Traits of an Ideal Binary Options Trading Mentor

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Trading Mentor – Options, FOREX & Stocks

I am new to options trading as my question will soon make very clear. If I see the market price of a put at .25, lets say I buy 100 contracts at . Now when I reach the “strike period” am I obligated to purchase those shares like I would any other stock? Or is my total investment cost just the commission on the trade and (100 contracts @ .25) ? Let’s say the company I am buying a put on is trading at a share, after buying the 100 contracts at .25 do I have to pay for anything else? Question really simplified: Do I spend on the 100 contracts and then never have to invest more money for this particular investment? I just wait for the “strike month” and I could only lose my original , and I don’t have to replace the stock (like a short position)? Sorry it’s so long but I really wanted to address my question clearly.

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5 thoughts on “Options trading?”

Sounds like you’re pretty new to options. The best book I’ve come across for learning options is “Getting started in Options” by Michael C Thomsett. I got a copy on eBay for about $5.

you should be gambler otherwise option tading is very risky.
good luck.
Unless you want to put some thousands of dollars and lose or win thats it. Otherwise I suggest the best you should try to stay out of it.

The reason why you are having all these questions is that you are totally unfamilar with options. With these questions answered, more questions will surface and that is an endless dead end as long as you do not polish up on what option trading is in the first place.

I have prepared for you a hand written site teaching you everything you need to know about option trading for FREE at http://www.optiontradingpedia.com .

I hope you find it useful.

i’ll answer your question but you should really do more homeowrk on options before you start. but to answer your question as simply as possible, you are right, if you bot the put and the stock goes up you will lose your $25 if you do nothing.

Option contracts are quoted on a per share basis. Each contract normally covers 100 shares. Therefore one contract at $0.25 would cost $25 and 100 contracts at $0.25 would cost $2,500.

No. Only the seller (writer) of the options has any obligations. The buyer (holder) of the options has the right but not the obligation to exercise the options.

Your total investment is the cost of the contract(s) and the comission. As already noted the cost of the contracts would be 100 times greater than you specified.

If you buy contracts you never have to invest more money. You should, however, be aware that if you still own conracts at expiration AND the contracts are in-the-money by $0.05 or more, they will automatically be exercised unless you explicitly specify they are not to be exercised.

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  • Binomo
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It is far better to ask if you are not sure.

I suggest you go through the material at

to learn a little more about options. If still interested after going through that material, I suggest you read a good book about option trading before risking real money on options.

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What is binary options trading?

Binary options trading is a relatively simple way of betting on whether or not a certain outcome will occur. The name ‘binary’ (meaning ‘two’) reflects the fact that you must choose from just two scenarios – yes or no.

In financial trading, this is typically whether the price of an asset will be lower or higher than a certain level at a pre-determined point in time.

The most common type of binary option is a digital option, sometimes broken down further into ‘up/down’ or ‘call/put’ options.

With a simple call/put option, if you think the price of the underlying asset will end at or above the strike price, you buy a ‘call’ option. If you think the price will be below the strike price at expiry, you purchase a ‘put’ option.

If you are correct, the option is ‘in the money’ and pays out a fixed amount of compensation.

This compensation is typically money but in some contracts can be a quantity of the underlying asset itself.

If you are wrong, it is ‘out of the money’ and you receive nothing.

Because of this, binary options are sometimes called ‘all-or-nothing options’.

The attractions of binary options trading

Because you have just two possible outcomes to consider, binary options trading is considered simpler than many other kinds of financial trading.

Typically, all you need to decide is in which direction you think the price of the underlying asset will move.

Unlike with other forms of financial trading where your potential profit or loss is determined also by the size of a price movement, it doesn’t matter to a binary options trader how far prices have moved above or below the agreed strike price when the option expires. With binary options, a winning trade always produces the same payout.

Because of this, you have a clear picture of your risk-to-reward ratio before you enter a trade.

This is in contrast to traditional options, where profits and losses can be limitless.

With binary options, therefore, you don’t have to sit at your trading terminal, anxiously watching prices – once you have made your trade, you don’t need to check in until the contract has expired. You also don’t have to worry about applying complicated risk management tools like stop losses.

Binary options are flexible, with brokers typically offering contracts for a wide variety of underlying assets – from foreign exchange or commodities to company shares or indices like the FTSE or S&P 500.

Contracts can also run for anything from 30 seconds to several months, depending on what your broker offers. This means you can tailor your trading to your own areas of expertise or trading style.

If you’re an experienced trader in other markets, such as foreign exchange or shares, you can apply some of the skills you have already developed.

Fundamental and technical analysis, for example, can both be used to help you form a view on future price movements.

The risks of binary options trading

With binary options, it is possible to lose all the money you have invested if none of your trades are successful.

Careful money management (see Lesson 6 https://learn.tradimo.com/lessons/1278) should however ensure that you do not wipe out your entire trading account.

An example trade

All or nothing call:

The current price of Uncle’s Apples shares is $10. If you think the price will go up and trade above $10 this time tomorrow, you can profit from this expectation by buying a one day binary call option.

Before buying the option you need to decide how much money you put on the trade. This will be your investment (your risk) and your payout will be a certain percentage of this amount. If the broker is offering a 50% payout, it means, if you win, you get your investment back plus 50% on top of it.

Let’s say you invest $20 in a one day Uncle’s Apples binary call option with a 50% payout. You come back same time tomorrow to see how your trade performed. You were right, the price is above $10 per share, that is, your option expired in the money. You get your $20 investement back plus 50%, that’s $10. So you get $30 altogether.

However, if Uncle’s Apples shares were below $10 when the contract expired, the contract becomes worthless. Then the option would be out of the money and you would lose your initial investment of $20.

Other types of binary option

With a ‘one touch option’, you predict that the price of the underlying asset will at some point during a defined contract period touch (reach or surpass) a certain level. If it does, you receive a payout. If it doesn’t, you receive nothing.

With a ‘no touch option’, you predict that a certain price will not be touched during the contract period, and are compensated if you are correct.

With a ‘double touch option’, you define two price levels and predict that at least one of them will be touched during the contract period. You receive a payout if this happens. If the price stays within the range of these two prices and touches neither, you receive nothing.

Note that the closing price at the end of the contract period is irrelevant with any kind of touch option. This makes them perfect for traders who believe that prices will be volatile but aren’t confident about predicting a sustained price move.

They are therefore particularly popular for trading volatile assets like foreign exchange and for very short-term trading with contract periods as short as one minute.

Summary

So far you have learned that:

  • binary options got their name from the fact that there are only two scenarios to consider: the market ends up either above or below your target price when the option expires
  • you get paid a set amount, typically a certain percentage of your investment if you are right or you lose your investment if you are wrong
  • it is because of these two reasons that binary options have gained a huge popularity in the last few years
  • brokers have created a variety of binary options contracts so you can take advantage of special market conditions, such as ranges, breakouts, tests of significant price levels and trending markets

Indicators of binary options trading without redrawing

We all want to find the perfect indicators for binary options without redrawing to minimize losing trades. It is desirable that these indicators fit into one or more currency pairs, and could be used for any tool. We are talking about dial indicators and colored dots indicating sales or purchases.

There are different types of indicators: trend, flat, counter-trend, scalping, arrow. There are those that are redrawn, and those that are not. In this tutorial, we will look at each type of indicator for binary options, determine which one is better and which is not. Also consider the features of the indicators for BO without redrawing.

“Redrawing”?

Redrawing of the indicator – is when the story shows one, and in real time is quite another. Indicators, which draw values in the course schedule, and then in a few candles change their appearance, adapting to the price value is common in the Forex market.

To better understand how does the redrawing looks, we will show an example in the screenshot below:

Figure 1. Example of redrawing in binary options

That is, redrawing indicators draw the past movement of the candles. In fact, such indicators can be considered useless as the trade on their incorrect signals will lead to a drain of the deposit.

How to determine whether the redrawing exists on the indicator for binary options

Here we come up against the fundamental question of defining indicators for binary options that redraw the values on the chart. After all, before using a particular indicator for binary options, you need to make sure that redrawing will be absent in it.

To determine the redraw of the indicator is quite simple. There are several ways to do it:

  • choose any timeframe observed for the Japanese candles. Usually divergent candle indicator can be seen after 25 candles;
  • search of redrawing is part of the testing strategy: you can monitor transactions only for sale, only on the purchase or on both purchase and sale;
  • if it is a commercial unique indicator, so before buying you can ask its vendor to provide a free version to get rid of it through the strategy tester. And it will show whether it redraws signals or not.

The principle of operation and features of indicators without redraw

The principle of operation of the indicator without redraw is clear – drawing on the chart of arrows or other elements (for example, colored pixels), which indicates that you need to open PUT option or CALL. The main thing here is that the chosen indicator by the trader worked without redrawing.

Figure 2. Indication without redrawing by dots and arrows

It often happens that the indicator without redraw can show the colored dot of some of the size. These signals indicate that the price of the asset more likely to continue its movement in the direction mentioned by the indicator without redraw. Such signals allow the next candle buy CALL option or PUT depending on signal.

The basic principle on which the indicators without redrawing work, is a signals formation (arrows) at a time as soon as the price repulsed from the high/low or will form some pattern. It all depends primarily on the algorithms of his work.

Almost all arrow indicators established such a rule, that the signal is a red arrow down means sell (PUT), and the blue up arrow is a buy (CALL). As soon as such a signal appears, the delay is like death. We must act quickly. At the opening of the next candle you need to be ready to go in the direction mentioned by arrow.

Difficulties and problems

Profits on the binary options market, depends on how precise the choice of the direction of price movement is. There are two main difficulties.

Difficulty No. 1. The indicator redraws its signals

When testing the indicator on the history that draws signals at first it seems that it just perfectly predicts the price movement of any asset. But while trading in real time all the pitfalls coming up. And everything is not as rosy as it seemed at first glance. That is, the disappearance of arrows or colored dots. This indicates that the indicator redraws. The problem may lie in the algorithms of its work.

Figure 3. The indicator redraws its signals

Change of location of the indicator upon receipt of new values of quotations. Frustrating when a trader opens a transaction on the signal of the indicator, but after a certain period of time the signal disappeared, then it becomes obvious that trading strategy with its participation is doomed to failure.

If the indicator for binary options trading without redrawing really “doesn’t draw“ the signals, it means that its arrows in no case should change its position or direction.

Difficulty No. 2. A high degree of reliability of the signal

In the Forex market and binary options there are many kinds of arrow indicators. But not all of them are suitable for the options market. If we talk about Forex trading – even the indicator with redrawing may work, because you can always wait for the right trader price reversal to close in a profit position. But for binary options you need greater precision, and any errors, especially drawing, is absolutely unacceptable.

The dial indicator should give a very accurate signal, especially in relation to the next 2-3 candles.

Ways to avoid problems or 7 signs of a reliable indicator for binary options

Really reliable, and therefore profitable indicators should:

  • to deliver signals without redrawing;
  • work with any asset and any timeframe;
  • to operate on all types of accounts (real, demonstrative, ECN);
  • not to miss the best entry points;
  • provide anticipating price signals so the trader has time to make a deal;
  • open code, so it is possible to make adjustments under certain conditions;
  • confuse the trader during a flat with large number of false signals.

Arrow indicators for BO without redrawing have such positive things:

  • determination of the moments, when the next few candles will close in profit without any amendments;
  • the minimum expenditure of energy aimed at technical chart analysis with the purpose of finding favorable points for transactions;
  • minimization of the number of errors that occur when using conventional indicators, which are constantly recalculate their values.

Figure 4. Indicator Scalper MA without redrawing

Types of indicators for binary options without redrawing

Figure 5. The indicator without redrawing

On the binary options market there are 5 main types of indicators without redrawing:

Consider an example of each indicator separately.

Scalping

Here is an example of scalping indicator for binary options:

Figure 6. Scalping indicator for binary options Binary Option Arrows

Green vertical stripes denote profitable trades, red – unprofitable. Often, scalping indicators for BO involve trading on small time frames M1-M5. The expiry time one or two candles.

These types include such indicators as: EMA, Catx, SMA and ADX. They best define the trend, but also show that might involve a possible bounce from moving average.

Usually trading on binary options by trending indicators suggest a longer expiry, up to the candle. The time interval can be anything. The most important thing. In this time, there was a bearish or bullish trend.

Figure 7. Trending indicator Catx

This type of indicator involves catching pullbacks (bounces from levels). A good indicator for BO which will not redraw the values is considered as the Bollinger bands. Signal for the opening of the option will serve as the price reaches one of its lanes and return to the moving average. You can work on the rebound from these bands. The expiration time is up to 8-10 candles, any timeframe.

Figure 8. The counter-trend indicator Bollinger bands

Good results on flat movements show the indicators-oscillators. They oversold and overbought zones allow to accurately enter the market.

For example – Stochastics. Its signals are perfectly show that the price is overbought or oversold, then there is a high probability of reversal. The level of purchase – area (0-20), sales area – area (80-100). The time interval of trading: any, the expiry time: few candles.

Figure 9. The Stochastic Indicator

Arrow

In most trading platforms this type of indicators are somehow unavailable. But arrow indicators for binary options without redrawing can always be downloaded free on the Internet. It often happens that the indicator shows good signals, which later turn to traders with profit.

Figure 10. Arrow indicator Scalper MA

Best binary options indicators without redrawing

Best indicators without redraw for the binary options market, of course, considered to be arrow.

Profit Sunrise

This indicator for binary options is one of the most accurate. It is based on unique algorithms that exclude various market noise. Testing has shown that a powerful Profit Sunrise indicator for the year showed a 91% of profitable trades.

Figure 11. Indicator Profit Sunrise

“QQENew”

Profitable the “QQENew” indicator without redrawing just created for binary options trading. Its algorithm is based on the smoothing values of RSI. In the histogram below you can see the intersection of the red and green lines between them. At thi time the signal is given.

Figure 12. Indicator QQENew

When the signal lines intersect the indicator “QQENew” will sound an alert. Trade on this indicator will be more profitable if you use additional filters of a trend.

RSI – RSX

High-yield trading system for binary options RSI – RSX showed that among the 14 transactions 13 –in-the-money, 1 – loss. In the base of a system the zones of the RSI indicator (0-30) and (70-100) are used. For example, the price dropped into the zone 0-30, then we need to wait till it gets out of this zone. The expiry time of 5 minutes, if the timeframe is M5. Sell trades should be considered, when price entered the zone (70-100) then there is a reduction. We open the option of PUT.

Figure 13. Indicators RSI — RSX

Indicators for binary options – tips

It is better to use arrow indicators for binary options without redrawing. Although there are many profitable indicators which do not draw signals. Open a demo account with one of the most reliable Forex brokers.

Installed Metatrader4 terminal allows you to test profitable strategies for binary options. Always consider the direction of the global trend. Do not risk more than 10% of your deposit per trade. Do not deviate from the trading strategy, which for several months have been tested on a demo account, and you will profit!

Best Binary Options Brokers 2020:
  • Binarium
    Binarium

    The Best Binary Broker 2020!
    Perfect For Beginners!
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  • Binomo
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