Trading Binary Options: Strategies and Tactics

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Trading Binary Options Strategies and Tactics

By Abe Cofnas
John Wiley & Sons December 2011

Specifications

ISBN-13
9780470952849
Publisher
John Wiley & Sons
Publication
December 2011
Format
Hardback , 256 pages
Jurisdiction
International ? Countri(es) for reference only

Details

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.

Table of Contents

Foreword

Preface

Acknowledgments

Introduction: What Are Binary Options and Why Are They Important?

Nadex versus CBOT Binaries

References

Chapter 1: Key Features of a Binary Option Contract

Defining the Key Features

Strike Price vs. Underlying Market Price

Currency Pairs as an Underlying Market

MoneyNess

Moneyness and Trader Direction

The Role of a Market Maker

Sample Bid Ask at Nadex

Chapter 2: Profit Opportunities in Binary Option Trading

Expected Probabilities

Winning Occurrence Analysis

Chapter 3: Sentiment Analysis: The New Predictive Tools

Defining Sentiment

Applying Sentiment Detection Tools

References

Chapter 4: Tracking Economic Forces that Impact Markets

The Fundamental Forces

Correlations Involving Binary Markets

Fear and the U.S. Dollar

Foreign Ownership of U.S. Treasuries

Crude Oil

Implications of Historic Commodity Plunge

Carry Trade and Interest Rate Differentials

Central Bankers Move the Markets

Evaluating Currency Pairs

Using an Economic Calendar as Trading Tool

Chapter 5: Basic Technical Analysis

Key Candlestick Patterns

Trend Lines

Support and Resistance

Confirming Strength with Price Break Charts

Key Patterns for Trading Analysis

Fibonacci Resistance Lines

References

Chapter 6: Advanced Technical Analysis: Volatility Tools

Defining Volatility

Bollinger Bands

VIX: The Fear Index

Option Volatility and Sentiment: Put/Call Ratios

Volatility Smiles

Cycles as Trading Tools

Reviewing the Tools

Chapter 7: General Binary Option Trading Strategies

Core Strategies

Examples for Strategy Selection

Combination Strategies

References

Chapter 8: Strategies for Analyzing Event Risks

Key Steps in Analyzing Event Risks

Putting Strategies and Tactics Together: Timing and Managing Trades

Intermarket Uses of Binary Options

A Word on Intraday Strategies

References

Chapter 9: Risk Management in Theory and Practice

Deal or No Deal?

The Confidence Index

Lot Size Management

Offsetting Trades: Failing Forward

Leverage and Margin

References

Chapter 10: Evaluating and Improving Trading Performance

Key Performance Metrics

Strategy Scorecard

Performance Challenges

Analytical Challenges

Know Your Trading Personality

Targeting Total Returns

Chapter 11: Algorithmic Approaches for Binary Option Trading

What is Algorithmic Trading?

Advantages and Disadvantages of Automated Trading

Developing a Trading System

Evolving Your Approach

Conclusion: The Future of Binary Option Trading

Appendix A: Test Your Knowledge

Appendix B: More Training Tools and Tests

Appendix C: Nadex Contract Specifications

Appendix D: Examples of Cycles in Binary Option Underlying Markets

About the Author

Index

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