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How trading binary option
- 1. What is Binary Option :
In finance, a binary option is a type of option where the payoff is either some fixed
amount of some asset or nothing at all. The two main types of binary options are the
cashornothing binary option and the assetornothing binary option. The
cashornothing binary option pays some fixed amount of cash if the option expires
inthemoney while the assetornothing pays the value of the underlying security.
Thus, the options are binary in nature because there are only two possible outcomes.
They are also called allornothing options, digital options (more common in
forex/interest rate markets), and fixed return options (FROs) (on the American Stock
Exchange).Binary options are usually Europeanstyle options.
When buying a binary option the potential return it offers is certain and known before
the purchase is made. Binary options can be bought on virtually any financial product
and can be bought in both directions of trade either by buying a “Call”/“Up” option or
a “Put”/“Down” option. This means that an investor can go long or short on any
financial product simply by buying a binary option. Binary options are offered against
a fixed expiry time which may be e.g. 60 seconds and up to 30 minutes, an hour ahead
or to the close of the trading day. Binary options once bought cannot be resold before
the expiry time is reached.
For example, a purchase is made of a binary cashornothing call option on XYZ
Corp's stock struck at $100 with a binary payoff of $1000. Then, if at the future
maturity date, the stock is trading at or above $100, $1000 is received. If its stock is
trading below $100, nothing is received.
In the popular BlackScholes model, the value of a digital option can be expressed in
terms of the cumulative normal distribution function. Due to the difficulty in hedging
binary options that are ATM near expiry, they are much less traded than vanilla
options, but can be approximated with vertical spreads.
How to start trading binary option
Here are 3 steps to start trading binary option
1. Open account on broker binary option
>>> Register Anyoption <<<
>>> http://www.sahamoption.com <<<
2. Deposit
Fast and secure payment methods via credit card.
3. Trade
Select assets and trade.
- 7.
4. Add indicator MACD Histogram
Developed by Gerald Appel in the late seventies, the Moving Average
ConvergenceDivergence (MACD) indicator is one of the simplest and most effective
momentum indicators available. The MACD turns two trendfollowing indicators,
moving averages, into a momentum oscillator by subtracting the longer moving
average from the shorter moving average. As a result, the MACD offers the best of
both worlds: trend following and momentum. The MACD fluctuates above and below
the zero line as the moving averages converge, cross and diverge. Traders can look for
signal line crossovers, centerline crossovers and divergences to generate signals.
Because the MACD is unbounded, it is not particularly useful for identifying
overbought and oversold levels.
Change plot color to green and negative value color red
Short 8, long 21 trigger 9
Average type exponential
5. Add ADX indicator
ADX is used to quantify trend strength. ADX calculations are based on a moving
average of price range expansion over a given period of time. The default setting is 14
bars, although other time periods can be used. ADX can be used on any trading
vehicle such as stocks, mutual funds, exchangetraded funds and futures.
ADX is plotted as a single line with values ranging from a low of zero to a high of
100. ADXis nondirectional; it registers trend strength whether price is trending up or
down. The indicator is usually plotted in the same window as the two directional
movement indicator (DMI) lines, from which ADX is derived
