Best Thread Binary Methods
BINARY BETS Strategies
They're quick, volatile and easy to understand. But how can one make money from them? What sort of strategies are available?
Trading is about accepting a given risk to make a probable reward
The best trades are therefore a combination of low risk, high reward as well as having a good probability of working - these can be based on technical analysis such as the F2358B Binary Power Method developed by Mark Wall.
It's not always easy to find these kinds of trades based on technical analysis without a system but here's one strategy using Binary Bets that follows all of these basic principles based on news.
Betting Against a Sharp Move In The Market Using Binary Bets
In order to understand how this strategy works you must fully understand how Binary Bets work.
First, find a market that's volatile and has the potential to move and reverse, stock indexes fit the bill perfectly. Wait for the market to make a significant move either up or down and then trade the binary bet for a reversal. In this case the risk on the binary might be no more than 10-15 points with the potential gain being 85-90 points, which equates to around a 6:1 payoff. You can therefore afford to be wrong 80% of the time and still break even.
This is how a trade might set up
The London stockmarket closes up or down at the end of the day, it really doesn't matter
Between London closing (4.30pm) and Wall St closing at 9pm some news is announced which spins the US indexes into a selling frenzy causing the Dow Jones to close down by over 200 points
It's now obvious that the FTSE 100 will open significantly lower the following morning perhaps down 50-125 points
The first stage of the setup is now complete - a significant gap open in the index, in this case the FTSE 100 Assume that the index opens 60 points lower, you now spring into action and buy the Binary Bet for the FTSE closing UP at the end of the day
And while the price reversing may seem strange and unlikely the markets over the years have reversed so many times from just these types of situations
More positive news with this Binary Bet trading strategy is that the stockmarket doesn't have to close up for you to make a tidy profit, it just has to show some sort of intra-day strength. The index opens down 60 but recovers slightly to be only lower by 40 points mid-morning.
There's a very strong chance that this type of scenario happening (market recovers slightly) and if so the Binary Bet would most probably have doubled in price. A prudent policy in this kind of situation would be to take profits on at least half the trade so you're left with a free bet with no chance of losing. Decisions such as this though are personal and vary from trader to trader.
Using The Strategy on Hourly Binary Bets
Another way of utilising this strategy would be to use the hourly Binary Bet on the FTSE or an American index like the S&P 500 or NASDAQ 100.
But this time do the reversal trade on a smaller timeframe such as one-hour Binary on the basis of a very bullish or bearish US economic figure like the Non-Farm Payrolls (jobs report) which is released on the first Friday of the month. The stockmarket often has a knee jerk reaction to these figures and can move and reverse very sharply, and quickly.
This is how a trade might set up
The S&P 500 index is trading at 1105
A very bearish economic figure is released and the index immediately slumps by 15-20 points
You swing into action and buy the hourly Binary Up bet
Within 15 minutes of the announcement the market has fully digested the report which now seems less negative than first thought
Couple this with some of the shorts taking profits so causing buying pressure which then feeds off itself for the next 20 minutes so creating more momentum on the upside
At this point you'd be looking to take a quick profit on the trade
Always remember with these trades that the risk factor is very small because you're buying the Binary market when it is trading at an extreme, ie under 15 points and maybe nearer 5 points.
To sum up, you're looking for a knee-jerk reaction either up or down due to some sort of news announcement. Binary Bets are used to speculate that the market will recover or at least part-recover over a set time-period. We've heard of some good profits being generated using reversal strategies such as this but unlike the Binary F2358B Method the secret is you must be patient as trade setups are few and infrequent.
Note: Saddam Hussein's capture was a great time for trading this strategy, obviously though with hindsight. If Osama Bin Laden is announced captured or killed, will this be another excellent opportunity to put this trading strategy into action?
Current Binary Betting Brokers
Binary Bet
City Index
IG Index
Finspreads
What About News?
An old market idiom states that 'a market never looks as bad as when it's trading on its low', and obviously vice-versa.
Forget about the news when looking to trade this kind of reversal strategy
News although important often takes a back seat to both psychology and momentum
If you focus on the news when looking to bet against the market you'll never trade because by definition the news will be at its best/worst when you're wanting to trade
Your job is to balance the risks and reward involved while noting from past experience that good or bad news announced earlier in the trading day does not always translate to follow through in prices by the close of business.
Start Trading Small
Finally, if you're new to spread betting and Binary Bets in particular you should always trade very small to begin with, as real-time experience is often the key to success. Don't rush into anything you don't fully understand but if you do, risk small amounts of money.
They're quick, volatile and easy to understand. But how can one make money from them? What sort of strategies are available?
Trading is about accepting a given risk to make a probable reward
The best trades are therefore a combination of low risk, high reward as well as having a good probability of working - these can be based on technical analysis such as the F2358B Binary Power Method developed by Mark Wall.
It's not always easy to find these kinds of trades based on technical analysis without a system but here's one strategy using Binary Bets that follows all of these basic principles based on news.
Betting Against a Sharp Move In The Market Using Binary Bets
In order to understand how this strategy works you must fully understand how Binary Bets work.
First, find a market that's volatile and has the potential to move and reverse, stock indexes fit the bill perfectly. Wait for the market to make a significant move either up or down and then trade the binary bet for a reversal. In this case the risk on the binary might be no more than 10-15 points with the potential gain being 85-90 points, which equates to around a 6:1 payoff. You can therefore afford to be wrong 80% of the time and still break even.
This is how a trade might set up
The London stockmarket closes up or down at the end of the day, it really doesn't matter
Between London closing (4.30pm) and Wall St closing at 9pm some news is announced which spins the US indexes into a selling frenzy causing the Dow Jones to close down by over 200 points
It's now obvious that the FTSE 100 will open significantly lower the following morning perhaps down 50-125 points
The first stage of the setup is now complete - a significant gap open in the index, in this case the FTSE 100 Assume that the index opens 60 points lower, you now spring into action and buy the Binary Bet for the FTSE closing UP at the end of the day
And while the price reversing may seem strange and unlikely the markets over the years have reversed so many times from just these types of situations
More positive news with this Binary Bet trading strategy is that the stockmarket doesn't have to close up for you to make a tidy profit, it just has to show some sort of intra-day strength. The index opens down 60 but recovers slightly to be only lower by 40 points mid-morning.
There's a very strong chance that this type of scenario happening (market recovers slightly) and if so the Binary Bet would most probably have doubled in price. A prudent policy in this kind of situation would be to take profits on at least half the trade so you're left with a free bet with no chance of losing. Decisions such as this though are personal and vary from trader to trader.
Using The Strategy on Hourly Binary Bets
Another way of utilising this strategy would be to use the hourly Binary Bet on the FTSE or an American index like the S&P 500 or NASDAQ 100.
But this time do the reversal trade on a smaller timeframe such as one-hour Binary on the basis of a very bullish or bearish US economic figure like the Non-Farm Payrolls (jobs report) which is released on the first Friday of the month. The stockmarket often has a knee jerk reaction to these figures and can move and reverse very sharply, and quickly.
This is how a trade might set up
The S&P 500 index is trading at 1105
A very bearish economic figure is released and the index immediately slumps by 15-20 points
You swing into action and buy the hourly Binary Up bet
Within 15 minutes of the announcement the market has fully digested the report which now seems less negative than first thought
Couple this with some of the shorts taking profits so causing buying pressure which then feeds off itself for the next 20 minutes so creating more momentum on the upside
At this point you'd be looking to take a quick profit on the trade
Always remember with these trades that the risk factor is very small because you're buying the Binary market when it is trading at an extreme, ie under 15 points and maybe nearer 5 points.
To sum up, you're looking for a knee-jerk reaction either up or down due to some sort of news announcement. Binary Bets are used to speculate that the market will recover or at least part-recover over a set time-period. We've heard of some good profits being generated using reversal strategies such as this but unlike the Binary F2358B Method the secret is you must be patient as trade setups are few and infrequent.
Note: Saddam Hussein's capture was a great time for trading this strategy, obviously though with hindsight. If Osama Bin Laden is announced captured or killed, will this be another excellent opportunity to put this trading strategy into action?
Current Binary Betting Brokers
Binary Bet
City Index
IG Index
Finspreads
What About News?
An old market idiom states that 'a market never looks as bad as when it's trading on its low', and obviously vice-versa.
Forget about the news when looking to trade this kind of reversal strategy
News although important often takes a back seat to both psychology and momentum
If you focus on the news when looking to bet against the market you'll never trade because by definition the news will be at its best/worst when you're wanting to trade
Your job is to balance the risks and reward involved while noting from past experience that good or bad news announced earlier in the trading day does not always translate to follow through in prices by the close of business.
Start Trading Small
Finally, if you're new to spread betting and Binary Bets in particular you should always trade very small to begin with, as real-time experience is often the key to success. Don't rush into anything you don't fully understand but if you do, risk small amounts of money.
An invitation to Binary traders.
The following is an announcement to ALL those interested in trading the Binary markets.
As noted earlier in this thread myself and a colleague are in the process of re-writing
a Binary trading software application.
We estimate the completion to be approximately 8 mths away. However we have decided to make the features of this application freely available to interested parties, (Part of the delay is due to the web interface that needs to be developed.)
We intend to provide the following :
Charts & Data covering:
NOTE Realtime = 30 Second Tick resolution.(its the best we can do atm)
a) Notification of directional & magnitude changes in market action and associated probabilities
b) Notifcation of forecast profit potential and realtime trading signals as a result of a) above.
c) Realtime probability updates regarding hourly and end of day market positions
d) Realtime probability updates regarding max and minimum intraday values.
e) An improved realtime binary pricing model. (The original pricing model was reverse engineered from the BinaryBet.com model)
f) Historical charted examples of our original and new pricing models versus the BinaryBet.com models.
The ability to compare two or more binary models, we beleieve, will improve transparency within the binary bet industry by providing a independent benchmark against which corporate pricing models can be assessed.
Access to the web site will be by invitation for beta testing after which time we aim to make it freely available.
If you would like to beta test the site, and provide feedback on improvements then please email me.
Please note I cannot respond to all emails. When the system is ready for deployment those chosen will be contacted.
If you would like to see specific features or have any ideas you think we should consider please let us know.
Thanks in advance
Chris S.
The following is an announcement to ALL those interested in trading the Binary markets.
As noted earlier in this thread myself and a colleague are in the process of re-writing
a Binary trading software application.
We estimate the completion to be approximately 8 mths away. However we have decided to make the features of this application freely available to interested parties, (Part of the delay is due to the web interface that needs to be developed.)
We intend to provide the following :
Charts & Data covering:
NOTE Realtime = 30 Second Tick resolution.(its the best we can do atm)
a) Notification of directional & magnitude changes in market action and associated probabilities
b) Notifcation of forecast profit potential and realtime trading signals as a result of a) above.
c) Realtime probability updates regarding hourly and end of day market positions
d) Realtime probability updates regarding max and minimum intraday values.
e) An improved realtime binary pricing model. (The original pricing model was reverse engineered from the BinaryBet.com model)
f) Historical charted examples of our original and new pricing models versus the BinaryBet.com models.
The ability to compare two or more binary models, we beleieve, will improve transparency within the binary bet industry by providing a independent benchmark against which corporate pricing models can be assessed.
Access to the web site will be by invitation for beta testing after which time we aim to make it freely available.
If you would like to beta test the site, and provide feedback on improvements then please email me.
Please note I cannot respond to all emails. When the system is ready for deployment those chosen will be contacted.
If you would like to see specific features or have any ideas you think we should consider please let us know.
Thanks in advance
Chris S.
BinarySoft Chris
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This sounds interesting, a few questions:
1) How much will the service cost?
2) Will it compare binary pricing models of other bookmakers apart from binarybet.com?
3) Is it purely an information service, or will it allow trades to be placed using the software?
I've actually finished developing a revolutionary binary interface to Betfair, it will be released sometime in the next few weeks or so.
1) How much will the service cost?
2) Will it compare binary pricing models of other bookmakers apart from binarybet.com?
3) Is it purely an information service, or will it allow trades to be placed using the software?
I've actually finished developing a revolutionary binary interface to Betfair, it will be released sometime in the next few weeks or so.
BinarySoft Chris
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Also, where are you getting the data from for your pricing model if you don't mind me asking?
jules101 said:
There is no cost. The idea is to make it a free service.
It is just information only. We can't take bets or process them.
We can only provide data on FTSE end of day UP Down pricing and hourly Up Down.
The web site won't directly compare against BinaryBets's pricing or any other company (we don't have direct access any more) . It will provide what we beleive to be an accurate and fair unbiased binary price at any specific point in time. By using our binary pricing as a base line you will be able to determine by how much the binary companies are overpricing or underpricing volatility.
Obviously by having two web pages open ours and any other binary betting company you will be able to see the difference in price. We have approached Binary bet about access to the binary prices but they declined. (no real surpridse there)
We have finite resources. There's just two of us doing this and we both hold down full time jobs.
BinarySoft Chris
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I understand that you want to provide an accurate and unbiased price, but isn't the real problem that the volatility at any moment in time is impossible to calculate? (and therefore a truly accurate binary price is impossible)
jules101 said:
Well lets wait and see.
We think we have a good handle on the volatiliy and we are confident our pricing is accurate.
You'll be able to comapre our early model against binary bets model (we have a database of over 300 days worth of data. Binary Bet prices & intraday FTSE data.)and our current model against the same data.
Once the site is up you can let us know what you think.
NotQuiteRandom
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I am with Jules101 and would be interested to engage in a more detailed analysis of what 'accurate' pricing means.
One can objectively know the underlying asset price, the tenor, the strike and the risk free and carry rates but the 'correct' implied vol is a misnomer in a context in which there is no liquid implied vol. Retrospectively one can empirically observe the standard deviation but in forecasting it the only certainty is that you will almost always be wrong by some margin.
I am interested in your software and would love to beta test it but caution against the concept of 'accurate' pricing for short term bets.
NQR
One can objectively know the underlying asset price, the tenor, the strike and the risk free and carry rates but the 'correct' implied vol is a misnomer in a context in which there is no liquid implied vol. Retrospectively one can empirically observe the standard deviation but in forecasting it the only certainty is that you will almost always be wrong by some margin.
I am interested in your software and would love to beta test it but caution against the concept of 'accurate' pricing for short term bets.
NQR
hmm yeah the volatility issue, I'd like to see how you create a daily volatility estimate using intra-day data (as I assume your daily vol will be a function of the current underlying).
Just out of interest how can you reverse engineer binBet model when they will have underlyign skews, volatility skews, vol surfaces, and various other fugdge factors for jumps etc, It can be doen to a certain degree of accuracy but what do I know about financial mathematics and derivative pricing.
Keep us all informed of progress
Just out of interest how can you reverse engineer binBet model when they will have underlyign skews, volatility skews, vol surfaces, and various other fugdge factors for jumps etc, It can be doen to a certain degree of accuracy but what do I know about financial mathematics and derivative pricing.
Keep us all informed of progress
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NotQuiteRandom
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Here here, I want to see some algorithms. Can you post any further info?
NQR
NQR
Re NQR & Robertral
As stated earlier in the post the specifics surrounding the algorithms won't & can't be divulged for obvious reasons. what I will say is what I aluded to earlier on in the thread namely that early testing of some ideas seems to be showing promise. we had originally intended to develop the ideas for our own use but decided to make the output available for review & criticism by "the community" . Once we get the site up and running and have some feedback we may be willing to discuss in more detail some of the ideas (we may not however).
As for reverse engineering Bin bets model our efforts suggest there is more fudge than function.
As stated earlier in the post the specifics surrounding the algorithms won't & can't be divulged for obvious reasons. what I will say is what I aluded to earlier on in the thread namely that early testing of some ideas seems to be showing promise. we had originally intended to develop the ideas for our own use but decided to make the output available for review & criticism by "the community" . Once we get the site up and running and have some feedback we may be willing to discuss in more detail some of the ideas (we may not however).
As for reverse engineering Bin bets model our efforts suggest there is more fudge than function.
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NotQuiteRandom
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Have you considered a career in politics?
;-)
NQR
;-)
NQR
Chris S said:
I don't want algo's, I'm just amazed that anyone could reverese engineer something with so many stochastic variables (with suuply/demand -> market making skew, being the main one).
Also if you are basing your model results off the pure cash then you should really stop your efforts now, and spend your time down the pub doing somethign really worth while...
Try this one...
Benron, here's one.
Its not an algorithm but is nonetheless systematic.
Benron said:
Benron, here's one.
Its not an algorithm but is nonetheless systematic.
Chris S said:
Chris, sounds very interesting. i have access to some heavy weight quants traders at the worlds largest (by volume) market making firm. I myself work on the algo trading desk and can do the number crunching for you using some of our cutting edge backtesting facilities. I have access to 3 years of global tick data and can calculate the FTSE100 price faster than Reuters or eSignal can receive it.
NotQuiteRandom
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What was the strike price on each? Were they both the same? If so I assume that you bought them at different times.
NQR
NQR
