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Forex Binary Options – How to use Binary Options to maximize your earnings during a false breakout
Forex options are becoming more and more popular nowadays among Forex traders as an additional tool for short-term speculations which are based on technical events. Although binaries are still young and suffer from liquidity and hence high premiums, Swing-Traders, Scalpers and Day Traders find the predetermined risk-reward ratio (~70% on trades that are « In the Money », and 10% on trades that are « Out of the Money »,) extremely productive.
Illustration of a binary option at StartOptions.com:
We had the opportunity to discuss with StartOptions.com Head of Dealing J. Mavor:
Traders like to trade around market events or chart patterns. The stronger the event or the pattern, the more volume they will attract and improve the odds of breakout success. Quite often a false breakout can frustrate your expectations. This happens when not enough volume concentrates around the event, leading to a pullback before you had a chance to take profit. However pullbacks do not have to eat at your profits, if you trade the event with a Binary Option.
For example, on 17/02/2010 the FOMC Meeting Minutes failed to generate enough volume for the EURUSD to create a sustaining rally. As the image illustrates, eventually a pullback at 20:00 GMT to the event level at 19:00 GMT of 1.36167 would have left you with no gains and lost on the spread. Had you traded a Binary Option you would have made $70.
Here is how:
- At the time of the event you place a Put Binary Option trade on StartOptions.com. The cost of the trade is $100, returning $170 if the price ends below 1.36167 or $10 if the price ends above, It’s that simple.
- Since the price returned almost back to the breakout level, I made $170 on my Binary Option trade, whereas I would have made $0 and even paid for the spread had I traded the EURUSD directly.
So, basically what the Binary Option offers me is a way to profit on weak events, so I can target many more events. Otherwise we have to wait for GDP or other big news or patterns that generate sustaining breakouts
FX Binary Options Gameplan-USD-17/02/10
The USD was down against most major currencies yesterday as concerns over Euro-Zone debt problems waned and investors turned to riskier assets.
Wednesday in Asia, the dollar and the yen declined against their major opponents as a rally in most Asian stocks reduced demand for the lower-yielding currencies.
While the greenback fell to a 6-day low against the euro and Swiss franc, the yen slipped to near a 2-week low against its European major rivals.
Click here to trade USD Binary Options
The USD looked to extend its retreat on profit taking, for all the major USD currency pairs. Look for pullbacks on the USD retreat for all USD currency pairs as a great opportunity for buying Forex Put Binary Options
to earn a predetermined reward on the USD hourly binary options of %70, with StartOptions.com you can trade the USD against major currency pairs with hourly expirations, you need to speculate only on the direction of the underlying asset within an hour, let’s say you just bought a USD/EUR at 1.3751 that expire in an hour from now even if the price will be lower in one cent (1.3750) at expiry then you’ll be entitled for the the full reward of the Forex option (70% on average). in contrast to spot FX trading in which you must speculate much larger moves in order to profit from a trade.
Click on the picture below to enlarge the USD graphs:
FX Binary Options Gameplan-EUR/USD-16/02/10
On Monday the Euro fell further against the US dollar which was much ahead of the summit that was to be held to decide futures of what steps were to be taken regarding the debt situation in Greece.
The EUR/USD crossed both its weekly and daily descending resistance trendlines, clearly indicating upward momentum. Any pullback followed by strength would be a great opportunity for a Binary Options Call trade.
Binary Options Game Plan for the AUD/USD- 07/12/09
We had an interesting pattern for the swingers among us in the AUD/USD, the AUD is showing short term strength, crossing a former support level at 0.9105 and is advancing towards the wall- a descending channel in the 0.9118 area.
In such a case the following set-up shall take place.
1)AUD/USD fail to break the channel and flip followed by – Buy AUD/USD binary PUT option
2)AUD/USD break the descending channel- Buy AUD/USD binary CALL option
You can access Forex binary options using the following link:
http://www.startoptions.com
Disclaimer: StartOptions.com is not a financial advisor, and does not recommend the purchase of any stock or advise on the suitability of any trade or investment.
