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Oanda Box Options

  • #1
  • First Post: May 18, 2006 2:45am May 18, 2006 2:45am
Just curious if anyone has tried the box options? It seems like a nice opportunity. Let's say when price is pretty much just sitting there and not really going up or down, wouldn't it be "easy" to achieve some pretty good profits? I am practicing with it right now and I seem to be hitting them pretty good.
JOHN 3:16
  • #2
  • May 18, 2006 3:39am May 18, 2006 3:39am
Hi,

What is the "oanda box options".

regards,
traderandreas
  • #3
  • May 18, 2006 3:51am May 18, 2006 3:51am
I will try to explain the best I can.

On the Oanda platform, you see a chart. You can place a box, you can choose the size of it and where you want to put it. Once you click the mouse, a window pops up and you can put in the dollar amount you want to buy the box for. You can also choose if price will either hit or miss the box. Lets say, a person makes a box and buys it for $5, the popup window will automatically show you what the profit is if it hits or misses. If you choose hit, and price touches the box, the box will disappear and you will get what you paid for for the box and the profit you were given. And the same goes for miss, If you buy a box and choose miss, and price misses the box, you get the profit.

Depending on the size of the box and the position of the box, this will determine how much profit you get.

Another thing that you can do. If you buy a box, and you realize you placed it in the wrong spot, you canNOT cancel it because you have bought it but, you can sell it back for a certain percentage of what you paid for it so you do not lose all the money that you paid. I hope I explained it right.
JOHN 3:16
  • #4
  • May 18, 2006 4:58am May 18, 2006 4:58am
Hi renasdad,

Thanks for the explanation.

traderandreas
  • #5
  • May 18, 2006 5:00am May 18, 2006 5:00am
You're welcome.
JOHN 3:16
  • #6
  • May 18, 2006 9:43am May 18, 2006 9:43am
Quoting renasdad
Just curious if anyone has tried the box options? It seems like a nice opportunity. Let's say when price is pretty much just sitting there and not really going up or down, wouldn't it be "easy" to achieve some pretty good profits? I am practicing with it right now and I seem to be hitting them pretty good.
Yeah, I thought this was interesting. However, perhaps it was the timeframe I was trying them on, but the risk/reward was just so low. like I was buying $1000 miss options and only getting $50 at a time. Now, in the grand scheme of things, 5% in about 10 minutes isn't really all that bad, but I also thought to myself..."what would happen if the price took a dive and touched my box?"...I dunno, the price was pretty directional, so it never happened the 6 or 7 times I tried it...however I wanted to do a better experiment with it because I think my box was drawn only about 20 pips away from the current price...during any type of volatility this would be killer...and perhaps they take that into consideration (I was trying this at considerably lower volatility periods - like after 1pm EST on none news days). So perhaps during the earlier hours, the boxes are worth considerably more.
  • #7
  • May 18, 2006 10:09am May 18, 2006 10:09am
I also tried oanda box options before. I feel the reward for the risk ratio is less and with so many complaints of stop hunting at oanda (I personally had couple of bad experience with them but money involved was less), I think it would be good to do this at higher time frames where price is not too close to the box. just my opinion.

Shan
  • #8
  • May 18, 2006 1:28pm May 18, 2006 1:28pm
HAHAHAHA what a bucket shop. This is like playing ring-toss at a carnival.
  • #9
  • May 18, 2006 6:08pm May 18, 2006 6:08pm
This comment is quite funny. But the one that I had when trying to figure out how to do the box option with Oanda.




Quoting Far From Average
HAHAHAHA what a bucket shop. This is like playing ring-toss at a carnival.
  • #10
  • May 18, 2006 9:43pm May 18, 2006 9:43pm
'box options' are garbage, there is no real market. see this thread...

http://www.forexfactory.com/forexforum/showthread.php?t=2508&

tell me if im wrong about only being able to sell back to oanda, but im pretty sure that is right.
Relax and be happy.
  • #11
  • May 18, 2006 10:27pm May 18, 2006 10:27pm
Quoting vishalshan
I also tried oanda box options before. I feel the reward for the risk ratio is less and with so many complaints of stop hunting at oanda (I personally had couple of bad experience with them but money involved was less), I think it would be good to do this at higher time frames where price is not too close to the box. just my opinion.

Shan
I've done around 6-10 box options on Oanda.

What Shan outlined is what I experienced. I was not very happy with the risk/reward ratio for the box options; I found it was better just to trade the darned reversal. I'm looking at options on forex futures now and they seem to be preferable to box options at Oanda.

I was using them on 1D charts, working on reversals/pin bars etc. I didn't have any problems with sudden price spikes taking out the box, or any other stop hunting issue on this time frame. But I did feel that the risk/reward ratio was not suitable. I tried both "touch the box" and "do NOT touch the box" box options and for me they were both unsatisfactory.

I was playing with them for reversals and some continuation of a move. they MIGHT have value for picking up money in a range-bound market but I am not sure as I never tried this.

Cheers,
Linc.
  • #12
  • May 18, 2006 10:48pm May 18, 2006 10:48pm
Quoting merlin
'box options' are garbage
It's gambling is what it is.
Mr. Trend
  • #13
  • May 18, 2006 10:50pm May 18, 2006 10:50pm
Quoting merlin
'box options' are garbage, there is no real market. see this thread...

http://www.forexfactory.com/forexforum/showthread.php?t=2508&

tell me if im wrong about only being able to sell back to oanda, but im pretty sure that is right.
It's true that you're only able to sell them back to Oanda, but it's slightly weird because it's not really an option in the purest form, I believe.

Basically, you pick a start time and an end time and then a range (this gives you a visual box on a time/price chart). Then a pop-up tells you what the payout would be if you hit the box (if you believe the box will get "hit" within the time period) or what the payout would be if the price misses the box (if you believe the price will not touch your box within the time period)...mind you, the payout will be based on how much you risk. Thus if you risk $1000 to have the price miss your box for the next 10 minutes, you might only get $50...of course, if your box does get hit, you totally lose that money.

So, in a sense, there isn't a market...Oanda merely let's the market hit or miss the price...

I also did like 7 or 8 box options, but always expected my target to be missed (I usually drew the boxes only 5 minutes away from the current bar, 10 minutes wide and 20 pips away from the current market). Doing so, I netted about $600 with the trades I made (the market was not volatile and trending away from the box). It was enough to do, and required no lengthy chart watching, which was nice. However, the risk/reward ratio was just F'ed up...$1000:$50...???...I never felt wrong about the boxes I was placing, but you have to think that it would be in Oanda's best interest to manipulate the price just so they didn't have to payout...because there was no actual market it was like daring Oanda to touch that box...not exactly something I felt like continuing to do...
  • #14
  • May 18, 2006 10:53pm May 18, 2006 10:53pm
Quoting merlin
'box options' are garbage, there is no real market. see this thread....
Yeah, just throwing this in as message #100 hehe
*if* if were a proper market they'd be OK. I'd like to sell, rather than buy, as Merlin outlined in the other thread on the Oanda box options. The arb. opportunities would be interesting if more brokers set up a similar scheme.

*shrugs* they're fun, but they don't seem like a serious money-making tool for a trader. I wouldn't wager any serious money using them.

Cheers,
Linc.
  • #15
  • May 19, 2006 12:07am May 19, 2006 12:07am
Quoting merlin
'box options' are garbage, there is no real market. see this thread...
Of course not, it's a carnival game.
  • #16
  • May 19, 2006 12:14am May 19, 2006 12:14am
This is great feed back!!!

I have been playing with themfor a couple days now. There is a reason I highlighted, playing.

Far from average is exactly right. It is like a carnival. It is kinda fun though. Gotta admit.
JOHN 3:16
  • #17
  • May 19, 2006 2:06am May 19, 2006 2:06am
Hello Everyone,
I just tried to price the same box in oanda's demo account and this is what I got:
Hit box: Pay $1000 for a payout of $1707.04
Miss box: Pay $1000 for a payout of $1396.62

Now there are only two possible outcomes for this, either the box is hit or it isn't, and so according to oanda's rates the probability for each outcome is:
Pr(Hit) = 36.94%
Pr(Miss)=41.73%

Now these two don't sum to 100% and so Oanda has a 21.33% margin! I.e. in the long run they aim to make a 21% profit on their box options (assuming of course that buyers of these box options only predict where the market is going with 50% accuracy).

In fairness to oanda this is still better than the local tote which has a margin of about 35% on sports games this weekend.

Still looks like gambling to me though.
Signal to Noise.
  • #18
  • May 19, 2006 6:21am May 19, 2006 6:21am
the real problem with these box options is that once you buy them, there is noone to sell them back to except oanda!!! its a one sided market, like a casino, where the odds are fixed against you. you can only play against the house, you cant bet against other players like a real market.
Relax and be happy.
  • #19
  • May 19, 2006 9:23am May 19, 2006 9:23am
Quoting merlin
the real problem with these box options is that once you buy them, there is noone to sell them back to except oanda!!! its a one sided market, like a casino, where the odds are fixed against you. you can only play against the house, you cant bet against other players like a real market.
Totally agreed...pure gambling, with probably only slightly better odds than playing roulette.
  • #20
  • May 19, 2006 10:55am May 19, 2006 10:55am
I have used them for macro move gambling, the odds are bordering on reasonable when you reach triple payout or higher. Bought upside boxes with eurusd in 1.16 and 1.18 levels. Could also make it a momentum gamble where you only lose if it stays flat.

Yes it is gambling, with so many pairs to trade at Oanda you're almost always better off actual trading.
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