Bitcoin Price Watch; Here Are This Morning’s Key Levels

It is early Wednesday morning in Europe and we are about to kick off our day of trading in the bitcoin price. Things have been extremely volatile over the last 24 hours against a backdrop of some fundamental inputs (we are looking at you, SegWit2X) which wasn’t unexpected, but the specific impact of the inputs … Continue reading Bitcoin Price Watch; Here Are This Morning’s Key Levels

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“Stop Trading Gold & Silver Now” – 30 Year Veteran

Ruminations on Gold by Soren K.
posted originally on MarketSlant.com
Enda Glynn’s original headline and  EW analysis is below.  Feel free to skip to it if you are looking for technicals. We had to change the headline for fear the po…

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Binary Options or Day Trading?

 

Binary Options or Day Trading?

It’s possible to make (or lose) money with by trading binary options or by day trading, and the two types of trading may appear similar on a superficial level, but there are some important differences between them.

 

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Binary options overview

With a binary option, you either make a fixed profit or a fixed loss. Binary options can be available on different kinds of underlying assets, from stocks and commodities to major events such as jobless claims announcements. A binary option is about a yes/no question; traders are, in a sense, gambling on whether an asset’s value will be at or above a certain amount (the strike price) at a specified time (the expiry), or whether it will be below this amount.

The price at which you buy or sell a binary option contract is not the actual price of the underlying asset, but a value between zero and 100, depending on the probability of the asset’s value reaching the strike price. The trading range for a binary option contract will fluctuate throughout the day, but always settles at either 100 (if the answer is yes – the price is at or above the strike price) or zero (if the answer is no). The trader’s profit or loss is calculated by subtracting the price at which they bought the contract from the settlement price of zero or 100.

Day trading overview

In day trading, positions are opened and closed during the same session, which is not a fixed time period, although it is rare that a position is kept open overnight. Day traders buy and sell different kinds of financial instruments including stocks, commodities, forex currencies, etc. Day traders also attempt to predict the direction of the price movement of an asset, but their profits and losses are not fixed and depend on their entry and exit price, the size of the trade, the number of shares, and money management techniques such as stop loss and limit orders.

For example, a day trader might enter a trade and set a profit target of $100 and a stop loss of $25. Unless they put in a limit, they can let their profits run above $100 to fully benefit from a large price movement. If a day trader held onto a trade and didn’t put in a stop loss order, the loss on an unfavorable trade could quickly get out of control as the trader waits desperately for the price to move in the other direction.

How are they different?

In a nutshell, binary options allow traders to know in advance what their maximum profit could be and what their maximum risk is, while in day trading it is only possible to restrict trading outcomes by placing limit orders and stop loss orders. That is, if a day trader does not use proper money management techniques, both their potential profit and potential loss are entirely unknown and possibly limitless.

Binary options also have a fixed expiry date and time, while day traders have the option to close their position at any time or wait for a limit or stop loss to be triggered. The holder of a binary option also does not have the right to buy or sell the underlying asset, while the day trader does.

Benefits of Binary Options Trading

Benefits of Binary Options Trading

Day trading binary options is quite a simple idea. The trader opens a trade position and closes it within the same trading day. Lots of articles discuss the drawbacks of this particular type of trading, but binary options do have their redeeming qualities. This article discusses some of the key benefits of binary options day trading.

 

Stock Market Diagram
Stock Market Diagram

You may have heard them referred to as digital options in the forex or interest rate markets, and they are also known as fixed-return options(FROs) or all-or-nothing options in the stock market. Collectively, we call them binary options because they offer returns in only two outcomes: a predetermined amount, such as $100, or nothing. The following assets can be used in general for binary options day trading:

• Currencies (forex market)
• Stock indexes
• Stocks (equities)
• Commodities (limited)

All binary options contracts have an expiry date and time; generally, that means there is a fixed expiry date for the standard binary options contract, unless a platform the trader is using offers a variable option expiry.

Advantages of binary options day trading

When you buy a binary option, the potential profit is already calculated and known to the day trader before making the purchase. And as binary opt

ions can be used on nearly all financial products and in either direction (call or put), day trading with binary options can be easy and immediately pays out the resulting high returns.

Besides the potential for fixed, high profits, several benefits are offered by binary options to the day trader:

• There is no broker involved; this means lower costs because of the lack of fees and commissions, and traders can manage their accounts on their own.
• Traders can trade diversified options at the same time.
• Traders can make small, multiple initial investments, giving an accessible form of day trading with a limited amount of risk. This makes it possible to make up for many losses with one successful trade.
• Minimum account balances may be lower or nonexistent compared to other forms of day trading.
• There isn’t any unnecessary downtime, so traders can profit from many constant opportunities during the day.
• Traders can select changeable time expiries to be suitable for various strategies.
• The private method of trading in this market provides a high level of innate se

curity.
• As the involved clear risks and the short timeframes in the day trading of binary options, volatility is much less significant.

Smart day traders won’t need to adjust their strategies in order to attain constant returns; they can do this by recognizing and following one of the successful trends and patterns in the market. Additionally, false trends that appear due to the short trade times can be exited rapidly to minimize any kind of loss if the trend is not working.

Binary options can be both rewarding and exhilarating for some day traders. The potential return is high, and the turnaround can be really fast. For the day trader, there is always a new opportunity to capitalize on due to the constant expansion in the binary options market.