I’m sure you’re more than well acquainted with those bland little lists of 3, 5, 7 or perhaps 8 or maybe 10 (there may even be some witter merchant who has somehow compiled 100) things to consider before you take the plunge and open a binary options trading account.
And what pearls of wisdom do these various homilies to all that is most trite and tedious impart?
Well, apparently you definitely need to avoid getting ripped off by scam sites that don’t play straight and/or don’t pay up.
No shit Sherlock! And these scam sites are? Hmm… bit short on detail there. But never mind, I have put together a half decent guide to finding the best binary options trading platforms – or at least safe (or as safe as this business gets) ones. I suggest you go read up on this topic for yourself, but in brief:
– Beware anything that looks too profitable to be plausible. Specifically “bonuses” – the scam here is that the condition for receiving what might appear to be “free money” is you being locked into making an almost impossible number of trades before you can withdraw either your winnings or your own original money!
– Check any prospective binary options trading broker for evidence of registration (the link above includes clear instructions on what to look for, and what to look out for).
– Use your nose! Does something smell? Does the thought “I wouldn’t touch that with late Uncle Eugene’s gangrenous dick” pop into your head? If so, pass swiftly on by, pausing only to wonder how it went when old Eugene finally met his maker… “So, God, the necrotic green trouser snake – what was that about?”
One especially helpful search “result” even suggested that I might want to understand what binary options actually are and the difference between a Call and Put option, before I go ahead and wager this month’s salary on the likely price fluctuation of cumquats over the next half hour. So glad I found that one before I put when I should have called. Phew!
5 Things To Shove Up Your Ass Before You Open a Binary Option Trading Account
However, among the genuinely important things to consider, which none of these list wankers have the wit to mention, is that binary options trading is gambling. Despite the fact that the CFTC (see earlier link) themselves refer to “investing in binary options” and the whole shebang is all dressed up in the lexicon of financial “investments” – it don’t actually make it so.
As this piece about binary options and money management makes clear, in common with all forms of gambling the game is rigged. The math ensures that normal probability (which is predicting future outcomes correctly half the time and incorrectly the other half) gives the broker a 5:4 advantage (assuming a payout of 80% for a correct prediction/guess).
To get to an approximate break-even point with an 80% payout means being correct 56% of the time. So if you stake $10 for each of 100 “trades” then your 44% of losses would amount to $440 and your 56% of wins would be $448. But in order to achieve this, you not only need to possess well-placed confidence in your ability to predict specific future outcomes significantly more accurately than random chance, but do so using only 1% of your “pot” of money (see previous link to “money management” to understand why).
Let’s look at that previous paragraph another way… We need to start with a pot amounting to $1,000 and place 100 trades of $10 each (e.g. 1%). If we are indeed able to correctly call the future 56% of the time then we will make… not $800, not even $80 but, wait for it… $8 profit. This assumes using a “flat betting” scheme whereby you always place one percent of the original pot.
Yes, I know that doesn’t sound like the 80% profit that everyone seems so keen to sell you on, but that’s because I’ve used real math to factor in the cold hard reality that you are not going to win all of the time or even most of the time.
To get that 0.08 percent return on your initial $1,000 you need to place a fuck of a lot of trades and, crucially, be fucking good at predicting future outcomes in money markets. Failure on either count and you will wind up well and truly fucked.
But there is an upside…
The upside is that it really is possible to become sufficiently knowledgeable about markets that you can indeed guess right more often than wrong.
And the higher your level of predictive accuracy, the further you can pull away from that miserable 1% allocation of funds yielding a 0.08% return (you see, even I find myself slipping into inappropriate conventional investment jargon).
The hypothetical best case scenario for binary options trading is 100% accuracy all the time – the math then posits that you can always wager the full amount of the pot and always expect an 80% return.
Put in context of the 100 trades example we’ve been using, this would net you close to $3,700,000 (using the Kelly Criterion to manage your money) but… it’s right up there with speed of light travel – not even remotely possible.
However, you might be surprised to learn that while guessing right less than 56% of the time will always wipe you out in the end, if you can get to 60% then you should be able to consistently make nearly $500 profit from your original $1,000 averaged out over every 100 trades.
This again assumes using Kelly to safely allocate stakes at 10% of your running pot, rather than always flat betting 10% of the initial pot, which often delivers a greater return over the short term but at the risk of total wipeout. It also fails to reward greater predictive accuracy – you would have netted “only” $80,000 using flat betting in this example.
The basic difference is obvious – betting say a fixed 10% of the initial pot exposes you to total loss if you get a run of 10 losses and doesn’t take advantage of winning positions; a variable 10% of the current pot can never result in total loss because the amount at risk always varies and it will increase returns from winning positions.
Never Mind The Bollox, Here’s The ONE Thing
So forget all the jibbering drivel about online tutorials, demo accounts, range of options and all the other fluff that poses (unconvincingly) as information on eejitHow, wankerHow, whoFuckingCaresHow etc. The only thing worth shit is this…
How accurately can you predict what will happen in particular financial markets? More specifically, how close to 60+ percent can you get? Because if you cannot do that then you will get a much better and much safer ROI by putting your money IN the market rather than ON the market.
And conversely, if you really can call market outcomes that well – and have the stats to back that claim up – then you’re almost certainly savvy enough not to fall for scam platforms and certainly don’t have much use for fuckheads bleating platitudes about mobile access and customer support, all the while seemingly oblivious to the fuck-off sized elephant reclining on a chaise-longue in the corner.
Binary options trading is pure gambling, but it’s not pure chance. All successful gambling relies on being better (or at least better informed) than the other players. It’s the impulsive, the ignorant, the stupid, in short the majority of other participants who fund both the brokers and the successful traders.
So what it boils down to is that you don’t have to be perfect; only better than most of the others to the extent that you are able to let the math run your way rather than run you over. Manage just that ONE thing and all the rest is mere detail.