Things to Know About Binary Betting

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Things to Know About Binary Betting

Date Added: July 19, 2010 08:49:31 AM

Author: Elm Trader

Category: Business & Economy

Binary betting, as the name implies, provides two options- yes or no. Here, ‘yes’ means you concur to a proposition and ‘no’ means you do not consent to the proposition. In any financial betting, your profits and loss are dependent on the accuracy of your betting. The proposition in binary betting is put forth both in terms of bid and offer price. If the quoted proposition has high chances of occurrence, the quote will be higher too. To explain it clearly, if the quoted price is 80-85, then the chance that the FTSE will close higher is greater. In binary betting the market settles either at 0 or 100. In the following we will discuss your profit and loss by an example:

Suppose, you are offered a proposition that the FTSE will close higher at 3:30 pm and the price is 55-60. If you agree with the position then you buy it at 60 say, for 10 per point. Now, if the FTSE indeed ends up high at 3:30 pm then the market is said to be settle at 100 and you gain (100-60)x10=400. On the other hand, if the FTSE does not end up at higher value then the market is said to settle at 0 and your loss amount is (0-60)x10=-600. Now, consider the other scenario, suppose you disagree to the proposition it means you sell at a value 55 for, say, 10 per point and the FTSE does not close at higher value. The market then settles to 0. You win in this case and your gain is (55-0) x10=550.

A binary bet is low risk and advantageous over FTSE spread betting. In financial betting of both kinds, you need to have certain deposit in your account to open a position. For the case of FTSE spreadbetting, the margin required in your account is the Notional Trading Requirement (NTR) multiplied by the size of your bet. For example, if you wish to bet for 10 per point and the NTR is 100, then the required margin is 1000. On the other hand, if you decide to buy the FTSE100 index to finish up at the end of the day at 70 for 10 per point, then the deposit required is the maximum amount you might lose from the trading which, in this case is equal to 70x10=700. Another main advantage of binary betting is that you will know precisely how much you will win or lose from the outset of your trade. Because of these advantages binary betting offers opportunities for sound money management and avoid the massive losses that can occur using spread betting and futures contracts when markets move very fast against your position. Binary bets allow instant access to many of the Worlds Stock Markets including World Indices, Forex Markets, Commodity markets and Individual Share / Stocks.

Even in binary bets, never bet more than you can afford to lose. It is fun to participate in binary bets, but if you feel it is becoming too challenging for you stop immediately.

Elm Trader is the author of this article on Trading Systems. Find more information about Spreadbetting here.

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Things to Know About Binary Betting

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