The Ins and Outs of Trying Out our Binary Options Full Demo Account

TradeSmarter is glad to announce that thousands of traders and investors have taken advantage of trading on our virtual platform.  Many Investors have had the opportunity to become familiar with our product and our user-friendly platform, as well as testing and improving trading strategies.

Our virtual money account operates exactly the same as a real account, enabling you to have the full binary options trading experience without risking real money. On a virtual account you can buy CALL, or buy PUT and trade the same way you would in the real account. Also you have access to your trading history, as well as all the tools and features of our trading platform.
Whilst binary options trading might sound complex it is in fact very straight forward.  We offer stock options, forex options and commodity options, all an investor has to do to trade is by simply choosing a direction of an option, as simple as Above (CALL) or Below (PUT). Once the option expires if the you chose the correct direction and settled ‘in the money’ your return will be 70-75%, if settles ‘out of the money’ you get 10% of your deposit returned.
So why spend your time with demo trading accounts?  Why not just jump right into it if it’s so simplistic?
Well, as with all trading there is high risk involved, arguably the pre-determined exposure to each trade reduces the risk however starting with the virtual trading is still the sensible option. Capitalize on this a virtual safe opportunity to test trading strategies and try out different options that work best for you. It’s much safer to learn when there is no real money and no risk. However it is still important to always treat your virtual account as if it is a real account, therefore when it is time to jump into the water your ready!
Are you a trading rockstar? come and show the world the trader in you- TradeSmarter.com

Resources:

Perfect your options trades for free with virtual trading by Steve Sarnoff

TradeSmarter announces new back-office features to its binary options platform.

TradeSmarter announces the deployment of ‘two’ new back-office features to be added to its binary options trading platform.
1. Change of Theme capabilities (similar to wordpress plugin)
2. Retention and Alert functionality

Change of Theme – Our new feature makes it very straight forward to configure aspects of a sites ‘look and feel’ without needing to edit any code. Check out this screen shot of the options panel.

“Simple as changing a panel”

Retention & Alert Functionality – we have implemented a messaging function, enabling  admin to send messages to end-users as a group or individually. For example “Hey Joe, we credited your account by $50 bonus”. This Retention Module helps site owner alert and notfiy users in real time.

Hedging a Forex News Risk Event Using Binary Options

In the past few days I have been writing all about how excited I am about my Forex hedging strategies using Forex binary options. If you have read my previous posts on this blog, then by now you are familiar with how to hedge a breakout of a Forex instrument using binary options. But just to recap, binary options hedging offers a better alternative to traditional stop-losses. The reason they protect you better than stop-losses is that stop-losses lose money when they are hit and a binary option hedge does not.

Its that simple, The principal behind this is that binary option hedges shift the risk from below the breakout point to above it. The most attractive feature of this risk-shift is that trader momentum works in your favor above the breakout point. Have a look at my previous posts if this is not clear.
Today I will talk about another binary option hedging strategy. This strategy is similar to the strategy we have been discussing. The only difference is that the timing of both your Forex trade and your binary option hedge will be based on a a rally following a Forex news risk event, rather than a breakout of a resistance point.
In this example, today Great Britain released an important news data, the CPI y/y. Immediately after the news release, which attested to a better than expected rise in Great Britain’s CPI, the GBPUSD rallied as expected. Just after buying a long position on the GBPUSD, I placed a binary option hedge on www.Tradesmarter.com ’s binary option trading site. As in my previous posts about hedging, this hedge was a position opposite to the Forex position that I was holding, in other words a $100 PUT GBPUSD binary option trade. What this effectively achieved was to provide me with a $70 buffer zone below the breakout point. Anywhere within that buffer zone, within a $70 loss on my long Forex position, I would have been protected against a breakout failure without losing any money. A stop-loss, on the other hand, would have resulted in losses in case it was hit after a breakout failure or a shake-out (a minor test of the breakout point).
We have been talking about trader momentum as an important element in making this strategy successful. As you can see in the image and in examples in my previous posts, as long as the breakout failure is minor, selling momentum will be minor in my hedged buffer zone, just below the breakout point. As soon as the breakout re-occurs after testing the breakout point, trader buying momentum will work in our favor by quickly providing us the gains we need to cover the cost of the binary option hedge, $85.
In short, trader momentum works in a highly correlated nature with binary option hedging. This makes binary option hedging a more successful strategy for protecting against minor breakout failures than a traditional stop-loss.

Go to trade options

Hedging breakouts of the USDCHF and AUDUSD by using forex binary options

In my previous posts I outlined and gave examples of how to use binary options trading as a vehicle to hedge Forex trading. The links to these previous posts can be found below, and they are very useful if you still find this technique confusing, or if you just want to delve deeper into the theory. But just as a reminder, one of the many ways that binary options trading can be useful is as a hedging vehicle. Rather than use a traditional stop-loss to protect against loss, I have been using binary options. The reason that binary options can be more attractive than stop-losses, is that stop-losses are risky below the breakout point, assuming that’s where you are placing them, and generate losses when they are hit.

On the other hand, using a binary option hedge, which is simply a binary option position placed to win in the opposite direction of our Forex trade, we gain better protection than with stop-loss because if our Forex trade fails than our binary options wins, thus fully hedging our Forex position and ultimately leading to zero losses if our Forex trade fails. Thus the risk is shifted from below the breakout point, in the area between the breakout point and the stop-loss, to above the breakout point, in the area between the breakout point and the cost of the binary option. Again, have a look at my previous posts if this is still confusing.

Today I used binary option hedging to protect against breakout failure of the USDCHF and AUDUSD. As you can see in the image below, these instruments were in full swing today. As usual, within the hour after breakout both instruments tested their breakout points. While placing a traditional stop-loss may succeed if placed exactly right, it is nearly impossible to guess how far below a breakout point a test may descend, often shaking us out of our position before breaking out again shortly afterwards. This is where a binary option hedge is useful. Immediately after placing my Forex trades at the breakout points, I placed $100 binary option hedges (a trade of a binary option in the opposite direction of my Forex trade) on TradeSmarter.com’s binary option trading site. As a result, I was completely covered up to $70 of losses when the breakouts were tested. Had the breakouts truly failed I would have exited with zero losses thanks to the binary option wins, rather than losing money had I used traditional stop-losses. Since the breakouts succeeded after testing the breakout points, I became profitable as soon as I made more than $85 on my Forex positions ($85 is the amount lost when the binary option fails).

The strength of this hedging strategy relies on the properties of trader momentum. Since nearly all traders use stop-losses below the breakout points, a test of the breakout point is very risky below the breakout point when more and more stops get hit and selling momentum builds. The same is true after the breakout test, when the breakout occurs again. At this point most traders are aware that the breakout did not fail and re-enter with greater momentum. This helps us quickly recoop the $85 loss of the binary option. You can see this in the image provided, as well as in my previous posts using the GBPUSD.
In conclusion, by using binary option hedging we shift the risk from below the breakout to above. This allows us to take advantage of trader momentum which works against us when using a stop-loss and works for us when using binary option hedging.
For more information on how this works see
http://tradesmarter.com/2009/06/hedging-a-breakout-of-the-gbpusd-using-binary-options-trading/
and
http://tradesmarter.com/2009/06/trading-binary-options-as-a-hedging-strategy-for-forex-trading/

Go to trade options

Hedging a Breakout of the GBP/USD Using Binary Options Trading

Today as expected, the GBPUSD ended its fantastic five day up swing (see image below, left side). The end of the swing was marked by a reversal during European market hours, shortly after 8AM GMT. The reversal was marked by a breakout at the 1.65150 resistance line. As usual the breakout was tested less than an hour later. At that point, the GBPUSD rose just above the breakout point, reaching 1.65185. This slight failure of the breakout point was enough to shake out those of us Forex traders that place a tight stop-loss just below (above in this case of a short) the breakout point.

We all know how much it stings when a very minor breakout failure denies us a huge payday. Indeed, those of you who placed a wider stop-loss raked in huge profits all the way down to 1.63555. So the question that always returns to our mind is, ‘What to do- set tight stops and get shaken out or set wide stops with greater risks?’

In my last article I explained how to resolve this risk conflict using binary options hedging (the link is provided below). Today would have been a great opportunity to use this strategy. At the same time that I shorted the GBPUSD at 1.65150, I placed a CALL binary option trade on the GBPUSD. Since the payout model at tradesmarter’s binary option trading website returns a 70% payout, this meant that my $100 CALL binary option effectively hedged my GBPUSD short trade and kept me profitable even when the breakout failed. In fact, I was hedged all the way up to 1.65250 without placing any stop-losses. As expected, the breakout failed only slightly and then brokeout again with much more momentum. My hedge cost me $85 because the success of the breakout caused my CALL binary option to fail. However it did its job since the profit on the GBPUSD was much greater, as you can see in the chart attached.

The conclusion, as you can see, is that binary option hedging can usually offer us a more successful alternative than placing traditional stop-losses. Thanks to moderate breakout tests, followed by trader momentum, we can shift our risk from below (in this case above, because its a short) the breakout point to above it (in this case below it). For a quick explanation of how this works see see http://tradesmarter.com/2009/06/trading-binary-options-as-a-hedging-strategy-for-forex-trading/ .