It doesnt matter which firm it was. None of them are in the business of handing out money to clients. If a client is making money (five figures or more), it had better be of luck otherwise they will want to shut down whatever it is that is causing the firm to lose money. eg Widen the spread or take a close look at how they are getting the volatility so wrong.
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Binary Options: how serious can be trade them?
- Thread starter sysfraix
- Start date
It doesnt matter which firm it was. None of them are in the business of handing out money to clients. If a client is making money (five figures or more), it had better be of luck otherwise they will want to shut down whatever it is that is causing the firm to lose money. eg Widen the spread or take a close look at how they are getting the volatility so wrong.
Actually it does.It doesnt matter which firm it was. None of them are in the business of handing out money to clients. If a client is making money (five figures or more), it had better be of luck otherwise they will want to shut down whatever it is that is causing the firm to lose money. eg Widen the spread or take a close look at how they are getting the volatility so wrong.
This claim of yours 'I made a small fortune between 2003 and 2008.' made me ask you this question.
It is a grim area. So full of scammers and shady brokers...
But putting all that aside, how serious it can be?
I'm studying some of my strategies, and probably they can work better in binary options: don't deal with whipsaws, if you lose with a lot of pips is just one lose, if you win with one pip it is still a full win, etc.
Another thread that I'm very late.
I guess because of the huge amount of scammers back in the mid 2000's binary options got a terrible name. But they are just one kind of exotic options nothing more nothing less. If you trade them with an approved exchange (like Nadex in the US) you can at least be sure that your deposits will be safe. The problem with Nadex is that expirations are super short (in the minutes time frames some of them), and the bid/ask spreads are too wide. The other problem is that such short expiration times encourage a gambling like environment (just doing mindless trades).
Binary options can be priced efficiently (both theoretically and from vanilla replication) and if you research a bit more you will notice that the single most important parameter for the price of a binary option is skew. In other words when you trade binaries you are actually trading skew. The other concept that trips most traders of these exotic options is that he relationship between the price of the option and the price of underlying is actually Gamma instead of Delta, so the price dynamics can confuse a lot of people.
My recommendation with binaries is that you do a lot of research about what the price really means, and that don't use them as simple directional bets, but instead s bets on skew dynamics. Also binaries are at the heart of decomposing many other exotic options, so you could use them to replicate things like contingent calls and puts (which are kind of useful).
Binary options can be priced efficiently (both theoretically and from vanilla replication)
Short term binaries. less than a day. Are very news driven. You have to stick a news calendar in your pricing model. Also they looked at order flow and adjusted pricing if lots of bets are being made one way.
Typically they relied on winning clients to set the price. If i saw an over priced option trading at say 25 and i sold it, they might change the price to 20 or 15 just afterwards.
Now they just rely on super wide spread and know the right price is gunna be somewhere between the spread.