garyfritz wrote:Do you plan to use existing strategies and just apply them to binaries? E.g. get a long signal from 10.4 and buy a long binary instead of going long the pair? Or do you plan to apply different strategies, e.g. the spread strategy you mentioned?
When I looked briefly at binaries, it seemed to me that you still needed a very clear edge. The market prices the options to account for any known conditions. Buy at the market price without a clear edge and you'll end up at breakeven, or worse with costs. What will you use for an edge?
Gary there are a lot of strategies and you purchase a binary based on the strategy you have decided on. For example there are out of the money binaries (OOM), in the money binaries (ITM), at the money binaries and deep in the money binaries. Each of these lends itself to different strategies. For example buy below market ITM and sell above market ITM. The more narrow you make the window the less risk or cheaper cost but the less likely it is that the market will stay in the window. Widen the window and it cost you more but the more likely the market is to stay in the window. However it higher risk. Risk increase in proportion to the likely hold of a event occurring. So if most traders think an event is going to occur than a binary will be priced high. If it is less of a chance to occur than the price will be adjusted lower. So if you buy a 5 dollar binary the market is saying that if you buy it you have a 5 percent chance of winning. I am a really good horse racing handicapper and the crowd is only right about 30 percent of the time. So technicals are very important. But in this example you can see that we are not playing a direction but a range. One leg will still win if price strays out of the range. However the thing to realize is that price can come back into the range and you do not have to hold these options to expiration. You can get in at any time and out at any time. So make some profit and get out if you think the market is going to break loose. You can also always get out of a contract at less than risk just to minimize your risk. Take a few dollar loss over a 40 dollar loss for instance. This is a very simple strategy. Now think about adding another layer of strikes farther out or in above and below the market  . It is really worth looking through the videos at Darrels site. http://apexinvesting.com/ ... There has to be over a 100 hours of free video there. You can also get a free version of Ninja trader and he gives you directions for getting free data from two different services. One for Forex and the other for commodities and indices. I think you can renew these trials from what he says. What is really good is that he has a binary scanner and a spread scanner which are free to use. They are fabulous for narrowing down the right binary or spread for the strategy you want to use. Than he has implied deviations charts that are based on the underlying options of the different indices, commodities, and Forex. This info is pulled from the options of the various indices, commodities and Forex which gives them a predictive quality. They have been right on from what I have seen. These are free too. Now he has some higher costly levels of membership that give you plugin for Ninja and his method of trading but everything you need is free with a basic Free membership. He apparently has an association with the Nadex. So yes Bobs methods still work great especially for spreads. They still also apply to binaries but there is technical direction needed and option strategy but what you can do is far more than with Spot forex and no matter what you trade a tick is always 1 dollar. No fancy math or conversions needed. |