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Binary Options Trading
E-book
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Contents
Introduction..................................................................................................................................3
What are Binary Options? ..............................................................................................................3
Pricing ..........................................................................................................................................4
Benefits of Binary Options .............................................................................................................4
How to Trade Binary Options .........................................................................................................5
Trend Following System .................................................................................................................6
Markets........................................................................................................................................7
Trending markets ......................................................................................................................8
Range bound markets................................................................................................................8
Volatile markets ........................................................................................................................9
Fundamental Analysis..................................................................................................................10
Technical Analysis .......................................................................................................................11
Trend Following: .....................................................................................................................11
Risk Management .......................................................................................................................13
Taking Profit ...............................................................................................................................15
Risk/ Reward...............................................................................................................................15
Bet Size ......................................................................................................................................16
Portfolio Management ................................................................................................................17
Hedging Your Exposure ................................................................................................................17
Hedging Using Binary Options ......................................................................................................18
Hedging Binary Options ...............................................................................................................18
Winoptions.Com......................................................................................................................19
How To Guide: ............................................................................................................................19
Platform .................................................................................................................................19
Binary Options VS. Traditional Options..........................................................................................21
Account......................................................................................................................................21
Transaction.................................................................................................................................22
Bonus Policy ...........................................................................................................................22
Deposit & Withdrawal Procedure .............................................................................................23
Trading.......................................................................................................................................26
60 seconds..............................................................................................................................28
Pro-Trader ..............................................................................................................................29
Support ......................................................................................................................................32
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Introduction
Binary options have recently come to the forefront of the on line trading world, and were
listed in the Chicago Board of Options Exchange (CBOE) on July 2008.
This step was a confirmation to many participants in the industry that binary options are a
proven investment vehicle for speculators and hedging practitioners.
Before July 2008,binary options were traded actively in the OTC market (over the counter)
by large investors such as institutional and major investment banks. Retail investors were
not able toparticipate in this dynamic market.
Binary options, also known as, digital options are all or nothing options, which give the
investor a fixed payout assuming the criteria of the option, are met. This means that there is
a fixed cash payout to the option buyer if the option expires in the money.
Nowadays there are many brokers and market makers who provide a safe yet effective
binary option platform for both retail investors and professional traders.
What are Binary Options?
Payouts
What makes binary Options interesting is the fact an investor receives a fixed payout as a
returnbased on whether the financial market is above or below a specific level at a specific
time. Asopposed to a standard option, the Binary option buyer can look for a specific
payout.
The structure set up for binary options creates a significant payout, with relatively small
moves in the underlying market. Binary Options are known as all or nothing options since
they either make a payout or expire worthless. Usually, a binary option is priced at the
current market and an investor is able to receive a return on his/her investment based on
the short-term movementof the financial markets.
The payout on a binary option is relatively simple. The payout is a specific dollar amount or a
percentage of your investment you will receive assuming the option expired "in the money."
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Pricing
When trading standard options an investor has to analyze the strike price, the underlying
price of the financialinstrument and the implied volatility of the underlying financialinstrument just to determine ifthere is a positive value in the call or put option he plans to
purchase.
With Short-term binary options most of the issues related to standard options are
eliminated. The only basis for a successful trade is whether the option is above or below, the
investor either receives a payout or does not.
The best approximation for a standard trader to mimic the payout of a binary option is to
use a very tight call or putspread. The pricing of an option is reflected in the payout that a
broker distributes. In some cases the payout will be 1-1, and in other cases the payout is as
low as 65% .
Benefits of Binary Options
Options trading have been available for a long time, and many investors use different
strategiesto speculate on the market direction. Unfortunately, most of the options, either
calls or puts, expire worthless. This happens because the premium that is usually paid, costs
more than the actual move that occurs in an underlying asset, basically the options are
overly priced.
This situation occurs because implied volatility, which is the perception of how much a
market will move over the course of a period, is generally higher than historical volatility .
Additionally, premiums incorporate market movements, and a more violent move than
expected needs to occur for an option to consistently payout .
For investors who wish to place directional trades on a financial instrument, thebest way is
to trade binary options. Binary options, allow investors to speculate on the direction of a
financial instrument, without paying a significant premium.
Call and Put binary options (also known as above or below options) are offered atthemoney and therefore just a small move is needed to expire "in the money" and receive a
payout .
There are also one touch binary options that allow a trader to receive a payout if the
market touches a specific area. You can use this tool to hedge your underlying investments
or to speculate on the market direction.
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How to Trade Binary Options
There are many ways to execute a binary option trade. Traditional binary options (usually
knownas above or below options); "60 seconds options" and one touch options.
The most prevalent type of binary option is the above or below (call or put option). The
above or below option give the investor a strike price in which he will speculate as to
whether the market will be above or below that level (strike price) on a specific time
horizon .
Most brokers offer a large number of hourly options that are frozen about 15 minutes prior
to expiration . To execute this type of options, (assuming that you have funded an account
with the brokersMinimal account size), you just need to click on the call or put button to
execute the trade.
Once the trade is executed (transacted), you are locked into a trade that expires at a specific
time. Some of the brokers who deal or make markets in binary options do not offer the
opportunity for investors to take profits on positions that go their way prior to the expiration
of the binary call or put option .
For example, if an investor where to execute a Call option on the EUR/USD currency pair at
11AM EST, when the underlying market was 1.2779 (which for this example is also the
strikeprice), with and expiration time of 3:30 PM EST; and the market moved to 1.28 by 12
PMEST, the investor would not be able to sell their binary option for a profit. These optionsarebased on an expiration time, and the only way to take some profit is to hedge the risk
associated with the trade .
We recommend a new feature, which allows traders to take profit on theirtrades. This
feature is an excellent tool, and should be something to consider for investorswho are
trading binary options. The only caveat to this powerful tool is that an investor willhave to
pay premium to take profit on their position .
Another type of binary option that is available is the one touch option. This binary option
hasa barrier feature, which allows and investor to receive their profits if the market moves
to aparticular level (touches a specific level). Some brokers offer investors a specific barrier
level ,as well as, a time to expiration. Some of these options even cover the weekends .
The last type of option that is available to execute is the range hit or miss option. This option
gives the investor a specific return if the underlying instrument either hits or misses a range
during a period. The execution of this type of option is as simple as executing the call or put
options.
Some brokers allow traders to draw (or define) the specific range that they areinterested in
hitting or missing, and the broker in turn calculated the returns that they willpay to the
investor .
All of these types of options can be used with numerous types of trading strategies and all ofthem are simple to execute .
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Trend Following System
To implement the system correctly, you need to be very cautious when selecting your
investments. In short, you must only select investments that have a very high likelihood of
finishing either UP or DOWN. The direction has to be very clear.
To help you determine which way an option will go, you need to look at 2 things .
1. Firstly, take a look at the options available and select one that is currently above itsvalue when compared to the previous hour .
In the example below you can see that the option has been climbing and is higher than the
previous hour .
*The yellow line on the graph illustrates the option's current value which is ABOVE its value for most
of the previous hour.
2. Secondly, you need to check out what other traders are doing. Its important to seewhether the majority of other traders are choosing Down (Put) or Up (Call) for this
particularoption .
Take a look at the traders choice bar on the left and you can see the percentage division is
51% to 49% and the majority of traders are choosing Down (Put) as the direction of the
option .
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*The majority of traders are choosing PUT (DOWN) for this option.
3. When you decide on an option that meets BOTH of the above criteria, you mustimmediately invest in that option by doing the following :
1 Click on the Put (Down) Button.
2 Enter your investment amount.
3 Click on the Apply button.
Thorough research has shown that when an option meets BOTH of these criteria, then there
is a very high probability that the option will expire BELOW its current value .
*First click the PUT (DOWN) button. Then enter in your desired investment amount and click Apply
Markets
Financial markets move up and down and sideways, and recognizing what type of market
condition you are in is an important part of learning how to trade. Once you determine the
type of market you are in, you can figure out what tools you should use to help determine
the future direction of the markets .
Financial markets move in many directions. Sometimes, the markets trend in one particular
direction over a short or long period of time. Other times, the markets stay in tight ranges
without moving in a defined direction for a long period of time. There are times that the
financial markets are very choppy, and move back and forth without moving anywhere .
There are also times the markets are extremely volatile and move in one direction very
quickly. Evaluating the particular market condition can be the different between a successful
trade and a losing trade. Market conditions are a function supply and demand of a financial
instrument. If demand for a product grows continuously, markets will move higher, on the
other hand, if supply of a product out ways demand, the financial product will fall .
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Trending markets
A trending market is a market that moves in one direction over a period of time. A market
trend is a putative prevailing course or tendency of a financial market to move in a particular
direction over time.
These trends are classified as secular trends for long term time frames ,primary trends for
mid-term periods, and secondary trends lasting short times. Traders andanalyst will use
specific types of technical analysis to determine if the market is trending .
When a financial instrument is trending higher, the market is called a bull market trend .
When a financial instrument is trending lower, the market is called a bear market trend .
There are many different types of technical indicators used to determine if a market is
trending or beginning a trend.
In the chart below, the Gold Spot market looks like it began itstrend when the 20 day
moving average crosses above the 50 day moving average in June .
The market will stay in a trend as long as it stays above its medium/long term moving
average. Shorter moving averages are better suited for identifying short term trends, while
longer moving averages are better suited for identifying longer term trends .
Range bound markets
When a financial instrument moves within a defined range, it is known to be range bound .
When a financial market is in a bull or bear trend, it can experience times when they
becomes range bound waiting for momentum to continue.
When markets reach the end of atrend, they often become range bound as some traders
who where long during the bull trendexit the market, but there is not enough demand for
the financial instrument to push priceshigher.
This also occurs at the end of bear market trends. Range bound markets occur whensupply
and demand for a financial instrument is equal. The noise the market creates will pusha
market higher and lower during the course of a day, but without any impetuous to pushdemand higher or lower, the markets will stay in a range.
Similar to finding trends ,technicians will use specific types of technical analysis to
determine if a market is in a range .The Bollinger Bands are a specific type of technical
indicator that market technicians use todetermine if a market is stuck in a range.
The Bollinger Band indicator analyzes price dataand creates a 2 standard deviation range
around a 20 day moving average. As the BollingerBands contract and move toward each
other, the range of the underlying price of thefinancial instrument becomes tighter. When
looking at the range that existed from mid 2007to mid 2008 on EUR/JPY, a trader might
come to the conclusion that the current range mightlast another few months (since the
Bollinger range lasted approximately 12 months in the 20072008 period .(
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Volatile markets
When a financial instrument moves quickly in one direction, the markets are deemed to be
volatile. Volatile markets create trading opportunities, but they can also be very difficult totrade.
Markets can also be volatile and choppy where, on an intra-day basis, the range of a
financial instrument is very large, but the movement from the close on 1 day is small
compare to the prior day.
When markets are volatile or choppy, market participants areunsure of the direction of the
market and therefore, this uncertainty creates large swings andvolatility.
One way traders and analysts measure if a market is volatile or going to be volatileis to look
at a financial market that depicts volatility. The VIX, which is a volatility index, is ameasure
of how volatile the market is now, and how volatile it was in the past. The VIXIndex is
created by looking at the value of implied volatility that is priced into S&P 500 atthe
money options.
By looking at a chart of the VIX a trader can see when the S&P 500 wasvolatile and what
traders are currently expecting. When volatility is high, traders areexpecting the market to
move very quickly in one direction or another.
When volatility is low ,traders perceive that the market will remain subdued. Trending
markets, especially bullishtrending markets generally have low volatility, while choppy and
quick bear markets, usuallydisplay high VIX levels .
As investors begins to follow the financial markets, they quickly become aware that there
aremany factors that create the ebb and flow to the short and long term market
movements .
Prices of financial instruments move based on market sentiment which is a function of
supplyand demand for a financial product. Successful trading is based on the ability of an
investorto analyze the financial markets and determine when the price of an instrument is
relativelyhigh or low.
The two main types of analysis that are used in determining the future price of afinancial
instrument are fundamental and technical analysis. These two types of analysis canbe used
independently or in conjunction with one another.
It is important for an investor tounderstand both types of analysis and be cognizant that
each analysis plays an importantrole in describing the future movements of the financial
markets.
The goal of this article is tointroduce the reader to some basic fundamental analysis .
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Fundamental Analysis
Fundamental analysis is the process of using economic, financial or political news to
determine the future movement of the markets. Fundamental analyst s will pour over
numerous reports and releases to try to gain some insight into the future direction of the
markets.
For example, analyst will make predictions on the direction of financial based oneconomic
news such as Gross Domestic Product or Central Bank announcements.
Equityanalyst will look at how a company performed over a specific quarter or what a CEO
hasrecently stated to gain some insight into the future direction of a stock. It is important to
beaware of what is happening in the world, since financial instruments like currencies, over
thelong term, reflect the state of the country the currency is used in.
Every day there areeconomic releases around the world that reflect new information that
determines the paththat a fundamental analyst will need to examine .Fundamental
trading is a type of discretionary trading. This means that the rules thefundamental trading
analyst employs are subjective and can change based on the tradersdiscretion.
When a fundamental analyst examines recent news, he or she must also be ableto
determine if the news or events are currently priced into the market for a financial
instrument.
For example, if the expectations for an economic report such as the employmentnumber
are for a slight reduction in employment, does a small surprise make a differenceover the
short, medium or long term?
The analyst will have to determine based on consensusestimates and their own estimate if
the market has previously correctly valued an instrument ,when determining if there is an
opportunity to take a position.
Generally, when a market issurprised by some new fundamental news, the market reaction
is immediate. Afterparticipants absorb the new news, the markets will continue to move in
the direction of theinitial reaction over a period of time .
As the fundamental trading analyst practices investing in the financial markets, he will begin
to understand the different fundamental news releases that are important, and those which
expose the markets to noise.
A fundamental analyst should keep track of how the marketmove on certain economic
releases is an import guide to performance within fundamentaltrading. It is very difficult to
be a fundamental analyst that specializes in all the markets .
Each market has numerous nuances that create subtle and large changes in the direction of
afinancial market .
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Technical Analysis
Technical analysis is the study of asset prices in the attempt to determine the future
directionof a market.
Market practitioners who use technical analysis believe that the majority of theinformation
that is available is already incorporated in the value of an asset.
With this in mind ,a study of the price action will help determine the next move of the
financial instrument .
There are multiple types of technical analysis that individuals practice to determine futures
prices. The art of technical analysis can be helpful in assisting an investor with entering
positions, exiting positions, and managing the risk of a position.
Technical analysis iscategorized into different subjective and objective studies that allowdifferent traders theability to accomplish different tasks. Some of the objective studies
include, trend followingstudies, means reversion studies and momentum studies. The
subjective studies includepattern recognition as well as support and resistance .
Trend Following :
Trend following strategies are technical analysis strategies that analyze historical prices to
determine if a financial instrument is within a trend.
A trend is a specific direction and for themost part continues to go in the same direction
over a period of time. The easiest and mostefficient way to analyze a trend is to look at
historical moving averages of a particularfinancial instrument.
A moving average is an average where the latest days are dropped offthe average
calculation. In a 5 day moving average, on the 6th day, day 1 is dropped off theaverage
calculation.
An example of analyzing a trend is as follows. Say an investor examinedthe prices of the
AUD/USD currency pair and the 10 day and 40 day moving averages of thiscurrency pair, a
trend can be potentially defined when the 10 day moving average crossesabove or belowthe 40 day moving average.
Moving average strategies are robust technicaltrading strategies and they are solid at
defining trends, but on their own, they do not alwaysgenerated the best entry point into
the market .
Momentum :
Second tool that is commonly used in trend following strategies is the moving average
convergence divergence or MACD. This strategy measure momentum in the market and
determines if momentum is climbing or falling.
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The MACD indicator measure the dailychanges of the moving average and compare a short
moving average change with a longermoving average change. If the changes of the short
moving average are greater, the MACDwill rise indicating that momentum is increasing. The
reverse is the case when the MACD isfalling .
Mean Reversion :
Another technical strategy that is employed when trading financial markets is a mean
reversion strategy. Mean reverting means that the financial instrument will fall back to its
mean (average) after moving away from it over a period of time.
A good analogy is to thinkabout how far wills a rubber band stretch before it snaps back.
This type of analysis would behelpful on two companies that have similar business models.
For example, a trader couldperform mean reversion analysis on Coke and Pepsi.
A technical indicator that is used byanalyst to measure mean reversion are Bollinger Bands.Bollinger Bands are a mathematicalformula that calculated a specific standard deviation
around a specific average .
A second group of technical indicators that are used to measure mean reversion are Relative
Strength and Stochastic indicators. Both of these technical indicators measure how fast a
market has moved in the short term, relative to movements over a longer period.
Theseindicators create an index that is used by traders to determine if a market is
overbought oroversold .
Pattern Recognition :
Another type of technical analysis is pattern recognition. In this type of analysis, the trader is
looking at specific patterns within the price action to determine if he can recognize a pattern
that has show s propensity to forecast a specific price move.
Any example of this type ofpattern is a head and shoulders pattern. A head and shoulder
pattern forms two shouldersand a head and in general the market will fall after forming the
second shoulder .
Technical analysts will also create trend line to determine support and resistance. Trend line
analysis is subjective, but as a general rule, highs are connected to highs and lows are
connected to lows to create a trend line .
Technical analysis is a useful study to help market participants in an effort to create a
specifictrading strategy, or to assist in conjunction with other types of trading strategies.
The studyof technical analysis will not only help in strategy formation, but it will also allow
the investorto have some insight into what other market participants might be considering.
This articletouched on some basic ideas that can be used when beginning the process of
trading.
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Thereare numerous books and articles written on both fundamental and technical analysis,
andinvestors should take the time to examine some of these types of analysis prior to
trading, inan effort to develop their trading style .
Risk Management
One, if not the most important aspects of trading successfully is the ability of a trader to
manage risk appropriately. Well too often, a trader will come up with a solid trading idea
andplace a trade without thinking about when they will exit their trade, or how much they
willrisk on a trade.
Without a sound plan on how to manage your portfolio, successful trades willbe the
exception more than the rule. Money management is a defensive concept. It keepsyou in
the game to play another day.
For example, money management tells you whetheryou have enough new money to trade
additional positions. Trade size and stop placementare two distinct concepts. Stop
placement does not address the question of how much capitalshould be allocated to a
position.
The goal of this article will be to explain how to manage atrade and a portfolio and the
different techniques that can be used to create sound risk andportfolio management .
The plan
Money management techniques are broken down in to a couple of specific areas. The first is
how much capital should a trader allocate to a trade, and the second is how much money a
trader should be willing to lose on a particular trade.
Prior to entering a trade, an investorshould have a sound strategy for the profit and the loss
that they are willing to accept, andthe size of the bet they are willing to undertake. In
general, a prudent risk reward profileshould be one where the profit is a multiple of the
loss. For example, a trader would wants toearn $2 dollars for every $1 dollar of capital
risked on a trade.
In a scenario where a numberof trades meet these criteria, a trader would need to win
slightly more than 33.3% of thetime to have a winning strategy.
The math would work as follows on 9 trades:
Winning trades =3 winners * $2 profit = $6 total profits, losing trades = 6 losers * $1 loss =
$6 totalloss.
From this example, you can see that with 9 trades, the winners and the loser wouldcancel
each other out, creating zero profit and loss. Slightly more than 33.3% would allow an
investor to generate gains.
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If a trader did not have this type of mentality when looking at atrading methodology, over a
period of time they will likely lose money. When entering into atrade, the trader most have
a specific idea of where they would want to stop loss out of thetrade, and where they
would want to take profits on a trade .
Creating a stop loss
When a risk management strategy on a trade is employed, one of the first items an investor
needs to consider is how much are they willing to risk on a trade based on capital allocated
and a move in the financial instrument.
When determining how much of a market swing arethey willing to accept against the
direction of their position, the trader needs to decide wherethey should stop loss out of a
trade.
The stop loss determines how much capital a trader iswilling to risk on a trade. Stop losses
can be based purely on a notional amount of money ,such as risking $1 dollar, or a percent
move in the market.
A trader can look at historicalmoves or technical analysis to determine where a stop loss
should be placed, or they canstrictly base their decision on potential notional loses. When a
trader designs a tradingstrategy that has been historically back tested, the trader can backtest numerous types ofstop loss amounts to determine the optimal stop loss level.
Support and resistance levels arevery solid ways for trend line drawing traders and
discretionary traders to determine a stoploss level.
By using a trend line in the EUR/USD Weekly chart below, a trader who hasdecided to short
the EUR/USD could place a stop loss in the market at a price slightly abovethe trend line
resistance level near 1.51.
If the market moved through this level, the tradercould exit the position. Traders will also
use technical indicators such as moving averages orhorizontal trend lines to create a level in
the market in which they would like to exit aposition.
The stop loss is a very important way to minimize losses and maximize gains .Additionally, a
trader could employ a stop loss that is dynamic and moves as the marketmoves.
A trend following trader might consider creating a trailing stop loss that initially is set ,and
as the market moves up, the trailing stop loss moves up to a level that minimizes anydraw
downs created from adverse market moves.
Trailing stop losses can be a function of apercent of a market movement or a specific dollar
amount. Some traders use specific priceaction levels such as the low of a prior day when
they are taking a long position and the highor a prior day when initiating a short position.
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There are many ways to optimize a trailingstop to maximize trades, and an investor should
look at historical market movements onspecific financial instruments to determine the best
way to maximize gains relative to trialingstops .
Taking Profit
Just as important as determining how much should be risked relative to a move in a financial
instrument is the decision of where to exit a trade when taking profit.
Just as with a stop loss ,a trader in advance should determine based on the risk associated
with a loss, where theyshould take a profit. Similar to a stop loss, a take profit level can be
based on a notionalamount of dollars, a percent move in the market, or a specific technical
level.
Support andresistance levels are excellent ways to create a take profit level. When
determining the takeprofit, it is also important to combine the amount you are looking to
gain on the trade, withthe amount you are willing to risk, which is your stop loss.
Traders should avoid placingtrades where they are willing to risk a greater amount of
capital, than they are looking togain.
A trailing stop loss is one way traders can take profit on a trade .
Risk/ Reward
The essence of a trailing stop loss is that each time the market moves higher, the risk reward
profile of the trade remains similar to the initial risk reward profit. This is called maintaining
the risk/reward profile.
A trader should avoid placing a trailing stop loss at levels where theyare risking more once
they move their stop loss, then they where risking initially. An exampleof this would be as
follows.
Lets say an investor placed a trade on IBM where he was lookingto make 6 percent, and
willing to risk 3% of a move against him on the trade. After themarket moved 2% the trader
plans to move the stop loss up to his initial entry price.
Thisstrategy would create the same risk reward ratio since the trader is risking 2% (the
differentbetween the current market which moved 2%) and the planned gain which is an
additional 4%. If the trader moved the trailing stop up to 1% below his initial entry point,
after themarket moved 2%, then the risk reward profile would be risking 3% (2% to minus
1%) tomake 4%, which is a different ratio then the initial risk reward .
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Bet Size
Along with stop losses and take profit levels, determining the optimal bet size is a very
important part of creating a profitable trading strategy.
Sticking to a strategy that preservesa traders capital and avoids ruin should be on an
investors mind when determining theappropriate capital to place on a trade. There are
many mathematical models which includeMonte Carlo Simulation and the Kelly rule which
help statisticians determine the optimal betsize for a systematic trading strategy.
A simulation will allocate an amount of capital to astrategy and historically step through
time to determine the best way to allocate capital pertrade. Realistically, there are a fewpotential ways to allocate capital.
There is a fixed notionalamount which allows a trader to place only a specific amount of
capital per trade. This stylecan become ineffective as a traders capital grows or falls and can
become unrealistic within avery short period of time.
Another style is to have a fixed percentage allocation. The benefitof this style of capital
allocation is that it avoids ruin by creating smaller bet sizes as yourcapital moves lower, but
increases and compounds as your capital increases. Since it is verydifficult when analyzing a
discretionary system to determine if a strategy will have multiplewins or loses in a row, a
fixed percentage strategy is a robust style to allocate capital .
Another strategy, which is known as pyramiding increases the amount in percentage terms
that a trader will risk as the portfolio climbs, and decreases the amount that is allocated as
the capital base falls. This strategy works well if the strategy has trends where there are
winners or that follow winners or losers that follow losers .
The key to a successful money management style is to preserve your capital and live to see
another day. Bet it all strategies are bound to fail and they should be avoided at all costs .
One way to determine the percent to risk on a trade is to determine your goals prior to
beginning to trade a strategy.
For example, lets assume a traders goals are to make 10%within a year and he believe that
his strategy will generate 10 trades throughout the year ,and the strategy generally wins
50% of the time and loses 50% of the time. Also, thestrategy usually wins $2 for every 1$
risked.
A capital allocation that risks 4% for every 2%risked will generate a return of 10%.
(10,000 * 1.04 = 10,400 * .98 = 10,192 * 1.04 =10,599. *98=10,387*1.04=10,803*
.98=10,587*1.04=11,010. *98=10,790*1.04=11,222. *98=10,998)
This type of analysis is very important in determining thecorrect amount of risk to allocate
to a trading strategy .When beginning the process of creating a strategy, regardless of
whether the tradingstrategy is a systematic (automated) strategy or a discretionary strategyit is very importantto create a plan on how to manage your capital in a defined way.
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Sticking to your moneymanagement plan is one of the most important concepts and it will
make the difference in asuccessful or unsuccessful trading and investing strategy. The
underlying fundamental theorywith money management is to preserve your capital.
More than making money on themarkets is the idea that you want to give your strategy a
chance to make money by placingnumerous trades over a period of time and avoid ruin at
all costs. Unfortunately before ruin ,there is usually an uncle point where a trader decides
that the strategy is a failure and hecannot afford to continue.
The key for a money management strategy is to avoid both the uncle point and ruin.
Creating a trading strategy is similar to running a business, you wouldlike it to have a plan,
that can be slightly flexible, but you are not willing to lose the businesson one client or
order .
Portfolio ManagementOnce an investor builds a number of positions for either one or multiple trading strategies, it
is important to measure the synergies in each position and evaluate whether some positions
mitigate the risks of other positions.
If an investor has 10 positions and all 10 positions movein tandem, which means they are all
highly correlated, then potentially all the positions canmove against the investor at one
time.
This would be equivalent to taking 1 position thatwould risk ruin. This is a very important
concept and a trader needs to perform an analysis todetermine if any two or more positions
are highly correlated .
Hedging Your Exposure
There are two interesting ways to think about how you can hedge your exposure. The first is
that you have initiated a position in binary options, and you are interested in reducing the
risk using financial tools that are outside of the realm of binary options.
The second is thatyou have a position either in a stock or contract (or some type of option),
and you decideyou would like to use binary options to mitigate your risk. The concept of
hedging is the actof reducing your risk exposure.
For example, If you have a portfolio of stocks and you want to mitigate the exposure that
you have to a fall in stocks, you could hedge the exposure bypurchasing puts on a basket of
stocks (or an index) or sell calls on a basket of stocks (or anindex).
Traders hedge their positions when the risks are not in their favor, or when a piece ofnews
is about to come out and the information will create some uncertainty which mightcreate
volatility within the market .
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Hedging Using Binary OptionsBinary options are an excellent tool to use to hedge exposure. They are especially
convenientsince you can use a specific dollar amount to hedge.
Lets say a Euro currency trader wantedto hedge his long exposure to the EUR/USD right
before the European Central Bankannounce their interest rate decision. The trader could
purchase a below option for theperiod overlapping the central bank announcement with an
amount that would allow him tomake a percentage of the notional value of the EUR/USD
position that is held.
If the traderwanted to hedge $500 dollars worth of EUR/USD, trading a below option would
be a simpleproposition .
If the announcement contained some information that caused the market to fall for a few
hours (over even longer), the trader would be protected. The trader would incur some
unrealized losses on his EUR/USD outright position, but would make back a percentage of
those losses with gains in the below binary option .
There are numerous additional binary options that can be used to create a hedge portfolio.
Ahit or miss option can be use to specifically protect both long and short positions.
A missoption can even act like a covered call. Again when looking at the long EUR/USD
position, atrader could purchase a miss option above the market. If the market rises, the
losses on themiss option would be offset by the long EUR/USD position. If the mark falls,
the gains on themiss option offset the losses on the underlying currency position .
Traders can not only hedge underlying positions such as a currency or equity, but they can
hedge their options positions by using a binary option .Hedging is an important part of
prudent trading and currency traders should look into binaryoptions as a way to mitigate
their exposure .
Hedging Binary Options
Hedging binary options positions is the act of locking in your profit, and avoiding having a
binary option position that is in the money, fall out of the money. Many times on daily or
weekly trades, the markets will move in your favor, and you want to take your chips of the
table.
Unfortunately, depending on who your broker is, this process might not be as easy asyou
would like. Some brokers, as well as, the CBOE allow traders to take profits on theirbinary
option positions.
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When you are trading contracts, you just need to find a bid for youroption, but when
trading through a broker, you will need to pay premium for the right tounwind the trade. An
alternative is to hedge the position .
There are a number of ways to hedge a binary position. The first is sell (or buy) yourunderlying position. If you had a binary option position in the S&P 500 index which was 15
points in the money, you could sell the S&P 500 Index for an amount equal to your delta .
This could be done using vanilla options as well. If you are interested in learning more about
delta or vega hedging against binary options, please visit the site www.winoptions.com
Winoptions.Com
Winoptions.Com platform is a place where investors can learn about the binary options
markets and how to invest wisely. The web site contains important information about
trading binary options.
The site delivers in depth market reviews that can be used to trade on binary options.There
is an enormous amount of information available about the options markets, and
Winoptions.comwebsite is a great source of information on the financial markets in general .
How To Guide :
PlatformWhat is a binary option ?
Binary options are a simple and rewarding financial trading product. Binary options deliver a
fixed return on every trade which is made, depending on whether the trade was In The
Money, Out Of The Money or a Tie.
Binary options which are also referred to as digitaloptions are one of the fastest growing
financial trading products in the world because theirsimplicity, together with the certainty
which they offer on every trade, makes them anattractive trading tool for many financial
investors .
When buying a binary option the potential return it offers is certain and known before the
purchase is made. Binary options can be bought on virtually any financial product and can be
bought in both directions of trade either by buying a Call/Up option or a Put/Down
option.
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This means that an investor can go long or short on any financial product simply bybuying a
binary option. Binary options are offered against a fixed expiry time which may bee.g. 5-30
minutes in the future, an hour ahead or at the close of the trading day.
What is an Underlying Asset ?
Assets are any tradable products which a financial market can be based upon. The most
common assets which are traded through financial markets are commodities (e.g. gold, oil ,
platinum), stocks (e.g. Microsoft, Nike, Citi, Coca Cola and others), currency pairs (e.g. euro-
dollar ,dollar-yen), stock indices (e.g. NASDAQ, Dow Jones, FTSE) and bonds .
In binary options trading investors buy options on individual assets on a fixed expiry time in
order to try to benefit from the price changes which are occurring within the underlying
asset .
What is the maximum investment amount?
1,500on the currency of choice in your account .
What is the time shown on this site ?
All times displayed on the Winoptions trading Platform are displayed in GMT (Greenwich
Mean Time).
Where can I view the precise trading hours of each asset?
To view a list of all of our trading assets, along with trading hours, trading symbols and a
description of the asset please visit our Asset Index .
Do I have to download any software for trading ?
There is absolutely no need for you to download anything before you can start trading with
Winoptions. All you need to do is register and deposit funds into your account and youll be
ready to start trading binary options for yourself .
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Binary Options VS. Traditional Options
Winoptions trading Platform offers simple, secure and rewarding binary options trading.
Binary options are anew and exciting way to trade financial markets which differ from
traditional financial options .
Whereas traditional financial options normally have very long expiry periods, binary options
on Winoptions trading platform have expiry times from the close of the trading day to as
little as five minutes .
Traditional financial options tend to offer wildly changing returns from investment, and are
complex to trade successfully, binary options by contrast offer certain returns and are simple
to understand .
Account
Do I have to deposit money for registration ?
No. A deposit is not required and no credit/debit card details are required in order to
registerfor this site .
What currency can I use for trading ?
You can open an account in USD, EUR or GBP. Please note that you cannot change your
currencyselection after registration .
How secure is trading with Winoptions ?
We use the internationally accepted security system SSL (Secure Sockets Layer) thatencrypts all credit card payments over the web. This system is automatic, and you will
receive instant notification if your browser does not support it .
Are payouts taxable ?
Winoptions customers are responsible for their taxation liabilities, if any, at their place of
residence. See our general terms for more details .
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I have problems with the registration process, What should I do ?
Contact our support team, and they will quickly resolve your problem. Youcan reach us via
e-mail ([email protected]), or by contacting one of our satellite officesor via our on-line chat service .
How can I register ?
Registration is extremely simple :
1. Fill in the mandatory details on the Start Trading Form, located on the right side ofthe screen and click the Open Account button.
2. You will receive a welcome e-mail with a verification link. Click it .3. Youre done. Welcome to Winoptions !
Is there a registration fee ?
No, Registering with WinOption is free of charge.
Transaction
Bonus Policy
TERMS & CONDITIONS
Winoptionss Bonus Policy: Winoptions offers a number of attractive reward features to its
newand regular customers. Bonuses and onetime trading credits rewarded to clients are
part ofWinoptionss promotions program.
These bonuses are limited time offers and the terms andconditions associated with any
bonus rewards are subject to change. To learn more aboutWinoptionss rewarding bonus
and promotional offers please contact us via live chat, phone oremail .
Winoptionss Bonus Withdrawal Policy
In order to withdraw your full bonus, you will be required to execute a minimum trading
volume of 20 times for every $1 bonus. The bonus can only be withdrawn when the
preceding stipulation has been fully met and fulfilled .
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The withdrawal of funds from an account before completing bonus conditions will
immediately nullify the bonus and will be removed from the account .
Any indication of fraud, manipulation, cash-back arbitrage, or other forms of deceitful or
fraudulent activity based on the provision of the bonus will nullify the account and any andallprofits or losses garnered .
Deposit & Withdrawal Procedure
This policy applies to all Winoptions accounts .
To deposit and withdraw any funds with Winoptionss the Following criteria must be met by
eachclient .Each client must submit documents authenticating their account with
Winoptions .
Those documents are as followed :
1. A Photo ID. This must be government issued and can be a driver's license, passportorresidency card .
2. Proof of address such as a utility bill. This must verify your physical or billing addressinthe country of your residency .
3. If invested through credit card, then a copy of the credit card used for investmentmust besent. The copy should be that of the front and back of the credit card with
the middle 8numbers of the card covered and the CVV on the back of the card
should be covered as well .
These documents should be scanned in clear copies and sent via email to
[email protected] with your name in the subject line of the email .
These documents can also be faxed in clear copies to +357-2203-0601 .
Deposit procedure :
A client can invest with Winoptions using multiple methods. Those methods are Credit
cards ,debit cards, wire transfer CashU, Money Bookers, AlertPay and Liberty Reserve .
Winoptions is working daily on providing our clients more processing and investment
methods .
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Credit Cards :
The credit card used for transaction with Winoptions must match the name on the account .
Winoptions accepts Visa, MasterCard, AMEX, Maestro, Visa Electron and Diner's .
Wire Transfer :
The minimum for a wire transfer is $500. Any transfer below the amount of $500 will be
charged a $25 fee. The wire transfer must be to the exact details which are posted on thedeposit website under wire transfer.
You must email a copy of the wire transfer [email protected]. It can take up to 5
business days for the wire to appear in yourwinoptions account .
CashU :
CashU is a new anonymous way to invest with Winoptions. This payment method is popular
inthe Middle East and Western Europe. Simply go to CashU website for how to invest usingCashU with Winoptions .
Withdrawal Procedure :
Winoptions's finance department handles all withdrawal requests submitted. The
documentsoutlined above must be submitted in order to process a withdrawal .
There is no fee to withdraw via credit card, however any withdraw using bank transfer will
accompany a processing fee of $25 . Once a withdrawal request is submitted it can take
Winoptions up to 10 business days toprocess and approve the request .
Credit Card Withdrawal :
All funds invested by a credit card can be withdrawn to the same card only. The maximum
withdrawal amount to a credit card cannot exceed the amount invested. Any additional
funds can be withdrawn via wire transfer or to a MoneyBookers.com account .
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Wire Transfer :
A wire transfer withdrawal can be made for profits or to those accounts which vested using
thewire transfer method. A processing fee of $25 is applied to a wire transfer withdrawals .
CashU :
There is no fee for a CashU withdrawal. The withdrawal can only be done to the same CashU
card .
If you have any questions in regard to this policy please feel free to contact us via our live
chat, email or phone. We look forward to assisting you in all your trading needs .
How can I cancel a withdrawal ?
You will have the opportunity to interrupt the withdrawal even when your application is in
progress, consequently your money will return to your WinOptions account.
The withdrawal refund option is especially useful when you have insufficient found in your
account and an interesting investment opportunity appears. In order to cancel a withdrawal,
please contact us by phone at your correspondent number, live chat, or e-mail your account
manager at [email protected].
What is a Swift Code ?
A SWIFT code is the unique identification code of a particular bank that is used when
transferring money between banks. Your bank can tell you what its SWIFT code is. If the
SWIFT code comprises only eight digits, you will have to insert XXX at the end .
Is there a minimum withdrawal amount?
No, There is no minimum amount to place a withdraw.
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What is the fee to withdraw funds ?
The fees change depending on the method of withdrawal :
Credit / Debit card withdrawal up the amount deposited (no fee.)
CashU - no fee
Liberty Reserve - no fee
Moneybookers - $15.00 processing fee.
Alert Pay - $15.00 processing fee.
Wire Transfer - $25.00 processing fee.
How can I withdraw money from my account?
You can withdraw money from your account back to your credit card (up to the amount you
have deposited)Or to the same source you fund the account with and receive your profits by
wire transfer,MoneyBookers.com Or to the same source you fund the account with.
How can I deposit money ?
Please refer to our Banking page. We accept all major credit and debit cards (Visa ,
MasterCard etc.), wire transfers, cashU, MoneyBookers.com AlertPay and liberty Reserve .
Trading
What is Double Up ?
If you are close to your expiry time, and you think that the direction you predicted is on a
roll ,then you have the chance to do it again by clicking on Double Up. By doing this, you
cancreate a new trade with the same conditions, for the current price of the asset. In a
nutshell ,when things look good, Double Up gives you the opportunity to increase your
investment andthus, double your profits .
Double Up Benefits :
Increase your investment on open positions
Make double the profit on expiry
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Immediately capitalize on a strong position
What is Rollover ?
Rollover is a powerful stop loss strategy that allows you to postpone the expiry of your
option.When the market disagrees with you, that is when it looks as though your
prediction is not going to be on target by the upcoming expiry date, activate Rollover with
the click of a button. This gives you another opportunity to close "in the money."
Rollover Benefits:
Postpone the option's expiry time
Utilize a powerful stop loss strategy
Get 30% higher returns when your option expires in the money for an added 30%
investment
Turn loss into gain with time on your side
The Roll over feature is available up to 10 minutes prior to the Expiry date
Per each particular option Rollover can be applied only once.
*Rollover feature is not available for the end of the day trade .
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60 seconds
60 seconds is a new feature added to the WinOptions trading platform.
With Each option lasting only 60 seconds until expiry, it allows the more seasoned investors
to capitalize on market volatility.
*Winoptions.com 60 seconds Trading
To trade with the 60 Seconds
1. Choose the asset in the top left corner
2. Enter an investment amount
3. Choose up or down
4. Press START to transmit the order
5. Press "OK" to place the trade or "Cancel" to find a better rate.
6. Wait 60 seconds to expiry
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Pro-Trader
The concept behind this tool is to allow additional features to the traditional Binary Trading
Platforms. The New Pro-Trader Platform features the underlying instrument's price chart
from the moment it started trading. You can also see options you own located on the chart.
You can also use the "Buy Me Out" feature to realize your profits immediately, which means
that you don't have to wait for the expiry!
*Pro-Trader Platform
How the Pro-Trader Platform works:
Choose the asset in the top left corner Review the history by choosing the back or forward buttons by either 1 hour or
10 minutes on the bottom left corner
Choose an expiry time Choose up or down Enter an option amount Press apply Press Approve to place the trade or cancel to find a better rate.
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Why am I not able to make a trade ?
1. All our assets are available during market trading hours. Outside the market tradinghours ,the asset will not be displayed in Winoptions.Com trading platform.
2. Another reason could involve a lack of funds in your account .3. If none of the above answers your question, please contact us via email at :
[email protected] or through our customer service phone numbers in your
region (located under "contact us") .
Why do the rates continue to change when I make a choice ?
Trading with Winoptions.Com is attached to market prices which are extremely volatile.
Market fluctuations, exchange rates and other parameters affect our real time automatic
pricing system,thus, prices change every second, even when you are selecting an option.
To facilitate your operations we developed a pricing chart that shows market prices and
statistics.
If prices appear in green, the current price is above the last update.
If prices are shown in red, the current price is below last update .
This tool aims to simplify market information provided to you.
What is the expiration time ?
The expiration time is the date and time at which the binary option expires .
What is the expiration rate ?
The expiry rate is the level of the underlying asset at the time of expiry of the asset
according to Reuters. This is the determining level if the option has expired in-the-money or
out-of-the-money.
A different expiry rate is determined for each underlying asset .
What are the rates displayed in the trading boxes ?
Rates are the live quoted prices of the underlying assets .The rate is a live feed from Reuters
for stocks and commodities and Xignite for currencies .The rates we present in the trading
boxes on our home page are those at which Winoptions is willing to sell the followingoptions .
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What return will I get if an option expires out of the money ?
In the event that the option expires out-of-the-money, your account will be credited
automatically with a proportion of your original investment.
The proportion you will becredited varies depending on the option you have taken from 0-
15% of the value of youroriginal trade.
For example, if you traded a Nasdaq Call option with a value of $500, and atthe time of
expiry your trade closed "out of the money" - you would receive a credit on yourtrade of
between $0-$75 depending on the option you bought .
What return will I get in case of a successful investment?
A successful investment will result in a guaranteed return of between 65-88% of the initial
amount invested. The payout for each successful trade is indicated on the site for the
underlying asset that you selected.
For example, if you invested $500 in a Nasdaq Call option ,and at the time of expiry, the
level was higher than the level at the time of your investment - You will receive a payout of
between $825-$940, depending on the type of option that wasoffered.
How can I invest?
Simply choose between buying a "call" or a "put" option on any assetyou want to trade.
Clicking on the call/put button will open an investment sheet in thesame box, where you
will be requested to enter the amount for investment and toapprove the execution. The
selection may be canceled by clicking on "X" at any time beforeapproval of the transaction.
Please note that the rates keep updating in the investment sheet .
What is a Put Option ?
An option that is profitable when the underlying asset price is lower thanthe price it was
purchased at. In case the option expires exactly atthe same price, the full original
investment is returned to the investor (Tie).
What is a Call Option ?
An option that is profitable when the underlying asset rises in pricecompared with the price
it was purchased at. In case the option expires exactly atthe same price, the full original
investment is returned to the investor (Tie).
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Support
How can I contact you ?
You can reach us via e-mail ([email protected]), by calling one of our satellite offices
or via our on-line chat service .
How can I change my personal details ?
You can update the information in My Account>Personal Details or contact us via email at:
What should I do if I have forgotten or misplaced my password ?
In that case you should contact us via email at: [email protected], contact our live
chat or call the customer service number in your region (located under "contact us").