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5/12/10

Binary options are gaining traction with retail brokers. The product is easy for the average Joe to understand. Has anyone seen these sites? Are they even legal? I imagine a security based on publicly traded stock must be governed by the SEC?
http://www.startoptions.com/options/

http://www.anyoption.com/jsp/index.jsf?s=2&gclid=C...

The site works by you selecting if the price in exactly one hour will be above or below the current price.

They are really a rip off. The pricing is really bad. Payouts are around 70%, for both a bear or bull trade. Obviously in a perfectly fair market without transaction costs there should be offsetting payouts on either end. i.e. if payout for above a given price is 70% return then the payout below the price should be 130%. The sites are acting as the market maker I guess, and making killing.

The other ethical issue is they advertise "make 70% in an hour!" but they forget to mention "lose 100% in an hour."

Comments (72)

5/14/10

I don't think I've ever agreed with anything as much as I agree with that, FXTrader.

http://www.jasonbondpicks.com
5/14/10

Thanks for the advice, I'll def. heed that and I agree with you on all points, I got carried away. I sent you a PM and hopefully we'll chat.

I'm applying to the UChicago program as well, taking the GRE Wednesday actually, don't know whether to apply to Math or the MSFM, def. would like to hear what you though about it.

5/14/10

Well said FX! Definitely keep an open mind M.C., I would wager you might come out with a different perspective.

Jack: They're all former investment bankers who were laid off from that economic crisis that Nancy Pelosi caused. They have zero real world skills, but God they work hard.
-30 Rock

1/23/12

Do you guys know/use any site that has a minimal deposit that is lower than 50$.
Thanks!

1/24/12

Buy a tight call spread if you want a freaking binary without giving up 10% on the trade. Exchange traded options are the only way for retail investors.

In reply to creditderivatives
1/24/12

creditderivatives:
The key is time frame, I've never seen hedge fund clients use digitals for a few hours, much less At-The-Money digitals expiring in a few hours.

Most frequently, you'll see digitals employed for 2-week to 3-month time frames, further out of the money, because then our sell-side desk can harp on the fact that the purchaser can obtain a payout 8.5 times the cost (based on the parameters).

So no, I can safely argue that hedge funds do not use digitals to bet on being right in a few hours, digitals are ill-advised for such a short horizon.

unqwertyfied, it doesn't quite work like that.

Example:
70% profit on wins
90% loss on losses

Here's a simulation where i was right 4 times out of 5 (80% correct) and still lost money:

Start with $1000.

First trade: Win----------Balance: $1700
Second trade: Loss----Balance: $170
Third Trade: Win--------Balance: $289
Fourth Trade: Win------Balance: $491.3
Fifth Trade: Win---------Balance: $835.21

ATM binaries expiring in an hour = a great way to get whiplash.

I'd love to listen to somebody with no actual experience explain to me how easy it is to delta hedge such a thing...

1/26/12

a big thanks to whoever brought this thread back. absolutely awesome read.

In reply to jonabrown77
1/26/12

jonabrown77:
Do you guys know/use any site that has a minimal deposit that is lower than 50$.
Thanks!

Yes but I think it'd be easier if I just had you transfer the money to me, as the effect on your account will be basically the same.

In reply to Tupac
1/30/12

Tupac:
jonabrown77:
Do you guys know/use any site that has a minimal deposit that is lower than 50$.
Thanks!

Yes but I think it'd be easier if I just had you transfer the money to me, as the effect on your account will be basically the same.

Forex software

I was thinking about using some trading software such as Forex Megadroid or Fap Turbo software. Has anyone used any of this software at all? I did find this PDF on the Forex Megadroid which is helpful (http://www.thepdfportal.com/forex_megadorid_3.pdf). Unfortunately all of the "reviews" on the web look like affiliates.

1/30/12

Forex software?

I was thinking about using some trading software such as Forex Megadroid or Fap Turbo software. Has anyone used any of this software at all? I did find this PDF on the Forex Megadroid which is helpful (http://www.thepdfportal.com/forex_megadorid_3.pdf). Unfortunately all of the "reviews" on the web look like affiliates..

In reply to jonabrown77
1/30/12

jonabrown77:
Forex software?

I was thinking about using some trading software such as Forex Megadroid or Fap Turbo software. Has anyone used any of this software at all? I did find this PDF on the Forex Megadroid which is helpful (http://www.thepdfportal.com/forex_megadorid_3.pdf). Unfortunately all of the "reviews" on the web look like affiliates..

..."Megadroid"

..."Fap" Turbo

I don't even...

2/3/12

hey can someone toss me a golden or silver banana or something?

5/20/12

I agree it's obvious odds are stacked against avg. binary options trader. I say to be profitable you have to KNOW thy financial instrument when it sleeps/activates/mutplies. Those have had no experience in market will eventually lose out after beginners luck streak or two. As for the experienced spot Fx Traders who ACTUALLY know their technical analysis/charts, i think they can exploit to turn odds in their favor. One lady trader from SG by name of "cherrycoke" is the queen of BO's has proven to beat B.O. brokers over and over again and interesting doing so while holding to a "Nanny Job" Google "CherryCoke Binary Options" a trader who likes to take naps after winning 500-1000$ on daily basis(perhaps non-over trading is her secret to success,whereas most traders after winning 5 trades carry on trading till they blow up) So, i say, if she can do it? why can't an experience trader who knows his technicals repeat the same, granted odds are against us.

Keep on sucking till you succeed, Curley.

10/13/12

I've been considering playing these binary options, but after reading this thread there is no doubt in my mind
I can't win. If you certified math and market geniuses feal it's a loosing proposition, then what chance would the rest of us have? Thanks guys, very informative

http://www.jasonbondpicks.com
10/16/12

So how much of this am I expected to know for S&T SA interviews and a SA position? I've basically been teaching myself vanilla option theory using Natenberg's book, but this thread made me question whether or not I know enough for the interviews. Any comments on this? Awesome thread by the way.

10/16/12

Oh... my... god... this is the GREATEST thread I have ever seen on WSO... bookmarking this.

"Well, you know, I was a human being before I became a businessman." -- George Soros

8/21/13

Well,that gives a clear idea..Thanks i found what i was looking for.

12/6/13

Great Thread! Although I am new to WSO, I have been trading Forex and Binary Options for well over 8 years.

I totally agree that the Reward:Risk ratio (i.e. 70%:90%) is a massive obstacle to overcome and prevents most traders from ever realizing any serious profits. I also appreciate that if you have the facilities, such as those of a renowned hedge fund, that you are well capable of generating serious returns by simply predicting the correct directional movements of assets. However, you probably need $millions of dollars a year to service the expensive tools and properly qualified personnel required to achieve this goal. I am sure that some of you can produce very accurate figures.

So, in my mind, here is the main problem. Does Joe Average have any hope of making a stream of worthwhile profits trading binary options since the odds are stacked so much against him? With a limited budget of just a few thousand dollars, he will certainly not have the facilities of a hedge fund at his disposal.

I have been studying this problem for years. I have concluded that it is possible if the following approach is adopted. A strategy is required that boosts a win:loss ratio of at least 50% (much higher is preferable). The next critical step is to produce a Reward:Risk ratio that is greater than unity as the standard ones are well less than that value, e.g. 70%:90% = 0.77.

This objective can be achieved in a number of ways. However, in doing so every aspects of trading binary options has to be viewed in a completely different light. For example, you cannot continue to focus on 60sec trades as most novices are prone to do so.

To accomplish this task, I have devised a complete theory which I have dubbed, 'my Theory of Binitivity'.

I can tell you now that this is no quick-fix instant solution but requires the investment of a considerable amount of time and energy to perfect. However, the effort is well worth it. I am thinking of introducing the concepts of my theory onto this forum if there is enough interest. This is because I would appreciate third party insights. I guess that this task could take over six months to fully accomplish.

In the meantime, good luck with your trading.

12/7/13

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In reply to FXTrader
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