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What you should know about binary options
What you should know about binary options
What you should know about binary options
What you should know about binary options
What you should know about binary options
What you should know about binary options
What you should know about binary options
What you should know about binary options
What you should know about binary options
What you should know about binary options
What you should know about binary options
What you should know about binary options
What you should know about binary options
What you should know about binary options
What you should know about binary options
What you should know about binary options
What you should know about binary options
What you should know about binary options
What you should know about binary options
What you should know about binary options
What you should know about binary options
What you should know about binary options
What you should know about binary options
What you should know about binary options
What you should know about binary options
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What you should know about binary options

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Ebook from The Binary Optioner on the binary options world: what they are, how to use them, how to pick the broker, strategies to profitably trade binary options

Ebook from The Binary Optioner on the binary options world: what they are, how to use them, how to pick the broker, strategies to profitably trade binary options

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  • 1. What you should know about Binary Options This ebook does not explain what binary options are and how to use them; for these purposes you can read one of the many ebooks published by the brokers and available from their websites. The Binary Optioner ebook focuses on the tricky things about binary options: - Why to trade binary options ? - How to pick binary brokers? - Which are the regulated binary brokers? - The statistics of the binary platforms and expected returns of the trader: are binary options really statistically biased in favor of binary brokers? - Advanced tools for the professional trader: trading signals by sms/email and trading systems.
  • 2. Important notice Please read carefully By proceeding to read this ebook you accept to be bound by the Terms & Conditions and the Privacy Policy of the website www.thebinaryoptioner.com. The Binary Optioner strongly advises you to carefully read this notice, together with the Terms & Conditions of the website www.thebinaryoptioner.com. If you disagree with the Terms & Conditions and/or with this notice, please do not proceed to read this ebook “What you should know about binary options”. You assume total responsibility and risk for the use of the content of this ebook, of the website www.thebinaryoptioner.com and of any material downloaded. No statement within the ebook should be construed as a recommendation to buy or sell a security or to provide investment advice. Any opinion, news, research, price analysis, or any other information given in this ebook or in the website www.thebinaryoptioner.com is given as a general comment and for information purposes and does not represent financial advice. Many of the matters discussed are subject to detailed rules, regulations, and statutory provisions which should be referred to for additional detail and are subject to changes that may not be reflected in the ebook information. Past results are not indicative of futures results. Options and derivatives involve a high amount of risk and are not suitable for all investors; in the trading of binary options you may incur in the loss of the entire capital invested. Do no trade options, binary options and/or derivatives without understanding the nature of this trading, these financial assets, the risk involved in trading derivatives and without asserting your trading education, experience, competence and risk adversion. IN NO EVENT WILL THEBINARYOPTIONER.COM BE LIABLE FOR ANY INCIDENTAL, CONSEQUENTIAL, OR INDIRECT DAMAGES (INCLUDING, BUT NOT LIMITED TO, DAMAGES FOR LOSS OF PROFITS, BUSINESS INTERRUPTION, LOSS OF PROGRAMS OR INFORMATION, AND THE LIKE) ARISING OUT OF THE USE OF OR INABILITY TO USE THE SERVICE, OR ANY INFORMATION, OR TRANSACTIONS PROVIDED ON THE SERVICE, OR DOWNLOADED FROM THE SERVICE, OR ANY DELAY OF SUCH INFORMATION OR SERVICE EVEN IF THEBINARYOPTIONER.COM HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, OR ANY CLAIM ATTRIBUTABLE TO ERRORS, OMISSIONS, OR OTHER INACCURACIES IN THE SERVICE AND/OR MATERIALS OR INFORMATION DOWNLOADED THROUGH THE SERVICE. The Binary Optioner makes no representations whatsoever about any other web site which you may access through this ebook or which may link to the site www.thebinaryoptioner.com. When you access a website through links contained in the website www.thebinaryoptioner.com , please understand that it is independent from The Binary Optioner, and that The Binary Optioner has no control over the content on that external web site. In addition, a link to The Binary Optioner website does not mean that The Binary Optioner endorses or accepts any responsibility for the content, or the use, of such web site. You agree to indemnify, defend and hold harmless The Binary Optioner, its officers, directors, employees, agents, licensors, suppliers and any third party information providers to the Service from and against all losses, expenses, damages and costs, including reasonable attorneys’ fees, resulting from any violation of this Agreement (including negligent or wrongful conduct) by you or any other person accessing the Service. “What you should know about binary options” – www.thebinaryoptioner.com Pag. 2
  • 3. Why to trade binary options? The reason why to trade binary options is not because they are easier to trade than other financial assets (maybe they are, maybe not) or because you can make more or easier money than in Forex or in Stocks or in traditional Options. You want to trade binary options to make money, exactly for the same reason you want to trade Futures, Forex, Stocks or Options. It is just another way of trying to make money. As simple as that. Are these features really differentiating binary options from other assets?       Quick expiry times: from 60 seconds to many months. This is not only for binary options; you go in and out in 60 seconds in almost every assets, and even less. Simplicity: the investment decision is Up or Down, Above or Below, In or Out of the boundary, Touch or Not Touch. Apart from some advanced strategies in traditional options, basically all the financial assets trading is all about “Up or Down”. Profitability: trading in binary options can make you even 85-90% per trade, and several hundred percent in One Touch binary options. Many derivatives have these kinds of return, not only binary options. Limited risk: unlike Forex, where you can get margin calls, in binary options you can lose not more than the amount invested. This is true also for traditional options, not only binary options, or in stock trading when you go long and not on margin. Stop loss/profit target: no need to manage the exit, whether it be in the loss or in the profit. Also in this case, traditional options are like binary options No need to calculate the number of shares or options or futures to buy/sell, you just need to set the amount you want to risk. True, but I don’t think this is a major factor. So, our answer to the question “why to trade binary options” is to “make money”, and to “why to trade binary options instead of forex or stocks or futures or options” is because “we like binary options”, just like you could like the other financial instruments better. AS SIMPLE AS THAT! “What you should know about binary options” – www.thebinaryoptioner.com Pag. 3
  • 4. How to pick the broker How should you pick the broker? Based on the assets portfolio on binary options? Of course, the higher the number the bigger your choice and the better for you. Based on the return of the binary options offered by the broker? Of course, getting 85% is better than 70% when you are in-the-money, and getting back 10% is better than losing 100% when you are out-of-the-money. Based on bonuses? Maybe, but you MUST know EXACTLY what a bonus legally means for your account and your money. Based on the kinds of binary options? Also, for the same reason: more choice means better choice (maybe). I only tell you a couple of important things about this point. “One Touch” options Do you ask yourself why they are only “Touch” but not “No Touch”? Why do you think the returns are so high but only if the assets touches the target price? Maybe because statistically the probability of “touching” is so low? Probably this is the reason. Our suggestion is not to trade One Touch binary options, because they are too biased in favor of the broker. In other words, only if the broker offers both the “Touch” and the “No Touch” version, on the same asset and for the same expiry, is the algorithm of the platform fair, in order to “protect” the broker profitability, and only in this case are the upper and lower target prices statistically balanced; if instead the broker offers only the “Touch” version (called “One Touch”), then there is a high probability that the platform has set the target prices (upper or lower) significantly far away from the market price (but not too far away in order not to deter investors), making statistically very difficult for the trader to be in-the-money. The extremely high return (300-400-500% !) is just a way to attract trades in transactions that will hardly expire in-the-money. Past closing prices The second word concerns whether or not the broker has a page in its website reporting the prices of the previous expiry times. If that is the case, the trader can compare the broker closing prices with the prices of the most important data providers (Thomson Reuters, Bloomberg, just to give two examples). All the serious brokers should have this service as a way to be fully transparent. “What you should know about binary options” – www.thebinaryoptioner.com Pag. 4
  • 5. Let’s continue now with the way you should pick the broker. Based on where the broker is legally located? This is for sure an important factor: even if the binary industry is getting regulated just recently after the ruling of the CySEC (May 2012), the majority of the brokers are still incorporated in fiscal paradise, and knowing which jurisdiction will be in case the one settling a dispute with the broker might be relevant for you. Based on the Terms & Conditions of the Brokers? YES Based on whether the broker is regulated or not ? YES In few words, you shall pick the broker mainly among those who are regulated and after having read the Terms & Conditions in full. How to read the Terms & Conditions of the binary options broker So let’s look at the way you should read the Terms & Conditions This is one of the most important points, and at the same time one of the least looked at. We will see that the most delicate points in the Terms & Conditions are related to the withdrawal process (quick or slow? fees? conditions limiting or even prohibiting the withdraw?) and to strange clauses forcing the customer to trade a minimum amount of money before having the possibility to get back his money, or even part of it, even in the absence of a bonus. For these reasons you MUST read the Terms & Conditions, or get the help of professional website like www.thebinaryoptioner.com in order to be sure that the T&C are ok. What do you have to read in particular? Let’s look at some Terms & Conditions in order to understand in practical terms. In order to speed up and simplify the analysis, copy and paste the Terms in MS Word, and look for the keywords “withdraw” and “bonus”, and you will find the most delicate and important sections for you. Withdrawal process With “withdraw” you will get also “withdrawal”, “withdrawing” etc. In these sections you will find the conditions of the withdrawal procedure: documents to be submitted, data verification process by the broker for security purposes, number of “What you should know about binary options” – www.thebinaryoptioner.com Pag. 5
  • 6. days the broker reserves for the whole process, the ways and the fees of the money transfer from the broker to the credit card or the bank account of the trader. It is important to know that the data and personal documents controls are necessary for the anti-laundering laws, and that for the same reasons the broker will transfer to the credit card, from which the first deposit originated, an amount not higher that the deposits and will transfer the excess amount to the bank account of the trader. All this means that the broker must accurately control the trader identity and the bank account to be credited. Usually, from these sections you can see brokers who want a fair number of days to perform the security controls and brokers who take advantage of the need to control the data and require up to 15 to 20 days before transferring the money. Also the withdrawal fees differ a lot among brokers, and also this must be taken into consideration in selecting the broker. Bonuses The sections concerning the “bonus” keyword are even more important, because they list the conditions and the contractual limits binding the customers when they accept the bonuses. Let’s look directly at the following examples of Terms & Conditions. Examples of Terms & Conditions Case 1 to 6 are considered by The Binary Optioner to be fair and acceptable, whilst cases 7 and 8 should be considered as not acceptable. Case 1 “8 SPECIAL OFFERS, BENEFITS AND BONUSES ……. 8.2 Unless stated otherwise in the terms of the offer, a precondition for making withdrawals after using the bonus/benefit is to buy options of 15 times the amount of the bonus/benefit. ……. 8.4 The bonuses/benefits must be used within the period defined in the details of the special offer. Should the bonus/benefit fail to be used within this time frame, the bonus/benefit will be withdrawn from the client’s account. 8.5 Once receiving the bonuses/benefits, the client has 3 (three) calendar months to complete the total amount of investments required as a precondition for withdrawal. If the required total amount of investments is not reached during this “What you should know about binary options” – www.thebinaryoptioner.com Pag. 6
  • 7. time period, the company will withdraw the bonuses/benefits funds from the client’s account according to its discretion.” Under these conditions, in the presence of a bonus, if the value of the transactions do not reach 15 times the value of the bonus within 3 calendar month, only the bonus value is at risk and can be canceled by the broker from the account, but the investor is free to withdraw the available money on the account; clearly he will not be able to withdraw the value of the bonus, or part of it. Case 2 “Special Offers, Benefits & Bonuses PLEASE READ ALL TERMS & CONDITIONS BELOW BEFORE ACCEPTING A BONUS. YOU ARE NOT REQUIRED TO ACCEPT A BONUS. A TRADING BONUS IS OPTIONAL FOR ALL ACCOUNT HOLDERS. EVERY BONUS REQUIRES A TRADING TURNOVER BEFORE ANY WITHDRAWAL IS MADE BY THE ACCOUNT HOLDER. BY ACCEPTING A BONUS YOU ARE AGREEING TO THE TERMS AND CONDITIONS BELOW. ALL BONUS INSERTIONS ARE FINAL. Special Offers, Trade Refunds, Benefits and Bonuses Please read carefully before accepting a special offer, trade refund, benefit, or bonus. …….. 2. Unless stated otherwise in writing from [broker name] and only [broker name], the terms of the offer, a precondition for making withdrawals after using the bonus/benefit is to buy options of 20 times the amount of the bonus/benefit plus the deposit amount. Example: (deposit + bonus x 20 = required turnover for withdrawal) …….. 4. The bonuses/benefits must be used within the period defined in the details of the special offer. Should the bonus/benefit fail to be used within this time frame, the bonus/benefit will be withdrawn from the client’s account. 5. …….. By accepting a bonus into your account, you are agreeing to the terms and conditions above. NOTE: If the required turnover is not met when making a withdrawal request – the withdrawal request will be automatically canceled. NOTE: [Broker name] DOES NOT RECOMMEND TAKING A BONUS UNLESS YOU KNOW HOW MAKE IT WORK IN YOUR ADVANTAGE AS LEVERAGE. BY ACCEPTING A BONUS YOU ARE AGREEING TO THE ABOVE TERMS. Dormant Accounts Procedure “What you should know about binary options” – www.thebinaryoptioner.com Pag. 7
  • 8. 1. [broker name] client accounts in which there have been no transactions (trading / withdrawals / deposits), for a set period of 12 months, will be considered by [broker name] as being dormant accounts. 2. Dormant accounts will be charged an annual maintenance fee of US$25 or the full amount of the free balance in the account if the free balance is less than US$25. There will be no charge if the free balance is zero. Consequently, all accounts with a zero free balance will be closed.“ Before making a withdrawal in the presence of a bonus, there must be a number of trades for a value of 20 times the value of the bonus plus the deposit, which means: Required transactions value = (deposit) + (bonus x 20). The broker can also set deadline within which these transactions must be performed, otherwise the bonus can be canceled. There is no limitation in the absence of a bonus: this might be an obvious assertion but there are certain brokers which impose a minimum value of trades also with no bonus given to the trader before the he/she can withdraw, even partially, his/her money (case 7). The accounts inactive for 12 months are charged $25 or, if the balance is less than $25, an amount equal to the balance, therefore in this last case set to zero and then canceled. Case 3 ”Bonus conditions: ……. Bonuses are only available for withdrawal after trading X times the volume of the bonus value. For example if a bonus of 100$ is granted, the trader must complete a total trading volume of x times 100$ before the bonus is available for withdrawal (subject to account balance). ……. In the event that the entire or part of the deposit on which the bonus is given is withdrawn before X times the bonus has been traded, then the following shall apply: 1. The bonus shall be canceled. 2. In the case of trading losses, all the trading losses will be deducted from the original deposit and the remaining balance may be withdrawn. 3. In the case of profits, the trading profits shall be canceled and the original deposit may be withdrawn.” “What you should know about binary options” – www.thebinaryoptioner.com Pag. 8
  • 9. If the trader receives a bonus, the minimum turnover in transactions required is equal to “X” times the value of the bonus before the investor is able to make any kind of withdrawal from his account, even out of the original deposit. The multiplier is not specified in the general Terms & Conditions, but it is set for each specific bonus. If the trader would like to withdraw even partially from the account after having received the bonus and before reaching the minimum required value of transactions, the bonus is canceled together with the profits generated while the bonus present on the account; the losses instead remain and charged to the account and the trader can only withdraw the original deposit less the losses incurred; in the best scenario then, the trader will withdraw no more than the original deposit. We strongly suggest that before accepting a bonus you must know precisely the Terms of the same bonus. Case 4 ”11. Withdrawal Procedure …. For bank wire transfers, [broker name] covers the withdrawal fee for the first withdrawal of a given month, any subsequent withdrawal using bank transfer will accompany a processing fee of $30, which covers the transfer fee. ….. Once a withdrawal request has been submitted, it can take [broker name] up to 3 business days to process the request. Once the request has been approved please allow an additional 5-7 days for the funds to show in your account. ….. 12. Investment Reward and Bonus Policy …….. Unless stated otherwise on specific promotions the default promotional terms apply to all bonuses as shown below: Withdrawal of funds which have received additional rewards, bonuses, or promotions, require a trading volume fulfillment of 30 times the bonus or in the even of a refund bonus 20 times the bonus amount. The trade volume requirement begins upon receipt of the bonus in the traders account. Upon receipt of the bonus, the trading requirement must be fulfilled prior to withdrawing funds from the account……” Apart from some redundant concepts, also in this case without any bonus there are no limitations to withdraw. “What you should know about binary options” – www.thebinaryoptioner.com Pag. 9
  • 10. Case 5 ”18.4. Withdrawal instructions. ……. The maximum bonus amount is 4.000 EUR/USD/GBP 1. ……. 2. Bonuses are only available for withdrawal after a trading volume of 20 times the bonus value has been met. For example if a bonus of $50 is received, a total trading volume of $1000 must be made by the trader before the bonus can be withdrawn. 3. In case you decide to use the early closure feature, only 50% of the amount you invested on an option will be counted in the trading volume. 4. ………. 5. ………. 6. Should the entire or part of the deposit on which the bonus is given be withdrawn prior to the 20 times the bonus volume has been traded then the following shall happen:  The Bonus shall be cancelled  All the trading losses will come from the original deposit and the remaining balance may be withdrawn.  The trading profits may be cancelled and the original deposit will be available for withdrawal. ” The bonuses are available for withdrawal after transactions worth 20 times the value of the bonus. For example, if you receive a bonus of 50$, it is necessary to perform as many trades for a value of 1.000$ before the bonus can be withdrawn. In case of withdraw, even partial, from the account on which the bonus has been credited before the 20x condition is satisfied, then:    The bonus is canceled; All the trading losses will come from the original deposit and the remaining balance may be withdrawn. The trading profits may be cancelled and the original deposit will be available for withdrawal. ” Like it happens with other brokers, if you want to withdraw before making the minimum turnover required by the bonus’ conditions, you will be able to withdraw the amount deposited less the losses incurred. Not only the bonus but also the profits generated while the bonus is credited on the account will be cancelled. “What you should know about binary options” – www.thebinaryoptioner.com Pag. 10
  • 11. Case 6 ”Special Offers and Bonuses Benefits and Bonuses may be offered by the Company from time to time, and shall be credited to the client’s account subject to the terms of the offer made to the client, e.g. making minimum deposits and/or executing certain trade volume within a specified time period. Unless mentioned otherwise in the terms of the offer, if the client wishes to make a withdrawal after receiving the bonus, he/she can do so only after executing a trade volume (aggregated sum of investments) 20 times the amount of the bonus/benefit AND at least 20 trades. ” In brief, unless the conditions of bonus state otherwise, if a customer want to withdraw he has to generate trading turnover for a value of 20 times the bonus and 20 operations. In the absence of the bonus there are no limitations to withdraw. Now we will look two examples of Terms & Conditions extremely in favor of the broker, and unfair for the investors. Case 7 ”7. Specific Conditions of Use Withdrawals: …… §30active trading days are necessary in order to ask for a withdrawal.§15 times the trading volume is required in order to make a withdrawal and also withdraw the Bonus § Processing the withdrawal request takes a period of 3 to 5 business. if the conditions are fulfilled and the request is approved, the sum will be paid within a period of 7 to 10 working days. § You will be charged a penalty fee of 45€ for any withdrawal of sums less than or equal to 300 Euros. § A fee of 15% will be charged for all withdrawals above 300 Euros.§ [broker’s name] authorizes withdrawals up to a maximum value of 5000 USD or Euros per month. In the event that a trader wishes to withdraw earnings of a value greater than 5000 USD or Euros, they will be forced to spread out the withdrawal over several months. Bonus: …….. There is never any obligation to accept these bonuses. ……..” “What you should know about binary options” – www.thebinaryoptioner.com Pag. 11
  • 12. Three are the constraints quite burdensome:    the need to carry out trading activities for 30 days before you can withdraw, the obligation to make operations for a value of 15 times the initial deposit regardless of the presence of the bonus, the excessive fee of 15% of the value of the withdrawal, with a minimum fee of €45. It does not matter that much if within the bonus section the broker underlines that there is no obligation to accept the bonus: the constraint of the minimum turnover in binary operations is valid even without the bonus. And incredible is also the condition for those willing to withdraw more than €/$ 5.000; apart from the fact that the wording of the article seems to refer only to withdrawals of profits, therefore excluding the case of withdrawals of funds deposited, limiting the withdrawal to $5,000 and divide the surplus in withdrawals to be made in "several months" without even indicating how many months of delay seems too unfair. Not to mention the English style, quite approximate and superficial. For all the above reasons, these Terms & Conditions seem unfair and unjust, and for that not be accepted at all. Case 8 ”19. ……. Withdrawals shall be made according to the site procedures and will take up to fourteen (14) banking days or as determined by the billing services provider of the site, the longer between the two. 21. The Company, at its sole discretion, may decide (but not be obliged to do so) to offer bonuses, promotional offers or any other kind of benefits to the Client, to set its conditions, and/or change them without prior notice to the Client. The Company shall not be subject to reason its decision nor to be forced to do the same in future transactions of the Client. Once a bonus has been awarded/accredited to a clients account, they will be subject to execute transactions in an amount of at least ten (10) times the deposit amount and might also subject to minimum deposit and/or minimum volume of trading and/or a certain time limit. Furthermore, the Company may, at its sole discretion, credit the Client with up to Thirty five Percent (35%) bonus for each deposit made by the Client up to a maximum of one thousand five Hundred ($1500). ” “What you should know about binary options” – www.thebinaryoptioner.com Pag. 12
  • 13. The important and unfair conditions are:  the delay of 14 days before transferring the money is quite long and unjustified even for all possible controls for identity security and antilaundering purposes;  the broker reserves the right to credit on the customer’s account a bonus up to 35% of the deposit, with no possibility for the customer to reject it, which means that the broker has the right to artificially create the bonus and to impose the subsequent bonus conditions of the minimum turnover of transactions, which could mean that the broker can avoid any request of withdrawal by simply crediting the bonus! These conditions must be considered unfair and unjust and for that not acceptable. Broker’s legal head office If you want to know where the legal office of the broker is located, not always the address indicated in the “contacts” section is the legal address, because for marketing purposes the address mentioned could be the one of the call center or, even more frequently, only the phone numbers, email addresses, IM and online chat tools are shown. In order to know without doubt the legal jurisdiction of the broker (and of the disputes arising between the broker and the customers), you have to look in the Terms & Conditions, and see if within the first clauses the corporate name and the address of the broker are published; if in the Terms & Conditions this information is not given, then it is necessary to look at the end of Terms & Conditions and find at least the legal jurisdiction competent in case of legal disputes arising between the broker and the customers: you won’t know the precise address but at least the country where the broker is located. Here are a couple of examples. In the first, the Terms & Conditions of the broker indicate precisely corporate name (that we have hidden) and legal address. “1. This Agreement is entered into by [broker name] registered under the laws of _The British Virgin Islands having its registered office at [broker’s address] (hereinafter referred to as: the “Company”) and yourself (hereinafter referred to as: “you” or “Customer”) (In this Agreement the Company and you may be referred to collectively as the: “Parties”).” “What you should know about binary options” – www.thebinaryoptioner.com Pag. 13
  • 14. In the second, only the jurisdiction competent for legal disputes is indicated (Cyprus), which means that the broker is legally located in Cyprus. “12 Law and Jurisdiction The laws of the state of Cyprus shall govern the use of the Site and all its consequences including the Terms of Use. The competent court in Larnaca, Cyprus shall have sole jurisdiction over any matter involving use of the Site.” To conclude, looking at the Terms & Conditions of the different brokers, it is clear that there are brokers which are highly professional and serious, as well as brokers which take advantage of the fact the potential customers do not read the contract between them and the broker and chose the broker on the basis of marketing campaigns, advertising, promotion activities in general. It is therefore necessary to carefully read both the T&C regulating the trading account and the relationship between broker and customer, and the specific conditions of the trading bonuses that brokers offer constantly to attract new customers. One of the services rendered by The Binary Optioner is to highlight brokers with clear, fair and just Terms & Conditions. For any question you are welcome to write to us at support@thebinaryoptioner.com “What you should know about binary options” – www.thebinaryoptioner.com Pag. 14
  • 15. The statistics behind binary options platforms This article will show you how your success rate need to be in order to make money under the different combinations of return/rebate. We split our explanations under the two different scenarios: efficient market theory and non-efficient market theory. In the efficient market theory, a trader can call the market right 50% of the times, and on the other side he is in the loss side in the other 50% of times; in the opposite hypothesis that the efficient market theory is not valid, the probability of the trader to be in the right position is not necessarily equal to 50%, but depends on his/her ability to predict the market movement. Some definitions: Return: payout for the trader when the binary option expires in-the-money (ITM); usually between 70% and 85%; Rebate: payout for the trader when the binary option expires out-of-the-money (OTM); usually between 0% and 15%. Expected return: statistical return that the platform or the trader should expect when trading indefinitely. Assumption: efficient marker theory Under this hypothesis, we can calculate the expected returns for the platform and for the investor as follows. Platform Expected Return = ((1-Probability of winning) x (1-Rebate) - (Probability of losing x Return)) which in the case of the platform paying out 100% return and rebating 0% is: Platform Expected Return = ((1 – 50%) x (1-0%)) – (50% x 100%) = 0% So, with the Return set at 100% and Rebate at 0% the expected return is $0. If the option return is 90% and the rebate is 0% we have : Platform Expected Return Investor Expected Return = = ((1 – 50%) x (1-0%) – (50% x 90%)) = (50% – 45%) = 5% ((50% x 90%) – (1 – 50%) x (1-0%)) = (45% – 50%) = -5% This means that statistically the binary investor must expect to lose 5% if the probability to be in-the-money and to be out-of-the-money is 50% (this being like the case of the Head or Tail game), while under the same circumstances the expected return of the binary platform is 5%. “What you should know about binary options” – www.thebinaryoptioner.com Pag. 15
  • 16. We can then calculate the platform and the investor expected returns for different pairs of Return-Rebate Return 70% - Rebate 10%: Platform Expected Return = ((1 – 50%) x (1-10%) – (50% x 70%)) = (45% – 35%) = 10% Investor Expected Return = ((50% x 70%) – (1 – 50%) x (1-10%)) = (35% – 45%) = -10% This means that investing infinite times in binary options with return 70% and rebate 10%, the investor will lose 10% and the platform will make 10% under the assumptions of the Efficient Market Theory (50% of probability to be in-the-money, 50% to be out-of-the-money) Return 90% - Rebate 10%: Platform Expected Return = ((1 – 50%) x (1-10%) – (50% x 90%)) = (45% – 45%) = 0% Investor Expected Return = ((50% x 90%) – (1 – 50%) x (1-10%)) = (45% – 45%) = 0% This case is equivalent to the case Return 100% - Rebate 0%; the closer the sum Return+Rebate to 100%, the closer the expected returns to 0%. Assumption: the efficient market theory is not valid In this case, we assume that the trader can be more successful than 50%. Hypothesis 1: Return of 85%, Rebate 0%, trader success rate 68% of the time: Investor Expected Return = ((68% x 85%) – (1 – 68%) x (1-0%)) = (0.578 – 0.32) = 25.8% Hypothesis 2: Return of 85%, Rebate 0%, trader success rate 60% of the time: Investor Expected Return = ((60% x 85%) – (1 – 60%) x (1-0%)) = (51% – 40%) = 11% “What you should know about binary options” – www.thebinaryoptioner.com Pag. 16
  • 17. Developing the different trio of Return-Rebate-Trader Success Rate, we can put together the below table and summarize as follows: EXPECTED RETURNS Investor's success rate 50% 60% 70% 80% 90% 100% Platform Return = 60% - 0% Platform Return = 70%-0% Platform Return = 80%-0% Platform Return = 90%-0% Platform Return = 100%-0% -20.0% -15.0% -10.0% -5.0% 0.0% -4.0% 2.0% 8.0% 14.0% 20.0% 12.0% 19.0% 26.0% 33.0% 40.0% 28.0% 36.0% 44.0% 52.0% 60.0% 44.0% 60.0% 53.0% 70.0% 62.0% 80.0% 71.0% 90.0% 80.0% 100.0% Platform Return = 60%-5% Platform Return = 70%-5% Platform Return = 80%-5% Platform Return = 90%-5% Platform Return = 100%-5% -17.5% -12.5% -7.5% -2.5% 2.5% -2.0% 4.0% 10.0% 16.0% 22.0% 13.5% 20.5% 27.5% 34.5% 41.5% 29.0% 37.0% 45.0% 53.0% 61.0% 44.5% 60.0% 53.5% 70.0% 62.5% 80.0% 71.5% 90.0% 80.5% 100.0% Platform Return = 60%-10% -15.0% Platform Return = 70%-10% -10.0% Platform Return = 80%-10% -5.0% Platform Return = 90%-10% 0.0% Platform Return = 100%5.0% 10% 0.0% 6.0% 12.0% 18.0% 15.0% 22.0% 29.0% 36.0% 30.0% 38.0% 46.0% 54.0% 45.0% 54.0% 63.0% 72.0% 24.0% 43.0% 62.0% 81.0% 100.0% Platform Return = 60%-15% Platform Return = 70%-15% Platform Return = 80%-15% Platform Return = 90%-15% Platform Return = 100%15% -12.5% -7.5% -2.5% 2.5% 2.0% 8.0% 14.0% 20.0% 16.5% 23.5% 30.5% 37.5% 31.0% 39.0% 47.0% 55.0% 45.5% 54.5% 63.5% 72.5% 7.5% 26.0% 44.5% 63.0% 81.5% 100.0% 60.0% 70.0% 80.0% 90.0% 60.0% 70.0% 80.0% 90.0% The lines in bold are the most common combinations of return/rebate among binary brokers, the lines in shadow are not realistic combinations of return/rebate and are shown here only for comprehension purposes, but no broker will offer them as the expected return would be negative for the broker. As you can see, staying between 60% and 70% of success rate guarantees a quite interesting return, while the break-even can be calculated as being 55%: this means that in order to make money in binary options you need to get it right more than 55 times for every 100 trades. “What you should know about binary options” – www.thebinaryoptioner.com Pag. 17
  • 18. On the basis of this simple statistical calculations, some say that the expected return for the platform is not fair, and that the binary option industry is a way for binary brokers to make money with this statistical advantage similar to the Casino. We say that this is like in Stock, Forex and Bond trading: when you consider that brokers charge you commissions, fees and that you as an investor “pay” the bidask spread, the break-even success rate of the traditional markets is very similar (if not higher) than in binary option trading. The important thing is to have the account with Regulated Brokers, where your money is safe and you can withdraw your earning with no hassles. You need then tools to reach the success rate between 60% and 70% in order to have interesting returns in binary options trading, with 55% being the break-even point. The Binary Optioner offers you a set of trading signals and trading systems with the highest performance in the industry for your trading, under the motto: “Trade No stress & Make Money” “What you should know about binary options” – www.thebinaryoptioner.com Pag. 18
  • 19. Trading signals by SMS/Email Trade No Stress!    3-hour expiry trading signals End-of-hour trading signals Live trading room signals The trading signals are created by algorithms which monitor the underlying assets continuously and which generate the signals as high probability trading opportunities arise. With this kind of professional service you will dedicate 15-30 minutes per day to your trading, and even more importantly you will TRADE NO STRESS and increase significantly the probability of MAKING MONEY. All the services monitored and offered by The Binary Optioner have to generate a minimum of 60% success rate, otherwise they will be delisted from the website The Binary Optioner and no more offered. For the signals given in real-time in the LIVE trading room you will follow a professional trader as he trades real time and copy his trades into your brokerage account. 3-hour expiry trading signals by sms/email The signals are intended for options with expiry 3 hours from the time of the signal. The SMS indicates precisely time of the signal and time of the option expiry. All the times are GMT, as indicated anyway by the SMS. It is therefore necessary to have a broker which offers the Option Builder tool, or which offers the possibility of early closure (so you can close the option after 3 hours). After subscription to this service (available in different format, 7 days, 1-month, 3month), you will receive once a day, at about 11:30 EST, the SMS and the email with a list of up to 5 signals, the entry price and the direction to take. Example: signals for 24/06/13, expire time 18:32GMT(-Options) ,-A-,EUR/USD,Put,1.3099 ,-B-,NasdaqC,Put,3312.6 ,-C-,USD/CAD,Call,1.0528 “What you should know about binary options” – www.thebinaryoptioner.com Pag. 19
  • 20. ,-D-,USD/CHF,Call,0.934 ,-E-,USD/JPY,Call,97.575 What to do: -A-, buy a put on EUR/USD at or above 1. 3099 -B-, buy a put on NasdaqC at or above 3312.6 -C-, buy a call on USD/CAD at or below 1.0528 -D-, buy a call on USD/CHF at or below 0.934 -E-, buy a call on USD/JPY at or below 97.575 Expiry: set the expiry time with the Option Builder (or similar tools), or buy options which can be closed before expiry (early closure tool). Recommended brokers: TopOption and Banc de Binary (offering the Option Builder tool) and 24Option (early closure option). They are all regulated brokers! The signals are sent by SMS and email. Get access to the Member Area to see the performance of the signals End-of-hour trading signals During the day you will receive by sms and email up to 5 trading signals, and for each of them you will then buy a binary option with end-of-hour expiry. The expiry time is indicated in the sms/email in GMT time. The signals are for the cross currencies eur/usd, gbp/usd, usd/cad, usd/chf, aud/usd, both for the New York session and for the London session. Customer satisfaction is guaranteed by a team of professional traders. Example of signal: "DOWN SIGNAL: PUT USD/CAD NOW AT 1.0131. EXPIRES 18:00 GMT 12-APR-2013" “What you should know about binary options” – www.thebinaryoptioner.com Pag. 20
  • 21. The signal is sent by SMS and email Get access to the Member Area to see the performance of the signals LIVE trading room Subscribe to the LIVE trading room and you will be side by side with a professional trader as he trades; you will be able to see what he does and listening his explanations about his trading strategies in binary options. You will also be able to copy his trades and make money! You will LEARN and MAKE MONEY. The trading room will be opened from 9:30 to 11:30 EST; during this timeframe you will then follow the screen and the explanations of the trader and copy the trades into your account. You will learn techniques that will change FOREVER your way of trading, and most of all your performance in trading. “What you should know about binary options” – www.thebinaryoptioner.com Pag. 21
  • 22. Trading systems Learn how to trade forever With the trading systems, The Binary Optioner offers you the possibility to learn how to trade. No more need to wait for sms and emails telling you what to do: you will learn how to trade successfully FOREVER! Trading systems Light Trade part-time Forex Binary Options Trading System Trade 2 hours per day or less in two sessions: New York and Euro session       Easy-to-use, must-have system for binary options trading Trade one hour or less per session for 1-5 trades per day Choose between Euro and New York session, or trade both Earn an average of $1.750 per month with $500 trades in the Euro session Earn an average of $3.200 per month with $500 trades in the New York session Earn an average of $4.950 per month with $500 trades in the two sessions combined Trading system for binary options on the index S&P500 Trade one hour or less per day      With Banker11 you trade on binary options S&P500, once a day starting from 12:00 EST with expiry at 13.00 EST. 1-2 trades per day Earn $600-800 per month with $100 trades Earn $3.000-4.000 per month with $500 trades Introductory system to Banker11 PRO “What you should know about binary options” – www.thebinaryoptioner.com Pag. 22
  • 23. Trading system for binary options on GOOG and AAPL Trade less than one hour per day         Clear and simple entry signals Trade for 90 minutes per day (9:30-11:00 EST) for 1-2 trade per day Accuracy up to 90% Focus on Google & Apple Earn up to $800 per month with $100 trades Earn up to $4.000 per month with $500 trades Earn up to $8.000 per month with $1.000 trades Get ready for STRIKER9 PRO Trading system PRO Trade full time Trading system for Gold binary options       Binary Option System BB12 is a powerful and unique trading system for Gold binary options Entry signals clear and simple Two sessions, EURO and New York, for 5-15 trades per day per session Earn an average of $15.000 per month with $500 trades in the Euro session Earn an average of $23.000 per month with $500 trades in the New York session Earn an average of $38.000 per month with $500 trades in the two sessions combined Trading system PRO for FOREX binary options Euro and New York session     Trade full time in the two sessions Euro and New York Focus on GBP/USD and EUR/USD Earn an average of $38,000 per month with $500 trades in the Euro session Earn an average of $38,000 per month with $500 trades in the New York session “What you should know about binary options” – www.thebinaryoptioner.com Pag. 23
  • 24.  Earn an average of $76,000 per month with $500 trades in the two sessions combined Trading system Pro for binary options on the index S&P500 Trade 4 hours per day     Trade full time as a PRO on binary options S&P 500 for 4 hours per day 5-10 trades per day Accuracy up to 80% Earn $25.000 per month with $500 trades Trading system PRO for stock binary options Apple & Google       Pro system: trade full time from 9:30 to 16:00 EST, for 5-30 trades per day Accuracy up to 90% Focus on Google & Apple Earn up to $5-6.000 per month with $100 trades Earn up to $25-30.000 per month with $500 trades Earn up to $50-60.000 per month with $1.000 trades “What you should know about binary options” – www.thebinaryoptioner.com Pag. 24
  • 25. Trading systems ULTRA Only for those who already master the Pro systems Trading system Forex Binary Options For the “Dead Zone Trader”    Trade 9-10 hours per day for 40-50 trades in the Forex Deadzone session: 17:00-02:00 EST Make an average profit of $7.000 per day with $500 trades Not purchasable by all: only those mastering a Pro trading system can buy this system Trading System for Binary Options on AAPL e GOOG        Quick to learn, super-easy to use for incredible results Suitable for AAPL binary options with 30-minute expiry Usable for similar stock, like GOOG Not a software, not a plugin, not an EA: QWARG is a course which will teach you how to trade ULTRA Learning time: 2 – 3 hours to understand the system, some days of trading for hands-on experience, and the full life to use it 15-40 trades per day Earn in the range of $30-60.000 with $500 trades Have a Good Trading & “TRADE NO STRESS” “What you should know about binary options” – www.thebinaryoptioner.com Pag. 25

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