Hedging your day trades with Binary Options

[hiprobabilitly]

Hi Guys,

Something I've been playing around with lately is buying and selling daily binary options (5pm, 7pm etc.) and then hedging the position with an FX contract. So just for a basic example say I've sold a binary at $50.00 on the AUD/USD being above 91.5 at 7pm and its trading at 91.25, I can go long the AUD/USD on a standard FX contract and as provided it stays between 91.25 and 91.5 im winning on both, otherwise I'll lose on one which will be offset against the other position provided that the standard fx trade doesnt move radically against me.

I tried this strategy and managed to double a small account over 8 trades. It was working very well as wins were very profitable and losses were small.. Until one contract did move radically against me and blew up my whole account in one trade... So overall it ended badly but I think it's something worth exploring, I mean If I had a stop loss on the standard fx contract it probably would of been ok.

What do you guys think? Has anyone else played around with binaries like this?

Cheers

 

[Pharaoh]

The math in binary options doesn't make a lot of sense to me. If I "bet" $100 and win, I get $65-80 depending on the broker. If I lose, I've lost $100.

If you want to try this strategy, why not play on an honest and level playing field. There are REAL options brokers (not binary) that are regulated.

 

[hiprobabilitly]

Thanks for your input Pharaoh.

Yes the spreads are quite significant for Binary Options, I was trading them with IG and I think the spread was about $5 - maybe more. Might give standard options a try, however the characteristic that appeals to me about Binary Options are how you can calculate their precise value at maturaty whether they are in or out of the money.

 

[Michel123]

I still can't see the positive side behind the binary options. It is simply guessing. I don't see the way to predict on which level the price can be in the specific moment of time in the future.

 

[Rambo35]

Binary options are very bad marketed and misleading. While you can make money (yes on a consistent base) it is much harder than advertised. They have been hyped up by so many bucketshop outlets and I am always amused how many go for it. They are as hard to trade as any other derivative product.

 

[Pharaoh]

There's one thing in Binary Options that's hard to calculate. That's how low the odds are of successfully withdrawing any profits you might make.