Why Binary Forex Options are better than Spot Forex

Back to your comment , i just checked and the EUR monthly still higher than the spot so it doesnt sound like a temp slippage but rather a skew in their long term strike price based on price momentum and clients demand , now it is at 1.2840s , so i wouldn't call that manipulation , you can take the other bet and take advantage of higher prices if you think the Euro will finish the month down ...

Dude, whatever you say. Look at the date I have circled on the screenshot. This conversation is not even relevant anymore. You still naively think that there is a buyer and seller and liquidity issue with retail binary options. There can never be a liquidity issue. The only time they say the market is not liquid is when there is a big number of people buying all in-the-money option at the same time and they want to stop others from buying, to limit their loss. It is their stop loss. But if you want to justify it with price momentum and what not, ignore everything I've said. I just don't want you or anyone to be that person, who made that call, on that dreadful day. I've given you the easy way, but if you want to learn the hard way and look back at this message again in the future thinking "that guy got it right", then it's up to you. They may not get you on the price manipulation, but don't go crying when you start having "account" issue. Then, your new best friend apparently isn't really a best friend.

Thank you , i wasn't talking about your screen shot example but rather their long term prices policy in general , it seems it is how they do business and it doesn't look like a temp blip to me and it has nothing to do with liquidity issues but i can understand a new member like you to dont understand what i am talking about , re anyoption as a broker i still don't know if i can trust them or any other unregulated BO broker ...

Well done for the patronizing reply but it appears to me that your defending the indefensible... your either not seeing what the issue is (out of stubbornness) or you have another agenda.

agenda lol , this is just a discussion about BO wake up mate nobody is defending anyone ...

Ok mate

(Nadex Demo Trades)

I recently started trading them.....They r easy to trade ...its only direction oriented ,if ur trade is in ur direction at the time of expiry of the contract (called in the money) then u'll win a %age of the money u invested+ ur invested amount.....if its not then u'll lose ur invested money ..Bt there are options to assure some of the invested money from getting lost....Also the broker im currently using has provided with some nice started benefits ....currently its going well....will see how it turns out in future.....

Bt im not risking big though..

I used to be a fan of binaries. In fact I was singing their praises in this very thread when it was started way back in 2009. However since then I've stopped using them. Not because I have a real problem with fixed odds trading, it's just the plain fact is that in order to profit over the long term you have to be right more often than you're wrong. I'm not very good at being right all the time so I decided to stick to spot trading where one winner can wipe out several losers.

If I were to continue trading fixed odds I'd probably place lots of small bets on different markets at the same time and see which ones come in at the end of the day.

Here is an example of a low-risk/high-reward trade using Nadex. The price on this binary (EUR/USD > 1,2797; 10AM) dropped somewhere to around $5 at 15 minutes before expiration, presenting a tremendous opportunity for a trade with a 20:1 risk-reward ratio. The underlying price did indeed go on to close above 1.2797. I took a couple of trades on this binary ( 20 contracts at an average price of 49.75). If I would have been more patient for a setup I had, I would have been able to enter the trade when the binary price made a bottom. Oh well...can't catch all the good trades.

Guys, can you help me out with something, please? This is from IG Markets, Daily One touch.

1. Why is there a Buy and Sell column? I thought that when you place a bet you just set a One-Touch price and make the order.
2. The time 12 pm, is this UK time?

I appreciate your help!

Hi

For example :the price for GBP/JPY to touch 132 is 16/23.1 , if you think it will touch that level then you buy @ 23.1 if you are right the price will reach 100 if it didn't touch it will reach 0 at expiry and if you think it will not touch 132 then you sell short at 16 your risk would be 100-16=84 and your potential profit is 16 .

Thank you!!

I opened an account with GFT and there premium costs of puts and calls are expensive? Are options really expensive the adviser said they are more complex and expensive than spot fx? What is the average contract cost in premium for say a eurusd put/call option for 5 days?

it is my question too.

what if my hit rate in spot FX is only 40% or so, but i often capture a huge trend that cover tens of my losers?

if i trade binary, isn't it in fact meaning i do not "let the profit run"?

Can someone given me a rough daily option premium contract cost is say trading a 1 micro lot or standard lot? Is it worth using daily options as a hedge for your spot positions? I would like to take advantage of moves against me.

Pipanator, what you are referring to is spread betting binary options, which is different than retail binary options. Just make sure you know the difference between the two. In spread betting you can both buy and sell options with different strike prices, and the premium is reflected at the price of the option. With retail binary options you can only buy an option (a bet is a more precise term) at current price. No premium, no stop loss, no choice of strike price (current price only). I've dealt with both types of binaries. Put your qs here if you want so people can learn from both my mistakes and my successes.

Interesting, so a retail binary options has no premium? So, what is the charge just a spread like on spot? Also, if these options are in the money at expiration do they convert into a spot position? I am looking to use options as insurance or a hedge against my spot positions. Thing is many times I can get a scalp on my spot position but out the market when it goes against me after being stopped out. If the premium is worth it, but i heard premiums are really expensive especially over 1 day and exercising your option increases the premium so not worth it for day traders.

Ok, let's focus on retail binary options like Banc De Binary, Anyoption, Traderush, and the likes, and not spread betting binary options like GFT and IG Market. In retail binary options, the most common type available is called call or put. In this case you are simply making a bet, so forget the term options, it is designed to confuse you in this case and it is a disguise to make this gambling house looks more legitimate by introducing fake financial assets). The price of the asset (be it forex, shares, indices,etc) is not real and freely set according to them. You'll see they rarely, if ever, reflect the price available from your forex broker. They explicitly (in their t&cs) reserve the right to manipulate the price, so that alone is a HUGE red flag.

For example, say according to them EUR/USD is currently at 1.3039 (their price, not real price, not real asset), and your prediction within the end of the hour it will be higher than 1.3039. So you buy a call at 1.3039 but you end up getting a 1.3045 because there is a purposeful delay if price goes in your direction and no delay if price goes against your direction. It is foolish to think that it takes more than a second to process one click. And it is foolish to think that a bet would have a slippage. Some people are comfortable with that, some are not. It's your choice. Occasionally, you may even get an error, or a warning that there is a "liquidity issue." Contrary to common belief that they are experiencing a genuine issue, both actually mean that a lot of people are buying in-the-money bet and they need to have a stop loss to protect themselves. Otherwise they will be losing a lot of money. Liquidity issue, or any other error is therefore becomes their "stop loss." Do you really think a bet has a liquidity issue? It does, if your broker is your counter-trade party.

But say, all things devil's advocate aside, you bought the option at 1.3045 and then the price does end up higher at the end of the hour. You will get 65-80% return depending on your broker. But mind you in order to get this return you have to risk 100% of your bet. In order to get $70 on a 70% broker, you need to risk $100. That alone tells you your unjust risk to reward ratio. But let's play nice and assume that you indeed get lucky and your bet of $100 gives you $70 return. Celebrate it because the sugar high is very short-lived. If you manage to keep winning, you'll started to get on their radar. And when you're about to withdraw your hard-earned profit, you'll then start having account "issues," and they will freeze your account indefinitely. Not a very nice way to steal from someone, but hey it's the real world.

Now that you understand all these, I can answer your questions. No, a BET doesn't have a premium, or a spread, or a spot position. It is irrelevant. A bet does NOT even involve a real asset. Making a bet of tomorrow's weather with your friends doesn't mean you have the control of the weather. You can, however use binary options to hedge against your spot position, only if you manage to get a reputable and honest broker to withdraw your profit from your hedge. Say you go long on EUR/USD forex like the example above and you buy put option on EUR/USD binay options. If price goes up upon the expiry of your bet you'll profit from your spot position and you lose all your money on binary options. And vicer versa. You have made your hedge. I did this myself, but the question is, would you consider this as a good hedge? Most of the time I ended up losing more. Through experience, you'll notice that this is a bad way to hedge.

Your understanding is more useful in forex options, which is again, different than both spread betting and retail binary options. In forex options you actually purchase a derivate of a real asset. So the same principle on share options is applicable to forex options (greeks, volatility, premium, etc). Yes, the time of expiration will greatly affect the premium. And upon expiry or before (assuming it's an American style option), you can buy or sell the option depending whether you're an option seller or an option buyer. And if you're a buyer you can convert it into a spot forex position.

So, if I were you, seeing that you have interest in genuine forex options, I'd either master forex options or spread betting, and stay the hell away from retail binary options scammers. A good test of a non-binary option platform is to see whether you can BOTH buy and sell options. If you can, you have one less of due dilligence to worry about. Good luck.

I'm still open for all your qs.