Synopses & Reviews
Long the province of financial professionals, binary options are now available to retail traders and investors. With trading volumes quickly growing and new markets for binary option plays coming on board, the simple structure of this product allows you to trade in over 20 different underlying markets, from currencies to indexes to commodities.
Now, in Trading Binary Options, author Abe Cofnasa leader in the field of currency trading, analysis, and trainingreveals how the average person can achieve above-average returns on a weekly basis, using specific strategies and tactics in their binary option trading endeavors.
While there are many variations to this type of trading, this reliable resource focuses on the regulatory approved weekly binary option trades of the North American Derivative Exchange (Nadex). Chapter by chapter, it takes you through the basic features of the binary option instrument as well as provides a detailed review of fundamental and technical analysis useful to making trading decisions. And, due to the fact that trading can no longer be separated from the Internet and the social media it has generated, new online tools and techniques for detecting market sentiment are also addressed.
Along the way, you'll gain valuable insights from real-world examples of how to scan the political and economic news and formulate appropriate binary option trading strategies. Case studies of binary option trading in relationship to key news events that we have recently lived through are fully exploredfrom U.S. Congressional elections and the Greek sovereign risk crisis to the turmoil in the Middle East and the earthquake that rocked Japan. Key trading strategiesare also reviewed with examples that include: At-the-Money; Out-of-the-Money; In-the-Money, Deep In-the-Money; and Deep Out-of-the-Money.
Rounding out this detailed discussion of binary options are four information packed appendices. Here, specific training challenges are provided, including a test of your trading knowledge, as well as details on Nadex contract specifications.
As the first book solely devoted to this topic, TradingBinary Options offers comprehensive coverage of this discipline. It will show you what it takes to capture consistent profits when trading binaryoptionsby anticipating market direction, understanding risk management, and effectively entering and exiting tradesand help you hone the types of skills that will allow you to excel in today's dynamic market environment.
Binary Options will explain how independent traders and investors can use binary options to speculate on price movements or hedge their stock portfolio. The great appeal of binary options is that they are less complex than conventional options and provide a simple method to trade based on an opinion of where the market is headed over a certain period of time. The book will explain how binary options work, trading and hedging strategies using binary options, how to use binaries in conjunction with other strategies; and how to choose a binary option broker. The book will identify the various markets in which binaries are available and provide suggestions as to which markets provide the best liquidity and lowest trade execution expenses. The first book of solely devoted to binary options, Binary Options will provide retail traders with an authoritative guide to trade this exciting new market.
An essential guide to the fast growing area of binary options
Long the province of professional traders, binary options are now offered to retail investors through the North American Derivative Exchange (Nadex) and a growing group of online brokerages. Now, with this new book, author Abe Cofnas explains how independent traders and investors can use binary options to speculate on price movements and global events.
The great appeal of binary options is that they are less complex than conventional options and provide a simple method to trade based on an opinion of where the market is headed over a certain period of time. Engaging and informative, this reliable guide reveals how binary options work, what are the best binary options trading strategies, and when to use them.
- Identifies the various markets in which binaries are available
- Offers insights on how binary options allow for opportunities to speculate on the direction of a market and receive a substantial payout
- Provides suggestions as to which markets provide the best liquidity and lowest trade execution expenses
As the first book solely devoted to this topic, Binary Options will provide retail traders with an authoritative guide to trading this exciting new market.
Trading Binary Options
"Are you interested in trading but don't like to wait weeks and months for a return?Are you following news events and want to financially benefit from your knowledge?Or maybe you are new to trading and want to participate but avoid the long learning curve in mastering trading skills. If these questions are on your mind, this book is for you."
From the Preface
Binary option trading is one of today's fastest growing areas of finance. The greatappeal of binary options is that they are less complex than conventional optionsand provide a simple method to trade based on an opinion of where the marketis headed over a certain period of timeone week at the most.
In Trading Binary Options, author Abe Cofnas puts this exciting new product inperspective, and shows individual investors and traders how it works, when to use it, and what strategies are most effective. While there are many variations to this typeof trading, this reliable resource focuses on the regulatory approved weekly binary option trades of the North American Derivative Exchange (Nadex).
Engaging and informative, Trading Binary Options:Provides insights on how binary options allow for opportunities to speculate on the direction of a market and receive a substantial payout
Identifies the various markets in which binaries are availableOffers suggestions as to which markets provide the best liquidity and lowest trade execution expenses
And much more
If you're looking to get more out of today's markets, look no further than binary options. With Trading Binary Options as your guide, you'll quickly discover how specific strategies and tactics will allow you to capture consistent profits on a weekly basis.
About the Author
Abe Cofnas has been the forex trading columnist for Futures magazine since 2001 and has writtenover 100 columns on forex trading strategies and tactics. He is also the author of three Wiley titles,Sentiment Indicators, The Forex Trading Course, and The Forex Options Course. He has, for over two decades,provided fundamental and technical analysis on trading strategies in currencies and inter-markets. He is the founder of learn4x.com, which provides private coaching and seminars on currency trading. In 2008, he formed FXDimensions Inc., a third-party trading system and signal development company that has pioneered the concept of algos that detect trader behavioral patterns. He is a recognized expert in technical analysis and has lectured in London and Dubai (with appearances on CNBC Arabia) and continues to work with students and businesses abroad. Cofnas generates weekly alerts on binary options for Agora Financial's Strategic Currency Trader newsletter. He holds a master's in political science and a master's in public policy from the Graduate School of Political Science, University of California, and the Goldman School of Public Policy, University of California, Berkeley, respectively.
Table of Contents
What Are Binary Options and Why Are They Important? 1
Nadex versus CBOT Binaries 4
Key Features of a Binary Option Contract 7
Defi ning the Key Features 7
Strike Price versus Underlying Market Price 8
Currency Pairs as an Underlying Market 11
Moneyness and Trader Direction 12
The Role of a Market Maker 14
Sample Bid Ask at Nadex 17
Profit Opportunities in Binary Option Trading 19
Expected Probabilities 19
Winning Occurrence Analysis 23
Sentiment Analysis: The New Predictive Tools 27
Defi ning Sentiment 27
Applying Sentiment Detection Tools 32
Tracking Economic Forces that Impact Markets 43
The Fundamental Forces 44
Correlations Involving Binary Markets 47
Fear and the U.S. Dollar 52
Foreign Ownership of U.S. Treasuries 58
Crude Oil 59
Implications of Historic Commodity Plunge 60
Carry Trade and Interest Rate Differentials 63
Central Bankers Move the Markets 65
Evaluating Currency Pairs 66
Using an Economic Calendar as Trading Tool 67
Basic Technical Analysis 69
Key Candlestick Patterns 69
Trend Lines 74
Support and Resistance 77
Confi rming Strength with Price Break Charts 82
Key Patterns for Trading Analysis 89
Fibonacci Resistance Lines 94
Advanced Technical Analysis: Volatility Tools 99
Defi ning Volatility 99
Bollinger Bands 100
VIX: The Fear Index 110
Option Volatility and Sentiment: Put/Call Ratios 116
Volatility Smiles 119
Cycles as Trading Tools 124
Reviewing the Tools 126
General Binary Option Trading Strategies 127
Core Strategies 127
Examples for Strategy Selection 129
Combination Strategies 149
Strategies for Analyzing Event Risks 153
Key Steps in Analyzing Event Risks 157
Putting Strategies and Tactics Together: Timing and Managing Trades 161
Intermarket Uses of Binary Options 163
A Word on Intraday Strategies 164
Risk Management in Theory and Practice 167
Deal or No Deal? 168
The Confidence Index 168
Lot Size Management 169
Offsetting Trades: Failing Forward 170
Leverage and Margin 171
Evaluating and Improving Trading Performance 173
Key Performance Metrics 173
Strategy Scorecard 176
Performance Challenges 177
Analytical Challenges 179
Know Your Trading Personality 181
Targeting Total Returns 182
Algorithmic Approaches for Binary Option Trading 187
What Is Algorithmic Trading? 187
Advantages and Disadvantages of Automated Trading 187
Developing a Trading System 188
Evolving Your Approach 190
The Future of Binary Option Trading 193
Appendix A: Test Your Knowledge 195
Appendix B: More Training Tools and Tests 205
Appendix C: Nadex Contract Specifications 207
Appendix D: Examples of Cycles in Binary Option
Underlying Markets 215
About the Author 221