Trading Binary Options: Strategies and Tactics / Edition 1

Trading Binary Options: Strategies and Tactics / Edition 1

ISBN-10:
0470952849
ISBN-13:
9780470952849
Pub. Date:
12/06/2011
Publisher:
Wiley

Hardcover

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Overview

Trading Binary Options: Strategies and Tactics / Edition 1

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.

Product Details

ISBN-13: 9780470952849
Publisher: Wiley
Publication date: 12/06/2011
Series: Bloomberg Financial Series , #134
Edition description: Older Edition
Pages: 232
Product dimensions: 6.00(w) x 9.10(h) x 0.90(d)

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

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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