I assume most of us here are sophisticated traders, savvy and have big appetite, or else you would not have come to this futures forum. I would assume that some of you already have experience in leverage trading, either in forex or futures products (stock indicies or commodities).
In my previous job, I have the priviledge of being a futures broker. Maybe you would ask, is there any priviledge in being a future broker? Of course yes!
Being a futures broker, I can observe the trading style of a very broad group of traders. They come from various backgrounds: either retail or institutional, scalpers or position takers, high net worth individuals or small players, from China, Indonesia, Malaysia or Singapore. By observing their trading style, I can learn from their past mistakes.
I had seen scalpers winning small profit when their view is correct, and lose big time when their view is wrong. End of the day, their profits are not even enough to cover their losses.
I have seen position takers winning a lot of money in their open positions, suddenly their profits turn into losses due to an unexpected event (maybe sudden raise in interest rate or sudden implementation of government policies). Eventually suffers the fate which no trader ever want: margin call.
Many times, my readers had sent emails to me, asking me to introduce a low commission broker. Actually there is already an alternative way of trading, and it comes with zero commission. That is binary trading.
Binary trading:
Binary trading allows you to bet on discrete financial events that have only three mutually exclusive outcomes; Win, Loss or Draw.
Prices on such financial events are quoted in various Odds and are quoted during market trading hours of that financial instrument ("in-running").
You do not need to wait on the outcome of the financial event and can "close out" to take an early profit or cut loss if the events are going against the bet.
Using a real-life example (time is 18.26pm China time, date is 18 Apr 08):
At that time, spot price of AUD/USD is 0.9364. The binary odds for AUD/USD Daily bet, strike price 0.9373, odd for "over" is 0.43 and odd for "under" is 0.65.
Translate the above statement into simple words:
If you think AUD/USD will close at over 0.9373 by 5am (21:00 GMT), your binary odd is 0.43.
If you think AUD/USD will close below 0.9373 by 5am (21:00 GMT), your binary odd is 0.65.
Say you are placing a bet of US$100, a binary odd of 0.43 means that if you lose, you lose US$43 or 43% loss; When you win, you gain US$57 or 57% gain.
Compared to margin trading, to achieve a gain of 57% is so much tougher, and the risk level is so much higher.
In the above trade, you will know what is your maximum loss if your view is wrong, and what is your gain if your view is right. What's more, there is never any commission to pay: any profits you make are yours to keep in full.
Hence looking from a risk-management perspective, binary trading looks more favourable compared to conventional trading.
Events driven trading:
Every other day, there is at least one US economic data. And some of these data can move the market wildly. Some of the impactful data includes: Non-farm pay roll, FOMC interest rate decision, Jobless Claims, CPI, PPI, etc.
Say Non-farm payroll data is going to be announced at 11pm. A positive data may push USD higher, and a negative data will resulting in weaker USD. If you are negative on the data, you can place a hourly bet on the "over" trade. So if the data is indeed a bad data, EUR/USD is expected to rise higher, resulting your "over" trade to make money.
Discipline trading
Say your initial capital for today is USD300. Set yourself a target how much return you would like to achieve, say 50%. Place your bet on the 5 min game. Stop your betting once you gain 50% profit of your capital.
Other benefits:
a.Low capital outlay.
Unlike futures trading whereby a huge capital is required. You can place a bet for an amount as small as USD10.
b.Traders do not have to worry about margin call.
c.No interest charge.
d.Downside risk is capped, unlike leverage trading where you can lose more than you can afford.
I had written so much on binary trading, but I had barely touch the surface on binary trade. I will touch more on this topic in the near future.
In my previous job, I have the priviledge of being a futures broker. Maybe you would ask, is there any priviledge in being a future broker? Of course yes!
Being a futures broker, I can observe the trading style of a very broad group of traders. They come from various backgrounds: either retail or institutional, scalpers or position takers, high net worth individuals or small players, from China, Indonesia, Malaysia or Singapore. By observing their trading style, I can learn from their past mistakes.
I had seen scalpers winning small profit when their view is correct, and lose big time when their view is wrong. End of the day, their profits are not even enough to cover their losses.
I have seen position takers winning a lot of money in their open positions, suddenly their profits turn into losses due to an unexpected event (maybe sudden raise in interest rate or sudden implementation of government policies). Eventually suffers the fate which no trader ever want: margin call.
Many times, my readers had sent emails to me, asking me to introduce a low commission broker. Actually there is already an alternative way of trading, and it comes with zero commission. That is binary trading.
Binary trading:
Binary trading allows you to bet on discrete financial events that have only three mutually exclusive outcomes; Win, Loss or Draw.
Prices on such financial events are quoted in various Odds and are quoted during market trading hours of that financial instrument ("in-running").
You do not need to wait on the outcome of the financial event and can "close out" to take an early profit or cut loss if the events are going against the bet.
Using a real-life example (time is 18.26pm China time, date is 18 Apr 08):
At that time, spot price of AUD/USD is 0.9364. The binary odds for AUD/USD Daily bet, strike price 0.9373, odd for "over" is 0.43 and odd for "under" is 0.65.
Translate the above statement into simple words:
If you think AUD/USD will close at over 0.9373 by 5am (21:00 GMT), your binary odd is 0.43.
If you think AUD/USD will close below 0.9373 by 5am (21:00 GMT), your binary odd is 0.65.
Say you are placing a bet of US$100, a binary odd of 0.43 means that if you lose, you lose US$43 or 43% loss; When you win, you gain US$57 or 57% gain.
Compared to margin trading, to achieve a gain of 57% is so much tougher, and the risk level is so much higher.
In the above trade, you will know what is your maximum loss if your view is wrong, and what is your gain if your view is right. What's more, there is never any commission to pay: any profits you make are yours to keep in full.
Hence looking from a risk-management perspective, binary trading looks more favourable compared to conventional trading.
Events driven trading:
Every other day, there is at least one US economic data. And some of these data can move the market wildly. Some of the impactful data includes: Non-farm pay roll, FOMC interest rate decision, Jobless Claims, CPI, PPI, etc.
Say Non-farm payroll data is going to be announced at 11pm. A positive data may push USD higher, and a negative data will resulting in weaker USD. If you are negative on the data, you can place a hourly bet on the "over" trade. So if the data is indeed a bad data, EUR/USD is expected to rise higher, resulting your "over" trade to make money.
Discipline trading
Say your initial capital for today is USD300. Set yourself a target how much return you would like to achieve, say 50%. Place your bet on the 5 min game. Stop your betting once you gain 50% profit of your capital.
Other benefits:
a.Low capital outlay.
Unlike futures trading whereby a huge capital is required. You can place a bet for an amount as small as USD10.
b.Traders do not have to worry about margin call.
c.No interest charge.
d.Downside risk is capped, unlike leverage trading where you can lose more than you can afford.
I had written so much on binary trading, but I had barely touch the surface on binary trade. I will touch more on this topic in the near future.
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