Trading Binary Options: Strategies and Tactics [NOOK Book]

Overview

Long the province of financial professionals, binary options arenow available to retail traders and investors. With trading volumesquickly growing and new markets for binary option plays coming onboard, the simple structure of this product allows you to trade inover 20 different underlying markets, from currencies to indexes tocommodities.

Now, in Trading Binary Options, author Abe Cofnas—a leaderin the field of currency trading, analysis, andtraining—reveals how the average ...

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Trading Binary Options: Strategies and Tactics

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Overview

Long the province of financial professionals, binary options arenow available to retail traders and investors. With trading volumesquickly growing and new markets for binary option plays coming onboard, the simple structure of this product allows you to trade inover 20 different underlying markets, from currencies to indexes tocommodities.

Now, in Trading Binary Options, author Abe Cofnas—a leaderin the field of currency trading, analysis, andtraining—reveals how the average person can achieveabove-average returns on a weekly basis, using specific strategiesand tactics in their binary option trading endeavors.

While there are many variations to this type of trading, thisreliable resource focuses on the regulatory approved weekly binaryoption trades of the North American Derivative Exchange (Nadex).Chapter by chapter, it takes you through the basic features of thebinary option instrument as well as provides a detailed review offundamental and technical analysis useful to making tradingdecisions. And, due to the fact that trading can no longer beseparated from the Internet and the social media it has generated,new online tools and techniques for detecting market sentiment arealso addressed.

Along the way, you'll gain valuable insights from real-worldexamples of how to scan the political and economic news andformulate appropriate binary option trading strategies. Casestudies of binary option trading in relationship to key news eventsthat we have recently lived through are fully explored—fromU.S. Congressional elections and the Greek sovereign risk crisis tothe turmoil in the Middle East and the earthquake that rockedJapan. Key trading strategiesare also reviewed with examples thatinclude: At-the-Money; Out-of-the-Money; In-the-Money, DeepIn-the-Money; and Deep Out-of-the-Money.

Rounding out this detailed discussion of binary options are fourinformation packed appendices. Here, specific training challengesare provided, including a test of your trading knowledge, as wellas details on Nadex contract specifications.

As the first book solely devoted to this topic, TradingBinaryOptions offers comprehensive coverage of this discipline. It willshow you what it takes to capture consistent profits when tradingbinaryoptions—by anticipating market direction, understandingrisk management, and effectively entering and exitingtrades—and help you hone the types of skills that will allowyou to excel in today's dynamic market environment.

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Product Details

  • ISBN-13: 9781118202722
  • Publisher: Wiley
  • Publication date: 11/7/2011
  • Series: Bloomberg Financial, #134
  • Sold by: Barnes & Noble
  • Format: eBook
  • Edition number: 1
  • Pages: 272
  • Sales rank: 1,340,088
  • File size: 10 MB

Meet 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.

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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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