asked:




Binary options are an easy and popular way to trade the markets, without the complexities of regular trading. Plus, you don’t need tens of thousands of dollars to get started. You can achieve returns of 60% to 500% in less than an hour!

We will focus on the simple, fixed-payout binary options offered by brokers such as AnyOption, StartBrokers, Binarix and others. We’ll use AnyOption in our example, since they have the best payouts of any fixed-payout binary options broker we’ve found. You can trade stocks, indexes and commodities with binary options, but we will concentrate on the forex market, due to the ready availability of free charting packages and technical analysis tools for currency traders.

In a standard fixed-payout binary options trade, a profitable trade pays out between 60-70%, while a loss will result in a return of 15% of your investment. This equals a total loss of 85% of your investment. A potential gain of 60-70% versus a potential loss of 85% does not put the odds into your favor.

Jason Ng
asked:




Can options trading turn you into a millionaire?

This is one of those questions I hear from people new to options trading all the time and not an easy question to answer in my opinion. Sure, options trading can create millionaires and many, including myself, have made more an a million trading options. However, can options trading turn YOU into a millionaire?

In a way, asking this question is as good as asking questions like:

Can trading stocks turn you into a millionaire?

Can trading futures turn you into a millionaire?

Can trading Forex turn you into a millionaire?

Can selling burgers turn you into a millionaire?

Can collecting coins turn you into a millionaire?

The answer to all of these questions is a resounding, YES.

The problem is, can YOU become a millionaire doing these things that have made OTHER people millionaires?

First of all, let’s ascertain the theoretical possibility of making a million through options trading. Let’s assume you have $5000 to start trading options with and you make an average of 50% per trade and compound your earnings. Here’s your account status after a number of trades:

After first trade – $7500

Second – $11,250

Third – $16,875

Forth – $25,312.5

Fifth – $37,968.75

Eighth – $128,144.5

Fourteenth – $1,459,646

As you can see, it takes only 14 trades at 50% profit per trade, which is not a lot in options trading, to grow $5000 into a million. If you do only one of those trades per month, it takes you only slightly more than a year to become a millionaire. As such, becoming a millionaire from options trading is clearly not outside the realm of possibility and clearly very fast if you do it right.

That leads us to the next question, are you able to produce a string of 14 straight wins at 50% per win? There is clearly no easy answer to this as well. I have heard of extremely lucky people who has done that before but that clearly isn’t something that applies to everyone.

Yes, in my 15 years of options trading, I must say that I have never seen anyone make a string of 14 wins within one year or two without losing no matter what options strategy they use. The good news is, you don’t need to make 50% on every win nor do you need a string of 14 wins to make a million in options trading as long as you follow a sensible trading methodology and have lots of patience.

Making a million in options trading isn’t about not losing. It’s really about making more wins than losses. As long as you have a means of consistently making more wins than losses, you can make a million in anything as long as you have the patience to stick to the game. Yes, this is the same logic in any form of trading.

If it is the same in any form of trading, why then options trading?

The beauty of options trading is that it actually helps you achieve more wins than losses through 2 unique means; Convexity and Versatility.

Convexity means being able to potentially make more money than you can potentially lose. In futures trading or stock trading, you can potentially lose as much money as you can win. When the stock goes up by $10, you make $10 worth of profit and if the stock goes down by $10, you sustain $10 worth of loss. There is no convexity. When you buy options, they will go up in value as long as the stock keep going in the correct direction (up for call options and down for put options) but if the stock goes the other direction, you will only lose as much as you used in buying the options, nothing more! For instance, if you bought one contract of call options for a stock for $150 and the stock went up by $10, you call options would be worth $1000 but if the stock went down by $10, you would only lose that $150 that you used. That’s convexity. As long as you use only money you can afford to lose or the maximum amount you are willing to lose on any single trade towards buying options, you will always have the advantage of convexity on your side.

Versatility is found in the vast array of options strategies that can be put together. Many options strategies allow you to profit not only when the underlying stock moves in one direction but in multiple directions! Yes, in futures or stock trading, you only profit when the stock goes up or down (when you are short the stock or futures). However, in options trading, there are options strategies that allow you to profit when the stock goes up OR down in both directions and options strategies that even allow you to profit from all 3 directions! Yes, being able to profit in more than one direction greatly increases your possibility of winning and greatly enhances the possibility of consistently making more wins than losses!

So, can you become a millionaire trading options? Yes you can. In fact, from the properties of convexity and versatility mentioned above, options trading could actually make it easier for you to become a millionaire versus stock or futures trading. As such, the possibility is there and the odds are in your favor. The final question to answer is, do YOU have what it takes to become a millionaire through options trading?

TheScorpio1008 asked:

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asked:




The great thing about a straddle is that it’s non-directional. This means that you can make money without forecasting market direction. In other words, it doesn’t matter whether the stock price goes up or down in the near future – you can still make money either way – as long as it moves somewhere. The method behind a straddle is that you simultaneously purchase the same number of call and a put options, with the same expiry date. The plan is, that the profit from the winning option will more than compensate for the loss on the losing one, with a good profit remaining.

The straddle trade is a “slow moving” trade that can take anywhere from a few days up to a month to do its thing, so it’s not like you need to be watching it every few hours. It works best on stocks that are in a period of price consolidation with the expectation that a breakout may be coming soon. If you are a technical trader, one of the best chart patterns I have found for straddle trade setups, are what are commonly known as “triangle” or “wedge” formations. This is where the recent highs and lows of the daily bar charts are coming together. In other words, the highs are getting lower while the lows are getting higher, so that if you draw a trendline over the highs and lows, you’ll see them converging into a point. You want to trade straddles as near as possible to the convergence of the two trendlines. The most volatile straddle breakouts come after you see this pattern forming for about 3 months. Anything shorter than that, may result in a breakout that doesn’t have sufficient momentum to give you the maximum profit.

StockMarketFunding asked:

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thebusinessplanz asked:

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StockMarketFunding asked:

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binaryoptionsdaily asked:

Live Trade Placed On 1/12/2011 For 8:30 Expiry on EUR/USD by David from Binary Options Daily www.binaryoptionsdaily.com

Jason Ng
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The recent global market crisis caused a lot of options traders to lose their fortune. Increasingly, there are people who are referring to options trading or derivatives trading at large as gambling. This is probably due to the many options traders who had their positions go down to zero, taking their whole account with them.

Did the stock investors do any better?

Many pensions and individuals had big positions on GM before the 2008 crisis begun and fully intend to hold it as “investment” rather than speculation. But look at where GM is now… barely a dollar. Didn’t those “investors” lose their shirt as well? Shouldn’t stock trading or investing in stocks be gambling as well?

So what is gambling?

In essence, putting money into something hoping that it will do well when you can do nothing about how the price movement of that thing moves is gambling. Depending on an uncertain future outcome in order to make a profit or loss is gambling! That includes stock “investment”, options trading, futures trading, warrants etc. How different are those from horse betters who “analyze” the performance of horses and then place their bets waiting for an outcome?

Accepting the fact that betting on an uncertain future outcome with money on the line is GAMBLING is the beginning of trading and investing.

How did high stake professional poker players make a profession and a living out of a “Gambling” game? The real secret is risk management. Risk management is what takes options trading out of the realm of gambling into the realm of investing.

The beauty of options trading is that risk can be hedged and position can be sized to any risk management needs. To take the simplest example, don’t buy more call options or put options than the amount of money you are willing to lose! See? Options traders who cannot accept the fact that trying to predict future outcome is gambling, who like to think in terms of “sure win”, will put all their money into a single position and lose their shirt. And then cry about options trading being gambling. Yes, options trading IS gambling in the sense that future outcome cannot be predicted! It is proper risk management that takes options trading out of the realm of gambling and into the realm of investing and trading.

In fact, with proper risk management, options trading can be much less of a gamble than buying stocks itself!

This is because you can structure options strategies that profit in more than just one direction whereas if you buy stocks, you only make money when the stock goes up! With the possibility of profiting in more than one direction, chances of winning is greatly enhanced, risk lowers and the trade becomes more of an investment than a gamble! See?

For example, a Call Ratio Spread allows me to profit when the stock goes down, stay stagnant or up to a pre-determined price! In all 3 directions! Now, how is that gambling now that the exact future outcome is no longer that important to profitability? With a Call Ratio Spread, I won’t have to be exactly correct on where the stock is going, because it is unpredictable in the first place, and still make money! See?

Also, due to leverage granted by call and put options, I could control the profit on more stocks using lesser money! By using only money I am willing to lose in one trade, I could reduce risk and yet control the profit on stocks which will take a lot more money to control!

Now, options trading is not magic. Options trading can be risky without a comprehensive understanding of how it works and how each options strategies work but once you reach that level of competence, options trading becomes more trading and investing than gambling with the proper risk management strategies in place. The point I am trying to get across to you in this article is this: Anything that depends on an uncertain future outcome is gambling and that includes options trading and stock investing. However, with proper risk management and hedging strategies, options trading can become a lot less dependent on the accuracy of the future outcome than stock investing, thereby becoming more of an investment than gamble.

citadelmarkets asked:

Citadel Markets – www.citadelmarkets.com