The Netherlands seek to ban advertising in binary options, CFDs

[CBC]

42-58

Is that the spread of a binary? I've never traded them.

No one can make money from that.


I still remember my last moments on the IG trading platform (demo). I was quoted a 40 / 120 spread for some FX options.

I honestly don't know how your meant to trade that.

 

[southall]

Is that the spread of a binary? I've never traded them.

42-58, is the spread on a typical binary that pays out circa £175 on a £100 bet.

In theory if you can predict market direction 60% of the time, there is 2% value there, if you can predict >70% of the time there is much larger value.

Of course most newbies think predicting direction >70% of the time is consistently possible and so these firms clean up when they cant.

The worst thing that can happen is that your first few bets are winners, then you risk addiction and losing even more money.
And revenge trading these is deadly. You can end up betting £1000+ on a one minute binary, insane.

If you want to use non directional strategies (eg Iron Condors) you typically have to pay an even wider spread.

Last month IG said they will stop offering 'sprint' binary bets to new accounts.
This was after the FCA said they were reviewing binary products in the UK.

IG sprint bets are simple up/down binaries that do not allow early close out.

 

[CBC]

42-58, is the spread on a typical binary

Yea but why would you do that when you can go to the market and hit the mid?

 

[southall]

Yea but why would you do that when you can go to the market and hit the mid?

No need to manage your exit.

With a normal market trade you have to predict direction and then manage your exit.

If you predict direction correctly but screw up the exit (stop set too tight, profit target too far etc) you dont make any money.

With a binary that is held to expiry you just have to predict direction by one tick.

That is all cool as long as the spread is narrow, less than 5.

Except the spread isnt, so binarys are a losing proposition.

Then there are non directional binarys, stuff like iron condors, they also work if the spread is narrow.