Binary Options / Stocks / Trading

Banger

Banger

Well-known member
Site Supporter
Forum Sponsor
A friend of mine is big into the world of stocks and trading. Recently he has started into Binary Options.
I don't know anything about this stuff which is already a red flag for me but he assured me it was relatively safe and easy so long as I stayed within my means.
He suggested a website and some strategies to try but again, I am cautious.
Does anyone else have any experience with sites like anyoption.com etc?
It just seems too easy. I am having a hard time finding information I can interpret with my lack of knowledge and my friend has recently gone away for work and is out of touch to answer questions.
 
Keep in mind that there are two sides to every such trade and it is a zero-sum game. Actually, it's worse than that, because the broker always makes their cut.

I don't use binary options but I do use "normal" put and call options. Something to keep in mind is that the seller of an option statistically makes a little bit of money most of the time (it is still quite possible to be wrong ...), while the buyer of an option usually doesn't make anything but has a small chance of making a lot. I have done much better by trying to make a little bit of money every month rather than trying to hit a home run and missing most of the time.

As for the "binary" options ... I have a really simple rule of thumb. If I can't do a transaction through a major brokerage (I use TD) then I don't do it. If a company doesn't have at least 5 years of history as a public company on a major exchange (not the Venture exchange - no penny stocks) then I don't want to be involved. I use Facebook all the time but I want nothing to do with their stock.
 
I know pretty much everything about any derivative that you can find a description of on the internet.
If you don't get the greeks down to the second order, stay off the binaries. If you don't know what I'm talking about, then for sure.

In a nutshell, binaries are flipping a coin on instantaneous direction and size of move. The price per dollar is equal to the implied probability of breaking even. Implied only means what other people think, not what will happen. Binaries I've seen are sorely mispriced in favour of the broker/dealer. They are typically used commercially for hedging fx payments... or for retail investors to be the sucker.
 
I'm with Brian I also use TD with no broker as the middleman. I'm more of a long term investor and rather invest in a company that is around for a while that way at least I can make some pocket change in dividends. But with great rewards comes great risk of losing a lot especially if one is trying to hit the jackpot in a short amount of time.

To me from eljay's explanation binary options seems one of those where you have to be super active and know what you're doing because one slip up can lose the entire pot. So it all depends on your risk tolerance.
 
Definitely not for the retail investor.

Also your intuition is good - if you don't understand it don't do it. The way to learn is NOT with your own real money.
 
exactly right. unless you "need" binaries, you are better off at rama.
if you want to play options, just use questrade or whatever is cheapest for you and do vanillas only. you'll lose plenty of money that way too, but at least you'll feel like you are in control.
on another note, stay off the canadian options market (mx), unless you "need" it. the liquidity and spreads there are so bad it makes me cry (sometimes for real).

IV. said:
Sounds like another type of scheme where you will lose and they will have your money.
Click to expand...
 
You must log in or register to reply here.
Back
Top Bottom