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Why Binary Forex Options are better than Spot Forex

  • #701
  • Sep 23, 2013 8:48am Sep 23, 2013 8:48am
Betonmarkets is a marvellous and most user freindly platform on the net. Can't comment on it's reliability. Burnt my fingers on it's tick trades which were maually manipulated for sure.
  • #702
  • Edited Oct 11, 2013 7:13am Oct 10, 2013 11:44pm | Edited Oct 11, 2013 7:13am
Quoting Yoda_Glenn
This is most important, the reward to risk ratio on Binaries is FAR FAR superior than Sot Forex. You can buy your typical binary option for $20 per contract (and some you can buy for $5!) This means if you win, you gain 5X your investment, or what you risked! ($20 x 5 = $100) To do this on a Spot Forex Position you would have to travel into positive territory that is five times your stop loss!
Is this no longer true? I'm looking into 24options and the reward-to-risk is at best 0.85 (85% payout). How can you get 5x reward per contract?

Update: Just found out there are high yield options as well with 220%-360% payout. That's 3.6-to-1.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: 24options high yield.png Size: 56 KB
Click to Enlarge Name: 24options payout.png Size: 74 KB
No longer trading forex. Looking for full time job.
  • #703
  • Oct 13, 2013 12:46pm Oct 13, 2013 12:46pm
Quoting mmaker
{quote} Is this no longer true? I'm looking into 24options and the reward-to-risk is at best 0.85 (85% payout). How can you get 5x reward per contract?
I believe Yoda was making reference to Nadex binaries as opposed to the traditional off-shore binary markets.
"GIVE ME 3 POINTS IN SPACE IN TIME AND WATCH ME CREATE MAGIC."
  • #704
  • Oct 14, 2013 3:03am Oct 14, 2013 3:03am
Please who can recommend some good binary options systems or strategies for me or where i can see some i can try out? Thanks in advance
  • #705
  • Oct 14, 2013 4:16am Oct 14, 2013 4:16am
Quoting Samuelkanu
Please who can recommend some good binary options systems or strategies for me or where i can see some i can try out? Thanks in advance
You can follow along with these guys who trade options:

Let's Trade Options!
Quoting The Fool
Any options traders here? Want to talk about trading options? Not sure if this thread will go anywhere. If I find even one cool trader in FF who wants to share some good options trading ideas, then I'll be happy. I am not a very sophisticated options trader - been trading options m/l full time for only the last year or so. I am basically a beginner, but I make money consistently. So, being a greenhorn, I am not out to be anybody's guru. And I'm not looking for one, either. I like learning by doing. I don't want to spend much time discussing options...
Following the big money
Quoting srmfx
{quote} It seems complicated, but it is not. The Ladders gives you a payout if the price is above a certain price level. If you think that the market will go up, you buy a ladder. If you think that the market will go down, you sell the ladder. This morning the volatility of gbpusd was severely depressed so I expecte a price move in any direction. With a long strangle you can trade wolatility breakout. The strangle itself is a simple options tructure. You buy options that profit from price move in both direction. For expample buy simultaneously plain...
No longer trading forex. Looking for full time job.
  • #706
  • Oct 14, 2013 5:12am Oct 14, 2013 5:12am
Quoting Samuelkanu
Please who can recommend some good binary options systems or strategies for me or where i can see some i can try out? Thanks in advance
You can trade any strategy with binary options. I trade the same strategy on spot or with binary options. When yu use optiosn you just have to pick carefullly your strikes and expiries.
  • #707
  • Oct 23, 2013 8:59am Oct 23, 2013 8:59am
Ignorance is bliss...
Of course binary options have greeks, just you have no clue how to compute them. There are a number of methods to calculate the price and the derivatives of these options, but the good old Black and Scholes will not do. The same above (call) option will have a higher price if the spot is higher (delta), a lower price if the maturity is shorter (theta), a higher price if the market is more jumpy (try EURUSD compared to EURNOK) (vega)...
Since you think there are no greeks, I assume you don't know either the probability of touching your price (for a one touch) or reaching your price for a binary... Also it seems you can only buy those, not sell them. So very obviously the options writer is screwing you on the price, the same way warrants issuers write their options at a much higher volatility than the market, and then decay their margin as the maturity approaches.
So:
1-My guess: you had a good run on a biased game, let's say 45-55, dumb luck. Long run, you'll lose your money slowly and surely.
2-As a professional option trader, I can guarantee you no institution writing options does it for your profit, the more complicated products warrant a higher margin, the less sophisticated clients (retail) as well.
3-Homework: in case I am wrong -or not-, you should work out the theoretical value with a Monte-Carlo algorithm or buy an intraday database of a few years on the markets you like to empirically find what is the fair price. I kind of suspect you'll be shocked.
  • #708
  • Oct 23, 2013 11:54am Oct 23, 2013 11:54am
Of course Binary Options have greeks! And they are easy to calculate (at mid-market). Pricing of the options is simple - in the Black-Scholes formula, N(d2) is the price and delta of the option. It is the probability that the asset price will be above the strike at expiration.

The problem is, this "Binary Options" business is all about 15 minute options, and any analysis will show you that prices are randomly distributed in such a time period. There is no fundamential or technical analysis that will give you enough of an edge (if any exists at all) to overcome the horrific bid-offer spreads of binary options. In the long run, binary options traders lose. Period. This is why none of the companies offering binary options hedge them.

With binary call options struck at-the-money, there is a 50% chance the option will finish in the money (above the strike) and 50% chance they will finish below. The mid-market price should be 50% of the payout. Similarly, the delta is 50%. But from this point, it gets ugly, from the perspective of a real hedger. If spot moves higher, the owner will be SHORT VOLATILITY. He wants the market to be quiet, settle down, and finish IN THE MONEY. But if spot is LOWER than the strike, the option owner is LONG VOLATILITY - he wants the market to go wild, so that there is a greater chance that his option will move above the strike and in-the-money.

This flip-flopping on a short dated option is ugly, and in some respects justifies a big bid-0ffer spread. Gamma can be INFINITE! But in reality, thousands of traders are trading tiny options with strikes all over the place, so the binary options broker has a benign book of risk, and LOTS of bid-offer spread to keep.

Binaries have no economic value, don't hedge anything, and are nothing but a GAME. Like a casino. If you are enjoying playing the game, great! Just don't bet your welfare check, and don't go in expecting to win. Just like a casino.
  • #709
  • Oct 23, 2013 11:47pm Oct 23, 2013 11:47pm
Quoting Options Guru
Binaries have no economic value, don't hedge anything, and are nothing but a GAME. Like a casino. If you are enjoying playing the game, great! Just don't bet your welfare check, and don't go in expecting to win. Just like a casino.
I'd rather say that the binaries are high speed type of options. They provide you with additional leverage. If you treat the binaries as casion, this leverage can kill your account fast. If you trade binaries like any other financial instrument, they can give an edge. I trade most of my strategies with binaries and for example the low liquidity is no longer a problem for me..

Betting could be trated as trading and vice versa. It's a personal choice. Actually betting could be very interesting if you apply trading methods. You can trade volatility in soccer match, or swings in tennis.
  • #710
  • Oct 24, 2013 4:25am Oct 24, 2013 4:25am
Quoting srmfx
{quote} You can trade any strategy with binary options. I trade the same strategy on spot or with binary options. When yu use optiosn you just have to pick carefullly your strikes and expiries.
Srmfx please can you let me in to the strategies you use for either spot or binary options? Thanks in advance
  • #711
  • Oct 24, 2013 4:59am Oct 24, 2013 4:59am
Spot forex is bad enough
Binary forex options are even worse.
Great product for the broker.
For the herd only.
  • #712
  • Oct 24, 2013 5:00am Oct 24, 2013 5:00am
Well said. Brokers have pulled a good one with binary options, they've tricked the retail trader into thinking he's getting a fair deal when they are essentially over priced OTC exotic options.

Quoting marc_social
Ignorance is bliss... Of course binary options have greeks, just you have no clue how to compute them. There are a number of methods to calculate the price and the derivatives of these options, but the good old Black and Scholes will not do. The same above (call) option will have a higher price if the spot is higher (delta), a lower price if the maturity is shorter (theta), a higher price if the market is more jumpy (try EURUSD compared to EURNOK) (vega)... Since you think there are no greeks, I assume you don't know either the probability of touching...
  • #713
  • Oct 24, 2013 6:12am Oct 24, 2013 6:12am
Quoting Samuelkanu
{quote} Srmfx please can you let me in to the strategies you use for either spot or binary options? Thanks in advance
http://www.forexfactory.com/showthre...89#post7026289
http://www.forexfactory.com/showthre...70#post7029470
I'm not sure if these are the right links, but look at posts 861 and 867. I'm trading basically my STE strategy, volatility breakouts and tests of support and resistance levels. I trade also around major data releases with plain vanilla options. Brokers have edge with the huuuuge spread, but we can also have edge with knowledge aboiut the order flows and quote reading for example. If you trade like most of the traders are tought to trade, you are doomed. Learn how the market actually operates. Trade binaries with reputable brokers.
  • #714
  • Feb 13, 2014 4:37pm Feb 13, 2014 4:37pm
Ok guys and girls,

It seems that this thread is a bit sleeping, so there is a chance to do a reanimation.
I want to trade with binary options with the following strategy, and I have some technical questions. When somebody can show me how to buy and sell the right options I will write a journal about my trades here.
So, I want to do the same as in the first pages: I want to buy two OneTouch Options: One Option has a strike price ABOVE the actual price, the other OneTouch Option has a strike price UNDER the actual price.
If there is the right price action I will get the options money (100 €) - the money for the options (2 * 38 Euros), so there is a profit of roundabout 24%.

I have attached the pictures for my problem: I dont know if I have to take the Bid or the Ask price?
I think the Ask Price is the price I have to pay when I want to trade, and the bid price is the price when I want to sell before expiration time. But the options are european style and i cant sell them before time! And there is no spread on options.....

I think the question is stupid, but I dont want to spend money just to try.....
I am trading at Saxobank but the support is crap....they dont answer :-(
Maybie my question is stupid, but I dont know another way to get it out.....

Thanks for any replys!


Ghaz
Attached Image(s) (click to enlarge)
Click to Enlarge Name: Option BUY.png Size: 125 KB
Click to Enlarge Name: Option SELL.png Size: 122 KB
  • #715
  • Mar 4, 2016 12:10am Mar 4, 2016 12:10am
It's over than 2 years after the last post. Is there anyone still trading binary option ? thanks for your kind reply
  • #716
  • Mar 8, 2016 12:37pm Mar 8, 2016 12:37pm
Quoting ronald_fsm
It's over than 2 years after the last post. Is there anyone still trading binary option ? thanks for your kind reply
i started demoing forex binary yesterday; looks like fun
As Above, So Below
  • #717
  • Mar 8, 2016 5:11pm Mar 8, 2016 5:11pm
Quoting ronald_fsm
It's over than 2 years after the last post. Is there anyone still trading binary option ? thanks for your kind reply
I do trade binary options along with FX/Index CFDs but i use my model/trading strategy for the same. When i say binary options , i mean up and down options ( IG -> Sprints , CMC -> Countdowns )

You can find more about my strategies here -> http://ctdn.com/algos/cbots/show/1026
  • #718
  • Mar 9, 2016 10:50pm Mar 9, 2016 10:50pm
Binary options is a fraud!! go and post your bullshit else where, IT*S A SCAM!
don't argue with me or I will prove it here in this forum.
GET THE F*** OUT OF HERE!
Bulls are stupid Animals!especially when Im short!
  • #719
  • Jul 18, 2016 1:58am Jul 18, 2016 1:58am
Quoting tashkent
{quote} i started demoing forex binary yesterday; looks like fun
Demo trading is must for learning trading processes as well as to test any broker. I guess at least six months should be given to demo accounts before going to live account and even when going to live, always start with small amount.
  • #720
  • Jul 18, 2016 7:13am Jul 18, 2016 7:13am
Quoting Yoda_Glenn
For those who dont know, Binary Forex Options are a type of option whereby every contract you buy pays out a $100. In a binary transaction you are pretty much betting against or for an outcome. For example, there maybe a binary contract that says the EUR/USD will close above 1.0824 at the end of the week. You would either sell this outcome (bet against it) or buy it (bet for it.) If you are right, then you win $100 per contract, and if you lose then you only lose only what you sold the contract for. Ok, So let me explain to you why Binary Forex...
Please! Show me a Binary Options broker who will give me 5:1,
I won't believe it until I see it, I bet you will have a hard time finding one even offering 1:1,
Binary Options is a fraud!! I probably have a better chance in Vegas.
definitely NOT better than Forex,
Bulls are stupid Animals!especially when Im short!
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