...if you can be that consistent.

All of what I said is just to point out that Binary Options is one of the best ways to rapidly multiply your money.
"GIVE ME 3 POINTS IN SPACE IN TIME AND WATCH ME CREATE MAGIC."
  • #550
  • May 9, 2011 10:22am May 9, 2011 10:22am
JohnnyGURU -
Yes if you go to my trades while you have them open you will see the correct underlying but it updates slowly on that page. The expiry will be right on spot, but it may slightly one way or the other depending on which broker you are using to check it against, if you have big bucks you can get a Reuters feed which is what they use but I use FXopen and have found it to be extremely close to their prices, even on the super tight ones that could go either way the Fxopen feed is very close.

Johnny -
Hope you're still raking in the big bucks. BTW, are u still using FX Open for raw spot prices, or have you switched brokers ? FX Open is no longer accepting US clients.
  • #551
  • May 15, 2011 10:45pm May 15, 2011 10:45pm
Quoting 82nd
JohnnyGURU -
Yes if you go to my trades while you have them open you will see the correct underlying but it updates slowly on that page. The expiry will be right on spot, but it may slightly one way or the other depending on which broker you are using to check it against, if you have big bucks you can get a Reuters feed which is what they use but I use FXopen and have found it to be extremely close to their prices, even on the super tight ones that could go either way the Fxopen feed is very close....
That's interesting, they have not kicked me out yet over there at FX Open so I still use them when I am at home. I trade mostly from my phone and on it I use a program called Trade Interceptor and I think the prices on it are even closer, they have a PC platform also that I have not tried but it is probably pretty good judging from their mobile platform, they have a website, tradeinterceptor.com if you want to check it out, I only use it on demo to get the price feed, I don't have a live account there so I don't know anything about that.
  • #552
  • May 23, 2011 8:02am May 23, 2011 8:02am
Hey! Great to see a binary thread up! I've been looking for one for quite some time now! Great seeing some fellow binary traders! I've only read a few posts (working right now) but am def. stoked to see some other tbinary traders here!!

My name is joe, nice to meet you guys
  • #553
  • May 26, 2011 7:15am May 26, 2011 7:15am
Im confused about the Buy/Sell options with Binary trading.

If i have this one trade "FTSE 100 will rise during XX:XX and XX:XX" if i buy this means i agree with this statement? and if i sell i think its going to fall. Am i right?
  • #554
  • May 26, 2011 8:39am May 26, 2011 8:39am
Hey all,

It's been a while since I have contributed much, but have really enjoyed the thread. I've got a good handle on the binaries but trying to really lock down my analysis and strategy. Mostly just doing something similar to a traditional option butterfly strategy but with one binary way in and one way out (trying to buy at <15 and sell the other at >85). This one seems to work pretty well through the London session, but as it is a volatility play, it has not paid out so good after about 10 eastern in the US session.

Anyway, I just spoke with a rep from nadex and he let me know that they are doing a webinar on Binary Options tonight. As many of us have discussed in the past, one of the big things lacking in this whole space is proper education so I am glad they are moving ahead in that. Also, they told me they are teaming with Trade With Precision, Nick McDonalds group, to handle the presentations.

It may be a bit basic if you have been trading for a while, but the price is right being free and all. Apparently you do not have to be an account holder to join either. If interested, you can register here:

https://www1.gotomeeting.com/register/894113361
  • #555
  • May 27, 2011 4:28am May 27, 2011 4:28am
I used to believe this until I tried.... the possible returns are tempting but these figures don't mean anything.

Even in normal trading, it is very unlikely that you will have lets say 20 winners in a row...but it is still a lot easier. You "only" need to catch the entry and then work the trade ( the great majority cannot even achieve that).

With binaries, you also have to be sure that in x minutes, price won't be at your entry level again...impossible to know for me....and then, one loss destroys everything, a broker couldn't be happier !!




My suggestion therefore is...if you want to grow your account agressively, rather trade spot fx with a 200-300 leverage. It is not the wisest thing to do either but it is still far more effective than binaries if you want to take big risks !


Quoting kapital
I know that there would be a maximum amount you would be allowed to trade. However, whatever that max is, still would allow for nice profits...if you can be that consistent.

All of what I said is just to point out that Binary Options is one of the best ways to rapidly multiply your money.
  • #556
  • May 28, 2011 8:21am May 28, 2011 8:21am
Quoting beehivesjoe
Hey! Great to see a binary thread up! I've been looking for one for quite some time now! Great seeing some fellow binary traders! I've only read a few posts (working right now) but am def. stoked to see some other tbinary traders here!!

My name is joe, nice to meet you guys
Are you by chance the beehivesjoe from BOD??
  • #557
  • May 28, 2011 8:24am May 28, 2011 8:24am
Quoting Traderlarry
I used to believe this until I tried.... the possible returns are tempting but these figures don't mean anything.

Even in normal trading, it is very unlikely that you will have lets say 20 winners in a row...but it is still a lot easier. You "only" need to catch the entry and then work the trade ( the great majority cannot even achieve that).

With binaries, you also have to be sure that in x minutes, price won't be at your entry level again...impossible to know for me....and then, one loss destroys everything,...
To each his own, I have done far better in binaries than I did in spot, for me it is much easier to solely have to determine direction rather than figuring SL and TP levels and not get spiked out. Binaries can be "worked" also to some degree to still achieve profit, of course as with spot, the "working" exposes you to more risk.
  • #558
  • Jul 21, 2011 5:57pm Jul 21, 2011 5:57pm
The good thing on binary trading is it commits you to the trade and as such i feel it takes a lot of the psychological aspect of adjusting TP or SL and closing trades early when in slight profit.

The bad thing is that it does not give the same returns as you risk...
  • #559
  • Jul 22, 2011 2:18am Jul 22, 2011 2:18am
what is the best broker to work with binary options?
  • #560
  • Jul 22, 2011 3:29am Jul 22, 2011 3:29am
Quoting davests
what is the best broker to work with binary options?
MGM
Don't get mad, get even!
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