Binary trading?

[Bobby]

Anyone use this form of trading ? its betting on financial events for high gain, in short term.
IG markets offer this.

Temptation is calling me again

Bob.

 

[Magdoran]

Anyone use this form of trading ? its betting on financial events for high gain, in short term.
IG markets offer this.

Temptation is calling me again

Bob.

Binaries are essentially a trading instrument which at expiry either have no value, or have a maximum point value. The expiry times can be hourly, daily, or weekly. In between these values shift based on the perceived forecast outcome:

IG Markets gives the example:

A Binary allows you to take a view on whether a specific outcome will or will not occur. For example, will Wall Street close up on the day?
• If the answer is 'yes', the Binary settles at 100
• If the answer is 'no', the Binary settles at 0

http://www.igmarkets.com.au/content/ot_binaries.html

See the link from this page for more detailed examples.


Hello Bob,

I’ve never traded these, and only became aware of these around April this year. I have not read through the terms and conditions of these instruments in sufficient detail to be able to fully evaluate these, so I can only comment on general comments made by a trader I know who was working on some strategies to utilise them.

Personally I rarely day trade as a personal preference, so I have a bias against day trading approaches generally, so please be aware that my comments may be coloured by this perspective.

I do know of some traders that were developing butterfly styled positions looking for the days trading of the underlying to fall within a range to profit from by both buying and selling positions using a strategy with a defined risk. This could use condor variations or other complex spreads to maximise the probability of success, but at the expense of capping profits (and risk of course). You could use a weekly version too of course.

My understanding is that you can buy or sell a binary, and that the value of the binary shifts through the day between 0-100 points based on the perceived chances for the outcome of the instrument. Skews in these values may offer opportunities using complex spreads… Of course some people may elect to use a straight position in a conventional sense, but the outcome is likely to be an all or nothing result, so there are notable risks involved where the outcome may be a 100% loss.

What I would say is to do the due diligence on the instrument, and consider all the risks and spend some time coming up with viable strategies if you choose to go down this path. Personally I tend to shy away from day trading, but if this is the time frame you prefer to operate in, then you may consider looking at credit spread approaches if they are possible, and develop the analytical capability to assess the spreads and locate favourable skews to enter. Of course if you are really confidant in your T/A, you may just want to enter straight positions.

I’d be interested to know if there are some people who are using these, and what their experiences are. Good luck Bob with your investigation, it’ll be interesting to see what you come up with.


Regards


Magdoran

 

[Bobby]

Hello ma

Binaries are essentially a trading instrument which at expiry either have no value, or have a maximum point value. The expiry times can be hourly, daily, or weekly. In between these values shift based on the perceived forecast outcome:


http://www.igmarkets.com.au/content/ot_binaries.html

See the link from this page for more detailed examples.


Hello Bob,

I’ve never traded these, and only became aware of these around April this year. I have not read through the terms and conditions of these instruments in sufficient detail to be able to fully evaluate these, so I can only comment on general comments made by a trader I know who was working on some strategies to utilise them.

Personally I rarely day trade as a personal preference, so I have a bias against day trading approaches generally, so please be aware that my comments may be coloured by this perspective.

I do know of some traders that were developing butterfly styled positions looking for the days trading of the underlying to fall within a range to profit from by both buying and selling positions using a strategy with a defined risk. This could use condor variations or other complex spreads to maximise the probability of success, but at the expense of capping profits (and risk of course). You could use a weekly version too of course.

My understanding is that you can buy or sell a binary, and that the value of the binary shifts through the day between 0-100 points based on the perceived chances for the outcome of the instrument. Skews in these values may offer opportunities using complex spreads… Of course some people may elect to use a straight position in a conventional sense, but the outcome is likely to be an all or nothing result, so there are notable risks involved where the outcome may be a 100% loss.

What I would say is to do the due diligence on the instrument, and consider all the risks and spend some time coming up with viable strategies if you choose to go down this path. Personally I tend to shy away from day trading, but if this is the time frame you prefer to operate in, then you may consider looking at credit spread approaches if they are possible, and develop the analytical capability to assess the spreads and locate favourable skews to enter. Of course if you are really confidant in your T/A, you may just want to enter straight positions.

I’d be interested to know if there are some people who are using these, and what their experiences are. Good luck Bob with your investigation, it’ll be interesting to see what you come up with.


Regards


Magdoran

Greeting Magdoran,

Normally I'll quote part of a post, But your impressive reply needs reposting in full.
Thank you for the depth & articulation of this subject.

Binary trading may well be just another form of punting, preparation & methodolgy will sure be fun to work on with this one!

As I,m always working on some idea, I'll finish up first on my present research before scrutinizing B.T.

Regards Bob.

 

[NettAssets]

Is the Tax ruling on these sort of trades finalized?

The ATO site still has a ruling from 2003 that is pending and I can't find anything more firm.

It looks as though this is not considered as gambling as the underlying event isn't a sport.has anyone any other interpretations of the law.

It would be nice tax free - but then again at least we can claim our learning curve
John

Get your tax advice form someone who knows not someone asking!!

 

[Bobby]

Is the Tax ruling on these sort of trades finalized?

Hi NettAssets,

No as far as I know.

But don't worry, First make the $bucks then the tax will be secondary

Bob.

 

[NettAssets]

Hi NettAssets,

No as far as I know.

But don't worry, First make the $bucks then the tax will be secondary

Bob.

Paying tax has never worried me Bob, in this situation what worries me is claiming a tax deduction for losses incurred and then being
hit for the return of deduction and a fine to boot.
Not that I actually aim to make losses but each new instrument I trade seems to teach me new ways to give the market money - and I havent found out how to teach myself by paper trading.

John

 

[Bobby]

Paying tax has never worried me Bob, in this situation what worries me is claiming a tax deduction for losses incurred and then being
hit for the return of deduction and a fine to boot.
Not that I actually aim to make losses but each new instrument I trade seems to teach me new ways to give the market money - and I havent found out how to teach myself by paper trading.

John

Ok John,
What do you want to know? I'll try to help.

Bob.

 

[NettAssets]

Ok John,
What do you want to know? I'll try to help.

Bob.

If I knew what I needed to learn I wouldn't need to be taught it would I.?
But seriously on this tax front. If the tax office do decide that these instruments are gambling and therefore not assessable, then the purchase of them is not a deduction for a trader and it makes for a very messy BAS if I get it wrong. I will get a ruling by phone anyway but that will be personal and I wont be able to pass it on.
regards
John