Binary101 Indicator User Guide version 3.0

Transcription

1 Binary101 Indicator User Guide version 3.0 September 2015 Page 1 of 16

2 Contents Page no. 1. What is the Binary101 indicator? 3 2. Why subscribe to the Binary101 indicator? 4 3. How do you get started? 5-7 i. Check for potential volatility 8 ii. Calculate the upper and lower boundary limits 9-10 iii. Place your bets Appendix i. What are binary options? 14 ii. What is an iron condor strategy? 15 Page 2 of 16

3 1. What is the Binary101 indicator? a) It is a trading indicator which provides upper and lower boundary limits on currency pairs. b) It has been designed to work in conjunction with binary option brokers in order to place bets on the In/Out binary option. c) It has been proven to return profitable results when used on low volatile days, i.e. by avoiding big news days and major news events. d) It is calculated using two components: I. The true range which is the greatest, in magnitude, of the following: Current high less the current low. The absolute value of the current high less the previous close. The absolute value of the current low less the previous close. II. Its mathematical average over a specified period (usually 14 days). e) It is not a directional indicator such as MACD or RSI; it is a volatility indicator that reflects the degree of interest, or lack of interest, in a move. Strong moves, in either direction, are often accompanied by large ranges, or large True Ranges. This is especially true at the beginning of a move. Uninspiring moves tend to be accompanied by relatively narrow ranges. As such, it can be used to validate the enthusiasm behind a move or breakout. Page 3 of 16

4 2. Why subscribe to the Binary101 Indicator? a) Our current pilot has yielded a 92% success rate when the indicator has been used on low volatile days, i.e. when no high impact news was expected and no major news events took place. b) It is an extremely powerful trading tool, takes a couple of minutes to download/set up, and it takes under 30 minutes each day to place bets. c) It can be utilised in conjunction with: I. Trading platforms (such as MetaTrader4 ) to determine the upper and lower boundary limits of major currency pairings. II. Binary option brokers (such as Binary.com ) to place bets on currency pairing movements. III. The Binary101 Digest to determine potential volatility in currency pairings. Page 4 of 16

5 3. How do you get started? a) Download MetaTrader4, and open up an account: I. II. Subscribe to the Binary101 indicator Import it into your trading platform (as per the instructions you have been provided). Page 5 of 16

6 III. Add the Binary101 indicator to the currency pairing you wish to bet on. i. Click CTRL+M to view the Market Watch section ii. Select a currency pairing (AUD-JPY has been chosen in the below example) iii. Select Insert iv. Select Indicators v. Select Custom vi. Select Binary101 IV. Select the Common tab, and ensure Allow DLL Imports is ticked. Page 6 of 16

7 V. Select the Inputs tab and insert the License Key we have provided you (please note: you will only need to insert this once). Select OK. VI. Upper Binary101 and Lower Binary101 will appear in the Data Window section (Click CTRL+D to view this section). Page 7 of 16

8 b) Set up a new account with a binary options broker (such as Binary.com). Please note: a demo account is available should you wish to practice with virtual money first). Page 8 of 16

9 4. Check for potential volatility a) Every Friday, read the Binary101 Digest either on our website or in our newsletter. b) Make a note of the days where high volatility is expected for certain currencies. Binary101 has been designed to work on low volatility, so we advise against betting on these days. Page 9 of 16

10 5. Calculate the upper and lower boundary limits a) Each week day between pm (UK-time), open up your trading platform (i.e. Metatrader4), and select the chart with your chosen currency pairing (AUD-JPY is used in the below example). b) To determine the Upper boundary limit, position your mouse over UpperBinary101. A new data box will appear showing the Upper boundary limit to use. In the below example, should be used for the AUD-JPY pairing. Page 10 of 16

11 c) To determine the Lower boundary limit, position your mouse over LowerBinary101. A new data box will appear showing the Lower boundary limit to use. In the below example, should be used for the AUD-JPY pairing. Page 11 of 16

12 6. Place your bets a) Log in to your binary options broker (the below example is so you will need to click on Start Trading ). b) Select Forex. Page 12 of 16

13 c) Select In/Out, and then either Ends Between/Outside or Stays Between/Goes Outside. d) Insert the following information: I. Currency pairing: AUD-JPY II. Duration: 1 day (Binary101 is designed for this length of time). Please note: when placing bets on Friday you will need to insert 3 days for it to take effect on Monday III. High barrier: (as per the UpperBinary101 section on page 10) IV. Low barrier: (as per the LowerBinary101 section on page 11) V. Stake/Payout: $100 (choose either the amount you wish to bet or to potentially win) VI. Select Get Prices, and then Purchase ( Ends Between has been used in the below example) Page 13 of 16

14 e) A Trade Confirmation window will appear confirming the details of your transaction along with an explanation of how the result is decided: f) Repeat the above steps (pages 10-14) for all currency pairings you wish to bet on. It really is as simple as that and shouldn t take you longer than 30 minutes each evening. g) Important to note: check the cut off time to place bets with your binary option broker. Binary.com is currently 8pm. h) Top Tip: keep a record of your bets in a spreadsheet so that you can track profitability/returns etc. We at LittlefishFX would be happy to share our spreadsheet template should you wish to use it. Page 14 of 16

15 Appendix I: What are Binary Options? Binaries are a type of option in which the payoff is structured to be either a fixed amount if the option expires in the money, or nothing at all if the option expires out of the money. The profit associated with a binary option is thus based on an on/off proposition, hence the name binary. A binary option automatically exercises, meaning the option holder does not have the choice to buy or sell the underlying asset. When buying a binary option, the potential return offered is absolute and known in advance of the purchase. 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 anything from 30 seconds, up to 30 minutes, an hour ahead or to the close of a trading session. Each binary option has four parts: 1. The Asset The value of a binary option is derived from the price of an underlying asset without the hassle of trading the asset itself. Binary Options brokers (such as Binary.com) offer a wide range of assets covering major FX rates, stock indices and commodities. 2. The Duration Each binary option is contracted for a specified period of time. The final determination of option value is made at the selected expiration time. Binary Options brokers (such as Binary.com) offer the widest range of durations. You can choose from 10 seconds to 365 days. 3. The Trade Type Whatever your market view for the selected underlying asset, there is a binary option contract to capitalize on your insight. With your total outlay limited up-front, they make a perfect hedge against riskier trading strategies. Binary Options brokers (such as Binary.com) offer four major types of trades: rise/fall, higher/lower, touch/no-touch and in/out. You can also trade ultra-short-term with tick trades. 4. The Payoff Each binary option trade is for a fixed payoff amount that you specify at the outset. Your stake is then calculated from the payoff. Binary Options brokers (such as Binary.com) offer payoffs from $1.00 to as much as $100,000. Page 15 of 16

16 Appendix II: What is an Iron Condor strategy? Iron Condor is not a super-heavy bird of prey but, in fact, a very useful trading strategy. A lot of binary options trades are executed with the expectation of a price surge. Some others are carried out having the view of the fact that price will certainly dip at some point in time. However, in some cases, price does not vary much at all. Wouldn t it be cheering to enable traders to make money in a stagnant (low-volatility) market? The Iron Condor (IC) strategy allows traders to do exactly this in the binary options market. IC is a good strategy to ensure that you make income every month. To utilize the strategy when the market shows low volatility, you bet that the price will fluctuate in a specific interval. The probability of success with this strategy is very high our recent pilot returned results of 89%. Range Binary Options have a lot of advantages compared to classical options: No Commissions or Spreads. You can open an account in 1 minute. You don t need to know in what directions the price will go. The main thing you need is to know how to use the volatility indicators such as the LittlefishFX Average True Range. Now the good news, Binary Options brokers (such as Binary.com) makes all this easy for you by offering the In/Out Trade! This trade is essentially a pre-made Iron Condor strategy. Page 16 of 16