Profitability of Binary Options Trading Systems

in Trading

Day traders these days continue to seek out profitable binary options trading systems to try in order to increase their online income. Here we look at a couple of strategies traders have been using of late with an eye toward demonstrating the strengths and weaknesses of each.

Using Spread Trading Signals to Forecast Weekly Binary Options

The great allure of weekly options contracts has always been the ridiculous yields of 200%+/-. The problem with earning yields like these revolves around picking which contracts offered are most likely to hit the touch/no touch target prior to expiration at least once at the end of one of the five trading days. One system I saw to try to resolve this dilemma involves using the weekly forecast from a futures market spread trading system as a means to forecast the likely outcome of weekly options contracts on the same (or very similar) assets.

The advantages of using this system are the attractive yields on the weekly contracts, the large number of assets tracked by the spread service, and the high likelihood of finding one or more assets to trade each week. The drawbacks are the costs of the service and the relatively high commitment of capital to individual trades due to the relative lack of asset turnover (ie. only 1-2 trades made per week). As far as profitable binary options trading systems go this one has shown modest promise however individual statistics are hard to track given the subjectivity of individual trade selections.

Daily Binary Options Trading System Using Signals

The second strategy in use of late involves a higher churn rate than the weekly strategy - in other words making multiple (smaller capital) trades daily rather than weekly. The yields on hourly or daily contracts are much smaller, hence so will be the earnings. On the other hand yields are still in the neighborhood of 70%, which isn't bad for an hour's risk if you can get it.

The way this strategy works is day traders receive one to two binary trading signals each day, with the day trader committing a fixed amount of capital on each trade. The profitability of binary options trading using this strategy is determined based on the yield of the assets, the contract size (capital invested), and the accuracy of the signals sent. The weaknesses of this strategy include a greater time committment of the day trader and the smaller profit per trade. The strengths include a higher probability of long-term success, a higher probability of more consistent earnings, and smaller capital risk per trade.

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Steve Wise has 1 articles online

The popularity of binary options trading has continued to grow globally. Find out why more people are choosing specialist binary options brokers over more traditional, higher capital requirement options and futures trading brokers.

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Profitability of Binary Options Trading Systems

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This article was published on 2012/03/14