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HavivaC1938's Profile
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HavivaC1938 |
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October 17th, 2012 |
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October 19th, 2012 |
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options pricing how options work options strategy trading exactly where stops can be hit in from time to time an irrational way.
So here is an example of how binary bets / binary alternatives evaluate in the authentic investing natural environment with spread betting and futures.
Let's say we have checked our charts or no matter what technique we use for predicting current market movement and we feel that the Dow Jones Index is very likely to rise in the following 24 hours from its closing cost of 10000.
Firstly we area a each day binary bet / binary solution and we are quoted a price of 48 for the market to near bigger than 10000. As binary bets and binary alternatives work on a -a hundred price band this basically means that if we take this price tag we will both win fifty two currently being one hundred minus expense currently being forty eight, instances our for each stage chance (say $ten for each stage) whole win $520 or we could drop 48 (price of the trade) times our for each position risk (say $ten for each position) whole loss $480.
1 of the major strengths of binary bets / binary possibilities is that you can by no means lose a lot more than the agreed volume. This also indicates that trade options you do not require to fret about stops as all you are interested in is the place the market place finishes the subsequent day.
Now we also area a pass on bet or futures trade and we spot a end say one hundred fifty details absent from our entry cost of 10000. So ideally our greatest reduction for the pass on wager / futures trade is $1500 staying a hundred and fifty occasions $ten per level.
Why don't we say in early trading the subsequent day the industry falls sharply. At this level if the market falls to below 9850 we will lose $1500 on our spreadbet / futures trade whilst our Binary wager / Binary choice stays stay.
Let us also say the current market eventually closes at 10010 a rise of ten factors. Our total win with a spread bet / futures trade even with our bigger danger as revealed over would be 10 moments $ten per point currently being just $a hundred.
Nonetheless our binary bet / binary pays out the amount we agreed when the trade was opened which is $520.00.
There are several examples of exactly where a binary wager / binary solution makes far more feeling than working with the higher leveraged items.
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