binary options strategy

successful binary options trading usually comes hand in hand with an established binary options strategy.

a binary options strategy is a plan that includes the asset to open a position on, when to open the position and how long to keep the position.
a binary options strategy must incorporate entry and exit levels that will eradicate any speculative risks.

some traders will adopt a more rigid binary options strategy where changing markets will have minimal  influence on their position, while other traders will take a more flexible approach which can be very successful but is also affected by the trader’s emotions.

in addition, there are binary options strategies that use derivatives.
the binary options market allows the trader to take different types of positions and to initiate the level of risk he is willing to take, while knowing what will be the maximum profit or loss results.

a good binary options strategy:

binary options trading has several advantages over other types of trading, such as : predetermined limited risk, potential high reward, a variety of options contracts on all classes of assets.
for those reason, binary options have become popular in the recent years among experienced and new traders and it is recommended for those who are interested in financial trading.

assembling a good binary options strategy,  can be a confusing task to many traders who are just starting their trading with binary options.
fortunately, there are some simple steps you can follow to successfully create your own strategy for trading binary options:

keep your trades small

after developing a strong and compelling binary options strategy, it is very tempting to open a position on a large sum. after all, with such high payouts and in such a short time, it is very reasonable for anyone to place larger amounts on a position which he believes to be a safe one.
of course, even the most comprehensive binary options strategies, can get complicated, when a basic data go wrong due to unpredictable events. and even without the occurrence of unpredictable events, there is no strategy that is complete and allows accurate predictions.

therefore, one of the foundations of a good long-term binary options strategy is to learn to invest conservatively and to stay with enough capital to be able to restore losses that may occur during life time of the strategy.
a good rule to adopt is to invest no more than 5% of your total capital on a single trade.

choosing assets

choosing the asset is an important part in creating a good binary options strategy, you can either concentrate on a certain group of assets (even a single asset ), to ensure that you understand the factors that affect the asset’s price.
or you can address all assets equally and look for significant price fluctuations to decide which asset to trade.

use both technical and fundamental analysis

a good binary options strategy will always use both technical tools, to constitute support and resistance levels and a fundamental analysis to the upcoming events that may have an affect on the asset’s price.

weekly markets review

american Markets

wall Street was closed lower on friday, as investors forget about  the u.s consumer sentiment index which rose to its  highest level since the outbreak of the financial crisis, and focus thier attention toward jp morgan bank, the largest bank in the U.S. (in terms of assets), regarding a $ 2 billion losses on an unsuccessful hedge move.
the producer price index has made its sharpest decline since october.

european Markets

europe has also presented some discouraging news, the economic commission of the european union reaffirmed that the economy will shrink by about 0.3% over the next year – while it expects negative growth in greece, portugal, italy, spain and other countries.

this comes as an addition to reports indicating the attempts to form a government in greece has failed , and disappointing financial statements by the french bank credit agricole – as profits dropped by 75% in the first quarter as an outcome to its exposure to the greek economy.

asian Markets

the chinese central bank announced on an additional reduction of the capital adequacy requirements for chinese banks, this is the third time in which the chinese central bank chooses to apply this tool in the past 6 months.
the decision to lower the capital adequacy requirements for chinese banks was followed by the publish of financial data which indicated that the growth rate of the world’s second-largest economy is slowing faster than expected.
the central bank announced a reduction of 50 basis points, a decline of 0.5% to 20%, compared with the previous level which stood at 20.5%.

This week (14-18/5/2012) should be very tempting for short term binary options traders ,as well as to medium to long term binary options investors since market volatility is higher.

types of binary options

binary options are options where you know in advance the amount of return that could be extracted from them.
When the option expires “in the money” the payout usually varies from 65% to 88%,  while in a case where the option expires “out of the money”, only 15% of the original investment value is refunded.

binary options are also known as digital options.

There are several types of binary options:

touch binary options

touch options are binary options that pay a fixed payout assuming the asset’s price has touched a predetermined price prior to the option’s expiry date.
on the other hand, in the event that the asset’s price hasn’t touched the predetermined price level up to the expiry date, the option will expire worthless.

touch Binary options are generally more expensive but at the same time they carry the highest payout returns (Up to 550%).

all or nothing binary options

all or nothing options are binary options with a predetermined payout in case they expire “in the money”, usually between 65% to 71%.
when an all or nothing binary option expires “out of the money” it expires worthless (the full amount invested in that option is lost).

asset or nothing binary options

asset or nothing options are binary options with a predetermined payout in case they expire “in the money”, usually between 65% to 71%.
when an asset or nothing option expires “out of the money” it pays the option holder a return rate of approximately 15% of the initial investment.

boundary binary options

boundary options are binary options paying a predefined payout as long as the asset’s price has fulfilled the predefined terms of the option.
the predefined terms can be : not touching certain boundaries, crossing or not crossing a certain boundary from a certain direction, 2 touches to a certain price limit and many more…

boundary binary options are usually more expensive but at the same time the payout rate the offer is usually significantly higher.

direction binary options

direction options are binary options paying a predefined return as long as the asset’s price has moved to the desired direction, down or up (up or down) before the option expires.

Trading binary options

If you want to increase your available income by trading binary options here are some factors you should consider.

Binary options trading incorporate several important advantages associated with the simplicity of binary options trading and the flexible time interval in which trading is possible.

Simplicity of binary options trading

Although there are dozens of types of binary options, there is almost no need in extensive contemplation and education regarding the capital market prior to trading binary options.

Flexible time intervals

Binary options are time limited transactions as opposed to investing in a certain share were there is no restriction on the timeline of the transaction.

A share is bought by an investor at any given time and from this point onward, the investor is not limited regarding the time he decides to sell it, Hence also the potential gain or loss incurred during this period due to changes in the share value is not limited.

Additional Important issues to check are the option type and the underlying asset to which it refers. You should also check what the payout rate is and when does the expiry date occurs.

The option type

The option type can refer to whether the option is available for exercise prior to the expiration date. A European option may be exercised only at the expiry date, while An American option can be exercised at any point.

The underlying asset

An investor must differentiate between options on commodities, Forex currency pairs, and indices (such as the NASDAQ) or shares in terms of the complexity of the different possible sources which influence on the asset’s value.

Important information relating binary options trading

Trading binary options gives the investor an opportunity to make a profit on a very small movement.

It would be best to use binary options in times when volatility levels are high, for example following a publication of an economic report.

There are exotic binary options such as the “one touch” and the “no touch” binary options.

The “one touch” binary option pays compensation only if the market touches a certain price or a given level during the life time of the option (prior to its expiry(.

The “no touch” binary option pays compensation only if the market doesn’t touch a certain price or a given range during the life time of the option (prior to its expiry).

Trading binary options

Facebook, the world’s largest social network, together with its shareholders and investors are planning to raise up to 11.8 billion, at the company’s IPO (initial public offering),the world’s largest Internet company IPO (initial public offering)  – according to documents submitted by the company to the U.S. Securities and Exchange Commission (SEC).

337.4 million shares will be sold in the offering at a price of $28-$35 per share, while existing shareholders paid an average price of $ 1.11 per share.

The price range for the offering reflects a market value which varies from $85 to $95 billion – lower than the estimates made in the recent months.

The company itself plans to sell 180 million shares the offering, and shareholders and investors plan to sell an additional 157.4 million shares.

The company’s shares will most likely be availbale commencing May 18.

Mark Zuckerberg, Facebook founder and CEO, is working mostly behind the scenes on preparations for the expected issuance.

Facebook plans to raise at least $ 5 billion in what is expected to be the largest IPO of an Internet company since Google’s issuance in 2004.

The company continues to draw a lot of interest from investors despite its disappointing results for the first quarter, which raised doubts about its ability to maintain a long-term growth rate.

Shortly following the IPO, Facebook shares will be available for binary options traders as well.

Facebook binary options

Spain’s rating downgraded

S&P lowered Spain’s credit rating from an A rating to a BBB+ rating with a negative outlook.

The Rating agency explained the reason for the downgrade: “Spain’s budget structure is expected to deteriorate further following the country’s economic contraction”
It also explained the reason for the negative outlook : “the Spanish government will have to continue providing a fiscal support for the banking sector, this will result in an ever growing national debt”.

Following Spain’s downgrade the risk on Spanish government bonds increased. The yield on a 10-year bond was increased by 0.6% to 5.833%.

A few days ago the central bank of Spain announced that the state has officially entered recession,since the economy retreated for the second quarter in a row.

Earlier this month, the Prime Minister of Spain admitted that country’s economy is having “enormous difficulties”, but he also clarified that the measures imposed are less painful than the government bailout program.

Trade Spain IBEX 35 binary options here >>>

What moves the markets

“Tell me, how did the stock exchange closed today in New York?”, Asked me one evening a friend of mine who is trading the American stocks. I glanced at the Bloomberg application installed on my iPhone and I replied: “Everything is falling. Pretty strong. Almost 2%.”

“Why, what happened?” He asked anxiously, and I answered: “Good news were published on the American economy. Unemployment is down, production and sales increased.”

“Good data”, he said, “then certainly you are mistaken and stocks are up.”

But I was not mistaken. In many trading sessions, the market logic works just the opposite: when there are good news the stock market declines and when there are bad news the stock market is rising.

Why does this happen? Here are two explanations.

The first one is that exchanges often work by expectations, and traders are positioning their investments according to their predictions. When “actual results” come, many traders close there position by placing the same position in the opposite direction.

The second explanation relates to reality in the markets in the recent years, characterized by an ongoing financial crisis, global slowdown, rising unemployment and desperate attempts made by central banks to revive the economy.
So when the news is bad, traders immediately assume governments will deploy additional aid programs which will enhance the liquidity in the money markets driving the stock market up.

If the economic news are good , traders are concerned that aid programs will be canceled , and worse – that interest rates will rise. And nothing scares traders more than the fear of rising interest rates.

This principal is the logic behind the U.S. Federal Reserve economic policies : They make the money so available and determining a low price for money (setting low interest rates) , that nobody would have the incentive to save it.

This is an important issue: the recent financial crisis has made many companies and people fear of the future and so they want to put money aside for a rainy day, but central banks are trying to create a different reality.
They are forcing the public to consume and thus stimulate the production, the service sector and the economy, they want companies to invest the money instead of keeping it in the current account.
And that is why the U.S. central bank Governor , Ben Bernanke earned the nickname “Helicopter Ben” which describes him as an helicopter who scatters money on them.

The trouble is that this reverse logic does not always work. If the news are really bad – for example if there are real signs that the European economy may collapse, then the Fed’s Streams of money will not suffice, and the markets will go down.
And again, if there are really bad news, for example much higher profits generated by the large companies, so their stock prices will rise.

There is no absolute price

But if we rise above the current economic reality, these responses indicate a much more fundamental question: what really drives the price of securities? Is it the economic reality – and earnings growth – or is the main engine for growth is actually the money, as in  the flow of money into the markets and out of them?

Ostensibly, the answer should be that the price of a companies share is rising due to a growing earnings environment and therefore a higher value is generated. The money is supposed to serve us as a way to transfer value from one place to another.

But the reality is not like that. For a security’s price to rise, all it takes is to have more buyers than sellers at a present price, and that buyers would be willing to pay for the stock a higher price.
The thing is that no security has an absolute price,  there is no absolute price! The Price will always be the point where buyers and sellers meet, and this is a virtual point, Which is affected by myriad considerations made by thousands of people.

True, the price of any stock would be tied to the company’s business performance. But beyond that it is will affected by the economic mood, investment alternatives, risks, taxes, interest, individual security concerns, predictions and another long line of factors  – and there is no way to isolate the weight of each of these factors, in the overall picture.
In the end, the only thing that matters is the ratio between the number of people who picked up the phone or typed on a computer an instruction to buy the stock at a certain price compared to the amount of people who did the opposite. This is a point which may seem obvious to traders, but it is not always fully understood by the general public.

Security prices go up (or down) because someone – Joseph , Moses, Andrew, Jack and John – have decided to buy them at a higher price.

In other words, the price for securities is determined by the flow of funds moving in and out of them.
Often it is simply impossible to explain it in any other way: When a stock exchange is rising by 0.5% in most cases we can not explain why. All we can know is that at the end of the day, more money wanted to buy the stock than sell it.

This brings us back to “Helicopter Ben”, and the European Central Bank Governor Mario drag. As long as they pour money to the markets – the prices of securities will find it hard to go down.

It’s deliberate: the central banks do not declare it, because apparently securities prices are determined by the market , but their goal is to maintain high prices in the bond market, and prevent a stock market collapse. They will do anything, to stop the economy from a downward spiral of falling prices, loss of confidence in the markets, a decline in economic activity and so on.
This phenomenon also has a name, “Bernanke’s put”  it speaks of a Put option, which the buyer acquires as an insurance against a price decline , and the analogy is that the central banks are providing such insurance to all investors in the stock market.

The central Banks didn’t stop pouring money into the markets, Earlier this year, the ECB has handed a cheap loan (1% interest) to local banks totaling more than a trillion euros, in activities that received the name LTRO1 and LTRO2.

Not everyone likes this approach. Critics say that the pouring of money only rejects the problem to a not too distant future, even creating a more serious crisis. The President of Brazil , for example,  attacked Bernanke’s policies and denounced it as “a monetary tsunami”, earlier this month.

She claims that the excess money causes a depreciation of the U.S. dollar against the currencies of countries such as Brazil, severely damaging the ability of the Brazilian export sector to compete in the international markets.

The bottom line is this: In the financial markets, the amount of money flowing into a certain asset is the only thing that counts, other considerations are less important, central banks are determined to continue to pump money to the markets, and prevent a sharp fall in the prices of the bonds and shares.

As long as this pyramid lasts, there is no reason to assume that the markets will fall. More than that, this is why the stock markets are rising in the U.S. and Germany from the beginning of the year.
What happens if the pyramid collapses? So, as we use to say, it’s time to buy canned goods, weapons, ammunition and warm clothes – and escape to the mountains.

Best binary options brokers

Trading binary options requires a broker, as well as forex or stock trading.
So how will you find the Best Binary options brokers ? There are numerous Binary options brokers,
you can search the Internet explore various platforms and view the different payouts in your search
for the  Best Binary options brokers, but still find it hard to make a decision.
Some brokers offer refunds for loosing options, while other brokers have special touch options that offer very large payouts.

We have analyzed all the available Binary options brokers and selected the  Best Binary options brokers  to help you decide.
We have taken the following aspects into consideration: Option payments, reimbursements for losing trades,
deposit and withdrawal options, age, and each broker’s reputation, quality of the trading platform,
the ability of the touch-options and the customer service quality.

Below are the Best Binary options brokers that have been selected according to the criteria mentioned above,
as well as the best forex brokers, if you decide to trade the forex market with a regular forex account.

Best Binary Options Broker :

Winoptions.com

Binary options Signals

Not long ago, before you could execute a binary option trade, you would have to conduct an in depth analysis to determine to which direction should you set the trade.
Today you can access many Trading Signals / Alerts services via the Internet which will allow you an access to the recommendations made by their  experienced teams.
You can use those recommendations in the decision making of your  Binary options Trading.

Most Trading Signals services can provide signals for several trading markets such as the foreign exchange markets as well as the commodities and indices markets.
All Trading Signals services allow an E-mail subscription to receive the alerts but only few offer an access to an on-line charting applications where you can see the alerts located on a price chart for any given asset.
All you are left to do is to follow the trading signals provided to you by the Trading Signals service you have chosen.

What to check When trying to chose a Trading Signals service :

Check to see how long has the service been around, how well do they know the binary option as a trading tool.
Check its past performance over the years, how long have they been offering binary options trading signals.
Check to see if they cover the markets you plan to trade and if they provide on-line 24/5 tech support and money management advisory.

The price for Binary options Trading Signals services ranges from free, to a monthly average of $450 and higher depending on quality of the alerts.
Most Trading alert services offer a free period for experience purposes, claim it to see if you are satisfied by the outcome of the alerts.

Last week Wall Street stock exchanges completed their biggest weekly fall in 2012 due to a surprising decline in U.S. consumer confidence, and a lower than expected growth rate in China – the world’s second largest economy following the United States.

Fears regarding an escalation of the Debt crisis in Europe also weighed on the indices.

European exchanges have also completed their longest weekly decline since last summer due to concerns that the Spanish government will be forced to follow Greece, Portugal and Ireland, seeking European assistance to deal with its debts.
Trading in the CDS market, the annual insurance cost against the insolvency of five years government bonds in Spain surged to a record of 5.05%