Trading Binary Options: Strategies and Tactics

Trading Binary Options: Strategies and Tactics

Released December 2011
Publisher(s): Bloomberg Press
ISBN: 9780470952849

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Book description

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

  1. Cover
  2. Contents
  3. Title
  4. Copyright
  5. Dedication
  6. Foreword
  7. Preface
  8. Acknowledgments
  9. Introduction: What Are Binary Options and Why Are They Important?
    1. Nadex versus CBOT Binaries
    2. Reference
  10. Chapter 1: Key Features of a Binary Option Contract
    1. Defining the Key Features
    2. Strike Price versus Underlying Market Price
    3. Currency Pairs as an Underlying Market
    4. Moneyness
    5. Moneyness and Trader Direction
    6. The Role of a Market Maker
    7. Sample Bid Ask at Nadex
  11. Chapter 2: Profit Opportunities in Binary Option Trading
    1. Expected Probabilities
    2. Winning Occurrence Analysis
  12. Chapter 3: Sentiment Analysis: The New Predictive Tools
    1. Defining Sentiment
    2. Applying Sentiment Detection Tools
    3. References
  13. Chapter 4: Tracking Economic Forces that Impact Markets
    1. The Fundamental Forces
    2. Correlations Involving Binary Markets
    3. Fear and the U.S. Dollar
    4. Foreign Ownership of U.S. Treasuries
    5. Crude Oil
    6. Implications of Historic Commodity Plunge
    7. Carry Trade and Interest Rate Differentials
    8. Central Bankers Move the Markets
    9. Evaluating Currency Pairs
    10. Using an Economic Calendar as Trading Tool
  14. Chapter 5: Basic Technical Analysis
    1. Key Candlestick Patterns
    2. Trend Lines
    3. Support and Resistance
    4. Confirming Strength with Price Break Charts
    5. Key Patterns for Trading Analysis
    6. Fibonacci Resistance Lines
    7. References
  15. Chapter 6: Advanced Technical Analysis: Volatility Tools
    1. Defining Volatility
    2. Bollinger Bands
    3. VIX: The Fear Index
    4. Option Volatility and Sentiment: Put/Call Ratios
    5. Volatility Smiles
    6. Cycles as Trading Tools
    7. Reviewing the Tools
  16. Chapter 7: General Binary Option Trading Strategies
    1. Core Strategies
    2. Examples for Strategy Selection
    3. Combination Strategies
    4. References
  17. Chapter 8: Strategies for Analyzing Event Risks
    1. Key Steps in Analyzing Event Risks
    2. Putting Strategies and Tactics Together: Timing and Managing Trades
    3. Intermarket Uses of Binary Options
    4. A Word on Intraday Strategies
    5. References
  18. Chapter 9: Risk Management in Theory and Practice
    1. Deal or No Deal?
    2. The Confidence Index
    3. Lot Size Management
    4. Offsetting Trades: Failing Forward
    5. Leverage and Margin
    6. References
  19. Chapter 10: Evaluating and Improving Trading Performance
    1. Key Performance Metrics
    2. Strategy Scorecard
    3. Performance Challenges
    4. Analytical Challenges
    5. Know Your Trading Personality
    6. Targeting Total Returns
  20. Chapter 11: Algorithmic Approaches for Binary Option Trading
    1. What Is Algorithmic Trading?
    2. Advantages and Disadvantages of Automated Trading
    3. Developing a Trading System
    4. Evolving Your Approach
  21. Conclusion: The Future of Binary Option Trading
  22. Appendix A: Test Your Knowledge
  23. Appendix B: More Training Tools and Tests
  24. Appendix C: Nadex Contract Specifications
  25. Appendix D: Examples of Cycles in Binary Option Underlying Markets
  26. About the Author
  27. Index

Product information

  • Title: Trading Binary Options: Strategies and Tactics
  • Author(s):
  • Release date: December 2011
  • Publisher(s): Bloomberg Press
  • ISBN: 9780470952849