TradeSmarter Moves to 24-hour Trading Day
We are pleased to announce that as of January 12, 2010 TradeSmarter has extended trading hours to offer a 24-hour trading day. TradeSmarter will now be open from 11:00 pm GMT on Sunday to market close on Friday. By extending trading hours, our members now have the opportunity to trade most of our currency, commodity and stocks overnight when trading was previously unavailable.
In addition, a 24-hour trading day is now offered by our partner StartOptions.com who offers real money trading.
If you have any questions, our customer service team will be happy to assist you. Please e-mail us at: support@tradesmarter.com
Sincerely,
TradeSmarter Team
TradeSmarter.com Launches a Binary Options Wiki
TradeSmarter.com launches today a comperhansive knowledge base that covers the binary options trading market.
Tradesmarter’s binary options wiki includes all the relveant information a trader should know in order to trade binary options sucessfully.
TradeSmarter.com is a technology and services provider of binary options trading solutions. TradeSmarter Binary Options Platform enables online traders to speculate easily on a wide range of instruments within the financial markets such as binary stock options, binary commodities options, binary forex options and binary indices options . TradeSmarter Solutions allow Partners to deploy sophisticated financial components within any new or existing online environment, customized with the look and feel of their own brand. Now platform is live at
TradeSmarter.com – click here to trade options
Tradesmarter’s Platform-New Bottom Bar Is Up!
As you might noticed, new improvements are being added to TS financial gaming platform on a weekly basis. We are really excited about the new deployment that just went live!, some performance issues were resolved-improving your trading experience by reducing the response time by 25%.
As we are fellow traders like you, we felt something lacking in terms of feeling the pulse of the market.. So we deployed a very cool bottom bar that show a world clock, presenting you the important data your need in a more reachable manner:
- Clock – Your local time and date
- Market Quotes-The quotes are refreshed dynamically, showing you stock quotes while your are trading forex, and forex quotes while you trade binary options.. If something is happening, you can response in a quicker manner as a click on a specific quote will take you directly to the trading area
- Financial News-All the news about the instruments traded in Tradesmarter.com are aggregated into the bottom bar and shown live, saving you the hassle of opening another browser and searching for news.
We are getting great feedback’s from you guys, we got very positive comments regarding binary options trading, we promise to pursue of creating a great platform for you, new killer features are going to be deployed very soon and many great surprises are on the way…
Stay tuned ! Goto Trade options
Tradesmarter Team
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/ .
Trade Binary Options as a Hedging Strategy for Forex Trading
Forex traders often encounter failure of their strategies in the dreaded stop-loss zone. This zone, adjacent to the breakout point, is the fuzzy area where we Forex traders often place stops to protect ourselves from further losses. Each Forex trader who trade options uses different rules for his stop loss point. Usually this is slightly above or below the breakout point. But as we have all experienced, the problem is that a breakout often tests the breakout price, sometimes dropping slightly below the breakout price, ’shaking us out’ of our trade. Therefore the stop-loss point becomes fuzzy, forcing us to choose lower and lower stop-loss points, and wearing us out each time we re-enter the same breakout point.
Trade Binary Options using Binary Hedging Strategy
One attractive possibility is to hedge our Forex trade using a binary option hedge. This is actually much simpler than it sounds. What it actually does is shift our risk from the stop-loss zone to the area above the breakout point, where the prices are more likely to rise and where the breakout is less likely to fail due to the properties of trader momentum.
- Here we outline one such hedging strategy, using binary options trading to hedge against our Forex trades.
In this example, i place a trade of 1 mini lot EURUSD long, when its price crosses my breakout point of $1.00. Should the EURUSD test my breakout point before i exit this trade, i will place a $100 PUT binary option trade. What this does is shift my original breakout point lower, similar to a stop-loss, such that i am profitable as long as a test of the original EURUSD breakout point does not leave my Forex account with greater than a $70 loss. If I incur more than a $70 loss in my Forex account, then I immediately exit the EURUSD position.
- This has effectively shifted the risk of breakout failure from the below the breakout point to above the breakout point. The attractive feature of this hedging strategy is that most breakouts are often tested slightly the below breakout point. Using this hedging strategy we protect ourselves in the area below the breakout point rather then get worn out using a stop-loss that is lower than the breakout point, which is the common Forex trader practice. And the best part of this strategy is that the risk has been shifted to the area above the breakout point (our Forex trade must make at least $85 profit in order to cover the binary option loss). However we know that as long as the breakout has not failed, we will more than likely cover this hedge. Remember, the breakout is most likely to fail BELOW the breakout point, but now we are covered.
About the author: Jack Major is currently the Chief Risk Management Office of TradeSmarter.com, managing Risk and Strategies for all major market instruments. Previous to TradeSmarter, Jack was a senior consultant for many years for PricewaterhouseCoopers Global Risk Management Solutions division.
Financial Gaming: The Evolution of the gaming industry
Financial Gaming Overview
The evolution: Game of chance -> Skill Games -> Financial Betting aka financial gaming – >binary options.
Here are a few of my own thoughts on the evolving financial betting market and the use of binary options. Our current economic environment has given birth to countless new financial gaming sites. Following on from this, a new segment of financial markets has been born.
Online Financial Gaming Background:
Online gaming is a fast-growing industry. Online gaming gross yields are expected to reach $20 Billion by 2010. Initial online gaming activity began with Online Casino operators, who used digit generators to provide games of chance to the player, but online gaming has since evolved. Now players can play skill-based games against each other on international financial markets and also benefit through payoffs which are determined by movements in various financial instruments. Increasingly, we are seeing the emergence of financial gaming as a new, distinct segment in this market.
Binary Options
From five minute NASDAQ bets offered by online bookmakers to hourly Forex bets traded around the clock, binary options are the latest craze to hit the gaming industry in a new form called “Financial Gaming”. Just like spread betting, binary betting allows you to take a view on whether a market is going to go up or down. The key difference and advantage is that from the outset you know your maximum loss and maximum gain. Binary options tend to be very short-term investment products, and most typically expire during a given trading period.
With such a simplified product, you can bet on movements in an ever-widening range of assets: Individual shares, equity indices, commodities and exchange rates. This simplified approach provides a new and exciting way to trade across the financial markets.
Why trade binary options?
The financial gaming segment is attractive for the gaming industry because:
• The player’s high level of interest in financial markets due to current economic uncertainty
• It utilizes a unique mix of entertainment, skill and knowledge from the player
• Any financial loss is known and limited, unlike in Forex or other leveraged trading
• Financial gaming is culturally accepted more that typical online gaming products
• There are high levels of profitability for the player.
Financial gaming involves prediction on real markets and real events that are happening in real life and all can be valued at some point (at expiry); as opposed to game of chance that is based on randomly-generated numbers.
• Games of Chance: A game of chance is a game whose outcome is strongly influenced by some randomizing device and upon which contestants frequently wager money. Devices used include dice, playing cards, roulette wheels or numbered balls drawn from a container.
• Skill Games: Skill-based games allow users to compete for money however their outcomes are based on skill rather than chance.
• Financial Gaming also called Financial Betting Odds: refers to the wagering on the price development of a financial instrument at some later date relative to the current price or level of the instrument, against odds offered by a bookmaker.
This analysis brought to you by: Yoni Avital, Chief Executive Officer of TradeSmarter Holdings, a software developer to the global Internet financial trading / gaming market, has developed proprietary binary trading platform with unique algorithms and architecture which allows partners easy integration for both technology licensing and white label solutions.
Refrences:
Binary Options book by Hamish Raw
Wiki – Binary Options Trading
What are one hour Binary Options?
One hour option term came about as traders and investors worldwide strove for new, simplified ways to trade across the financial markets. One Hour Binary options are a cross between traditional buy-and-sell options and those of fixed returns. However, do not be overwhelmed by this new system; more and more financial traders are finding it the most simple, ‘straight up’ and enjoyable way to get the best out of online trading.
Trading Binaries- How does it work?
Binary options or digital options, can have only one of two possible outcomes. When trading binary options we only have to ask ourselves two questions. First, what is the current rate of currency we are analyzing? Second, can we expect the rate to be higher or lower in a fixed time from now? For example, imagine you are a trader who is willing to risk $100 on the idea that Euro/Dollar’s exchange rate will increase in one hour from now. If your prediction is correct and the fixed return rate is 70% you will receive $170. If incorrect and your binary option decreases below the strike price, you will lose your initial investment and receive nothing. The term ‘binary’ thus suited this all-or-nothing type of trading. You should now be starting to realise why binary options are fast becoming the simplest way to trade the markets and are yielding large profits for online traders. But here are a few more factors to help you:
Benefits of trading hourly binary options
1. Controlled Risk – The percentage reward is known from the outset, as is what the player stands to lose i.e the exact amount they placed.
2. Easier, simpler – The player only needs a sense of direction i.e. ‘Will the exchange rate increase/decrease in half an hour?’
3. “In the money” – For a profitable trade to take place there is a need for price to close in-the-money, a winning trade will receive the entire payoff, even if was ‘right’ by a single tick.
4. Protection – A safer option to take if a trader has an open position elsewhere in currency, stocks etc. Utilizing a binary option can eliminate a further loss elsewhere.
5. Punctuality – Binary contracts are being issued around the clock, allowing traders to trade on multiple time frames. There is always an expiration time arriving, which constantly yields new opportunities for binary traders.
Select Direction:
1. “Call Option” – Select call if you believe that the instrument will close above the current price
2. “Put Option” – Select put if you believe that the instrument will close below the current price
3. Select Investment amount
Example:
hourly option
Digital Option Calculation
The cash-or-nothing digital option provides a fixed payout of M when the price of the underlying instrument S ends up above (in the case of a “call”) or below (in the case of a “put”) the strike price K.
Binary option formula
This can be visualized as follows, with the height of the horizontal bar equivalent to the payoff M:
One hour Digital option
