If you start another journals with binaries start it somewhere else do not post it on this thread, I will help people if they have question about nadex or binaries, but real questions not the way you ask them. I explained a lot baout nadex before but like stock piker said you do not even bother to read, your just trying to find the easy way out to trade. Binaries give you what seems like an easier way and I think yes it is less stressful but there are a lot of intriciacies about binaries and they way they are priced and they way they move you must understand. Traders whom understand options will have an easier time knowing the pricing structure
Rsikit...yea, sorry I do not know the proper terminology but...I was trying to say that binaries eliminate the immediate hyper 'going against you p&l' red reading...for me that is huge...takes pressure off while trading. I usually like to (via DEMO) sell far out binaries that are at about 15-30 of the 100 value...obviously considering that the market is going away from the entrance strike
Thats exactly the bad behavior of binary options plays that gives binaries a bad name or makes people lose money when they could be making. Dont try and sell an option out of the money thats far away its a high risk low reward strategy, stick to learning to trade and incorporate the binaries into a clear concise trading strategy
Nadex euro-convention binaries average 800 bps wide on markets. You're not going to want to trade out of these routinely, so you're going to want to hold to expiration. These binaries are easy to price if you have stat vol(cnd, and can price the distribution). Skew isn't an issue at these durations. ATM options will always run at 50/100 fair value, so nothing to price there. I'll suggest you download hoadley for excel, but from what I've read you don't intend on running any analytics. IG's down and outs are priced under the legit vol-figure as clients are net sellers of puts.
I agree the spread is to big to trade out on a basis of scalping, and when I trade ATM sure I get the 50 even money price, I trade out when it almost maxs out at expiration price. Which doesnt have to be near the time of expiration, it all depends on where it goes. Can you scalp on these, definately not. So holding till expiration or when these max out is a good idea, but they max out before expiration , obviously if you are on the right side of the trade, which if someone is a decent trader they should be. So alot of the time there is no need to hold till expiration to get just shy of full price. Again its learning how they trade with the corresponding markets they are derivitives of. If someone wants to trade alot and often in and out, they should probably stay in the futures side, but this offers something different.
hi rsikit, do you know if their spread products are more scalpable? what are the spreads like(for spread contracts) on us500 or oil? do these prices move pretty much in lock-step with the underlying? thanks.
To be honest the spread products are not really tradable becuase the spreads are pretty big for scalping , there is a ceiling and a floor for limited risk and limited profit. The limited profit is not an issue, becuase the max limit is usually pretty high and the limited risk is nice, but bascially it is almost a half point spread plus commissions. So I really will not trade the the spreads, as more volume comes in if and when the spreads tighten then different story. But the only silver lining in the spread contracts say you have a floor and ceiling of a spread range of 1160 floor and 1180 ceiling. Meaning if you short somwhere when the market its inbtween say at 1175 your max loss is only to 1180 even if the market spikes to 1190 or 1200. Your max profit on that trade would be 15 points not a bad risk reward, but not for scalping becuase of the spread. What you can do is have that same range 1160-1180. This time say the market is out side the range at 1183 so your out of the band at that point. You might be able to sell the range at 1179, meaning max 1 point risk. So no matter what the most you can lose is one point. and the most you can gain is 19 points. So depending on the way you ttrade if your using a 30/60 min chart and you think over the course of the day it will come into the range between 1160-1180 you short at 1179 and then you can make some decent money with very little risk. Or you can chose the range I mention with little risk and short and then find another range( becuase 4 different ranges are always posted) that has a floor at 1185-1205 you buy it say at 1186. So now you have a 1 point max risk on the upside and you have the trade I mentioned earlier on the down side, and now you sort of straddled the ES with a 1 point risk on either side. Sometimes I do this on news I think can move the market one way or another but not sure which way, or sometimes if I think Europe might be volatile , I can put this type of straddle on at 6pm at night and hold all day to 415 pm the next day to see where it goes, you can be right on one side and make moer then enough money to take the risk away from the losing side an profit and sometimes during the course of the day you can make on both sides. I do also straddle things like oil and natty gas on the wed and thursday supply numbers, I use both binaries and spreads to straddle these as long as I find appropriate risk on both sides. So thats my opinion, but fofr scalping, your honestly better off on the futures.