are binaries a con?

I priced a 'no touch' bet with BOM earlier today. The price of GBP/USD was at 1.7454 and wanted to know the cost if I were to buy a bet for it not to touch 1.7350 in the next seven days!! I was quoted £173.50 to win £126.50. Now, that is just unbelievable!! I have seven days to trade against the price reaching 1.7350 (100 pips away) and if I am right I will win £126. Why would I want to pay anyone to be able to trade on the price of the price of GBPUSD while I can just trade on the price itself? This is such a no brainer that I can't believe this people get away with it.

Here is what you would do. Risk £173.5 which you will lose if the price touces 1.7350 any way. Now, you can just wait for the price to get closer and trade against the 'NO TOUCH' target. The closer, the better and you will make a damn sight better than £126. Strange world trading.

I managed to make decent money trading No Touch bets on BOM. Although I never traded GBP/USD or USD/CAD - the price and risk where just too high.

It is a method of trading which can be very profitable if you know what you are doing.

adrianallen99 said:

I managed to make decent money trading No Touch bets on BOM. Although I never traded GBP/USD or USD/CAD - the price and risk where just too high.

It is a method of trading which can be very profitable if you know what you are doing.

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What do you mean the price is too high? Adrian, if 'you know what you are doing', you have no need to buy 'NO TOUCH' bets. These things are designed precisely to appeal to people who don't know what they are doing. See what I mean? You have to be an exceptional trader to make money with BOM. They win only if you lose. They are a bookie and the odds are way against you.

If you are an exceptional enough trader to be able to win against the massive odds, then you are paying for a service from which you get no benefit. You might as well trade the traditional way and burn the surplus.

FXSCALPER2 said:

What do you mean the price is too high? Adrian, if 'you know what you are doing', you have no need to buy 'NO TOUCH' bets. These things are designed precisely to appeal to people who don't know what they are doing. See what I mean? You have to be an exceptional trader to make money with BOM. They win only if you lose. They are a bookie and the odds are way against you.

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I mean by price too high, that the cost of buying the bet and the return made it not worth it. If you choose when you buy the bets carefully you can get a good price. True BOM is a bookie and they need losers to pay for the winners, but this is much the same for many spreadbetting firms as well. BOM do tend to market their products towards the inexperienced trader.

FXSCALPER2 said:

If you are an exceptional enough trader to be able to win against the massive odds, then you are paying for a service from which you get no benefit. You might as well trade the traditional way and burn the surplus.

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Not True, just because you can make money betting on NO Touch bets and Barrier range bets, does not mean you can make money trading the traditional way. With a no touch bet, you are prediciting an event won't happen - with traditional trading you are predicting an event will happen. Its a different way of trading and requires a different way of thinking.

adrianallen99 said:

I mean by price too high, that the cost of buying the bet and the return made it not worth it. If you choose when you buy the bets carefully you can get a good price. True BOM is a bookie and they need losers to pay for the winners, but this is much the same for many spreadbetting firms as well. BOM do tend to market their products towards the inexperienced trader.


Not True, just because you can make money betting on NO Touch bets and Barrier range bets, does not mean you can make money trading the traditional way. With a no touch bet, you are prediciting an event won't happen - with traditional trading you are predicting an event will happen. Its a different way of trading and requires a different way of thinking.

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Adrian, I don't think you can argue with what I am saying because it is not an opinion, it is a fact. Let me explain.

If you are consistent enough to predict that some price level will not be touched, then you are paying someone else for no benefit in return. It is imporant that I am talking about someone who can do it. If you pick a level which you think will not be touched, say, in 5 days, provided what you are trading is liquid and has a lot of movements, you will make much more money just trading against the 'NO TOUCH' point as your stop loss. I trade GBPUSD,EURUSD and USDJPY. If you pick a price you think the pair will not touch in 5 days, say 150 pips away, then you can have a lot of 30-50 pip profit opportunities which wil pay you much more than what BOM will give you if you are right, and you lose if you are wrong anyway. BOM are exploiting exactly the fact that the price level you pick is unlikley to get hit. Meaning they charge you a lot because they are taking a big risk in case it is touched and that is where they make their money. All you have to do is think like them. If you do that and they make money, so will you. And I bet they will make money over time. Be the bookie not the punter.

only problem is that often 150 pips up and 150 pips down from 'now' will give you same premium (which means that they also don't know potential direction)

FXSCALPER2 said:

Adrian, I don't think you can argue with what I am saying because it is not an opinion, it is a fact. Let me explain.

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Hehe! I can argue as much as I like

FXSCALPER2 said:

If you are consistent enough to predict that some price level will not be touched, then you are paying someone else for no benefit in return. It is imporant that I am talking about someone who can do it. If you pick a level which you think will not be touched, say, in 5 days, provided what you are trading is liquid and has a lot of movements, you will make much more money just trading against the 'NO TOUCH' point as your stop loss. I trade GBPUSD,EURUSD and USDJPY. If you pick a price you think the pair will not touch in 5 days, say 150 pips away, then you can have a lot of 30-50 pip profit opportunities which wil pay you much more than what BOM will give you if you are right, and you lose if you are wrong anyway. BOM are exploiting exactly the fact that the price level you pick is unlikley to get hit. Meaning they charge you a lot because they are taking a big risk in case it is touched and that is where they make their money. All you have to do is think like them. If you do that and they make money, so will you. And I bet they will make money over time. Be the bookie not the punter.

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The style of trading I use for No Touch wouldn't allow me to sit at a computer trying to take 30-50 pip profit opportunites. My no touch trades were based on EOD data and I decided trade entry points in the morning - if it hit, I traded, otherwise I didnt make a trade. I was alerted of price by email and sms. The system produced 1-2 trades per month, per currency.
Was simple, but effective, but ultimately would not work with traditional trading.

I have done traditional methods of trading before, but because of time contraints I prefer the make a trade then leave it approach with fixed stops/limit. It works for me and thats all I want.

adrianallen99 said:

Hehe! I can argue as much as I like



The style of trading I use for No Touch wouldn't allow me to sit at a computer trying to take 30-50 pip profit opportunites. My no touch trades were based on EOD data and I decided trade entry points in the morning - if it hit, I traded, otherwise I didnt make a trade. I was alerted of price by email and sms. The system produced 1-2 trades per month, per currency.
Was simple, but effective, but ultimately would not work with traditional trading.

I have done traditional methods of trading before, but because of time contraints I prefer the make a trade then leave it approach with fixed stops/limit. It works for me and thats all I want.

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Oh I see. Obvioulsy what I am saying doesn't work if you don't have the time to trade like I suggested. All the best to you.

zagreb said:

only problem is that often 150 pips up and 150 pips down from 'now' will give you same premium (which means that they also don't know potential direction)

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Of course they don't know where the price will go but they don't have to know. Trading is a numbers game and they manipulate the numbers so that the odds are against you. If you are charged £300 to win £100, you will lose even if you are right 70% of the time. You are missing the point if you think it is about knowing whether the price will touch or not.

FXscalper2

I am 10+ years into this FX thing (1/4rd of them profitable), but I am really missing the point re. your method.

For example, I tried your mentioned GBPUSD data on Oanda PriceBox (almost same as BOM, but worse payoff). I calculated scenery if next 7 days price doesn't touch 150 pips up or down from 'now' - for every USD 100.- on risk Oanda would pay to me USD 122.- if price avoids upper limit or down limit.

Now, first I can see that they also have no clue where price may be goin'. Second, my predetermined stop (or 'no-touch') point is not absloute value. As time will pass, they will change their opinion, so my lucrative no-touch level today may become 'probably touched' point. How can you think that no-touch level from today has sense as stop-loss after 5 days for example?

I would appreciate your clarification.

regards
Dagg

zagreb said:

FXscalper2

I am 10+ years into this FX thing (1/4rd of them profitable), but I am really missing the point re. your method.

For example, I tried your mentioned GBPUSD data on Oanda PriceBox (almost same as BOM, but worse payoff). I calculated scenery if next 7 days price doesn't touch 150 pips up or down from 'now' - for every USD 100.- on risk Oanda would pay to me USD 122.- if price avoids upper limit or down limit.

Now, first I can see that they also have no clue where price may be goin'. Second, my predetermined stop (or 'no-touch') point is not absloute value. As time will pass, they will change their opinion, so my lucrative no-touch level today may become 'probably touched' point. How can you think that no-touch level from today has sense as stop-loss after 5 days for example?

I would appreciate your clarification.

regards
Dagg

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I think I probably explained my thoughts in earlier posts. I don't know what you mean by 'they will change their opinion'.

From your point of view [as a buyer of a 'no touch' bet] the following is the scenario. You pay X dollars today for the price not going to P, say. If the price doesn't touch P in the five days, the you win Y dollars. If the price touches you lose the X dollars yo paid when you bought the bet. END. What their opinion may be in 3 days, say, is irrelevant to you. Your conditions are set when you bought the bet.

What I am then saying is this: if you are a full time trader and sit in front of your quote machine all day trading, all you need to do is take your cost of the 'NO TOUCH' bet and trade against the price hitting that point. If you know what you are doing, then you will make much more money doing that and you don't have to pay anyone for the previlege. In fact, in most cases you will not have to wait 5 days to make the money you would get paid if the price doesn't touch after five days. This binary betting business is a very nice way for the bookies to make money.

FXSCALPER2 said:

... all you need to do is take your cost of the 'NO TOUCH' bet and trade against the price hitting that point...

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By not entering into discussion about fairness of betting business, this sentence is exactly what doesn't make sense to me.

What makes you think that it is lucrative to trade against 'no-touch' price point? They are putting same premium 150pips up and 150 pips down, so they don't know which direction price level will be touched.

How then you think it is good to trade against that point? I'm sure their income source is based on better models than predicting price direction (because every experienced trader knows that nothing - weather included - cannot be predicted even 2 days in advance).

It translates to this: their no-touch level is worthless in terms of profitable information.