Binary Gambit strategy: description, advantages and disadvantages

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

"Binary Gambit" is a strategy for trading binary options on important news. Like all others, it has its advantages and disadvantages. She has her fans and opponents, which is largely determined by the stock of the trader's character. Let's try to figure out what kind of strategy it is, what results it can give and who it suits.

Trading on the news

Trading on important news has its own characteristics that attract some traders and scare others away. Its characteristic feature is the increased volatility of the market, which can bring both high profits and large losses. On especially important news, the price can change by tens of points per minute, which in a normal situation takes several hours. It is not surprising that traders who are looking for any useful information on how to make money on binary options try to learn how to trade on the news in order to get the maximum profit in the shortest possible time.

NewsThey come out almost every day, sometimes 2-3 times a day. Each broker has a page with a calendar of events for the day and week, where the news is marked with one, two, three stars or other icons. The more icons, the more important the news - serious price movements are usually given by news marked with three icons. One of the most important is the news on the number of people employed in the US non-farm sector, Non Farm Payrolls. Traders call this news "Non pharma", it comes out every first Friday of the month at 15:30 Moscow time. On the price chart, this moment is highlighted by a strong surge.

The essence of the Binary Gambit strategy

Before the release of important news, a trader must make two deals: to buy and to sell. That is, in one or two minutes Put and Call options with the same investment amount should already be bought. For example, the minimum allowable amount to buy an option from many brokers today is 30 rubles, and many beginners start with it in order to minimize losses in the learning process. We immediately buy a Call option for this amount and a Put. At the same time, we expect that the price will take off sharply in one direction and the corresponding option will bring us profit. But after all, the opposite option will bring a loss, where is the benefit? Yes, but the loss is much smaller than the profit if you choose the right broker (more on that below). For this reason, not all brokers can trade using the "Binary Gambit" strategy, but only those that meet certain requirements. The final profit will bethe difference between the gain on the first option and the loss on the second. Let's look at a specific example for an investment of 30 rubles.

Strategy on a specific example

Let's say the option premium is 80%, in this case, the gain will be 80% of 30 r=24 r. The loss on the second unprofitable option depends on how quickly we close it - the faster we do this, the smaller the loss will be. Let's say we closed a losing option in one minute and the loss on it was 20%, which is 6 p. That is, the total gain was 24 - 6=18 rubles. or 60% of the investment amount. It is clear that if we bought an option in the amount of 1 million, then the profit would be corresponding - the numbers are different, but the essence of trading is the same. Specific premiums and losses are set by each broker, they need to be carefully studied and find the most profitable options, since even the same broker's reward and loss rates may differ on different assets (currency pairs, stocks).

Advantages and disadvantages

The "Binary Gambit" strategy attracts first of all with its simplicity. You do not need to do a serious market analysis, which can take several hours in a row, you do not need professional skills and knowledge. The indicators are also resting while we trade big news releases using the Binary Options Gambit strategy. Even a person who is far from trading can start earning immediately - it is enough to understand the technical side of the issue. It's unconditional and bigplus.

The strategy is profitable over a long period of time, if you do not change the amount of investment. It will not give a 100% result - such systems do not exist in nature. That is, it will not be possible to do without losses at all, but in the long term the result is consistently positive, albeit small. This strategy may well serve as a guide for those who do not yet know how to make money on binary options.

How is it, you ask, because the system seems to be win-win - the price will definitely go one way or the other, that is, up or down. This is the main disadvantage of the strategy - unfortunately, the price does not always go only in one direction. Very often, especially in the summer, when market volatility drops somewhat, the price on the news does somersaults in one direction and then in the other within seconds, leaving traders only to regret their losses.

After the expiration time - for the considered trading system it is 15 minutes - the price returns to the point where it started. One of the options will still win, because there will be at least one or two points difference. But in this wild pandemonium, when the price just flies here and there, it is unrealistic to understand where it will stop. Therefore, it is impossible to understand in time which option will be profitable and which one needs to be closed. It's like watching a ball on a roulette table. The end result in such a party will be unprofitable, however, the loss will be less than the profit in the normal course of the price. Due to this, in the long runthe strategy still gives a positive result.

Another problem when trading this trading system is slippage or requotes, which are essentially the same, although slightly different.

Requotes and slippages

Requotes and slippage - the inability of the broker to process user orders due to too fast price movement. Let us explain this in relation to the strategy considered in the article. You bought two put and call options with an expiration time of 15 minutes. The news came out, which caused the price to jump downwards. This means that the Put option turned out to be profitable for us, and the Call was unprofitable, and we need to close it, the sooner the better, which is what we are trying to do. But while our order reaches the broker, the price has already changed (remember the huge volatility). And the order cannot be executed at our original price.

Information about this comes back to us with a proposal to close the option already at a new price, less profitable. While we agree and inform the broker about it, the price has gone again. This can go on for quite a long time (on the scale of news trading) - up to several minutes. By this time, the loss on our Call option may approach the premium on the Put option and the profit will be minimal, if at all.

A natural question arises whether it is worth using "Binary Gambit" in trading and how to trade if the broker does not provide such an opportunity. The answer is simple: you needchoose the right broker and connect only high-quality high-speed Internet. A trader should not save on this if he wants to work professionally.

Mathematical expectation of the strategy

For the reasons described above, the "Binary Gambit" strategy does not give 100% results and the profit from it is quite modest. If you are promised and guaranteed a profit of 500% per week, this will be a deliberate lie. Most likely, no strategy will give such a percentage of profit. A good result among traders is considered to be a small but stable result. "Binary Gambit" meets these requirements. In the long run, it still turns out to be profitable if you do not change the amount of investments.

How to choose a broker

Only in the Russian market there are at least a hundred Forex and binary options brokers. How to choose the right one from them? Let's leave aside the ethical issues (reliability, payment of winnings) and focus on the technical side. It is necessary to choose a broker that allows early redemption of a loss-making option with a minimum amount of loss. Without this condition, trading using the "Binary Gambit" system becomes simply impossible.

Strategy reviews

On the net you can find different opinions, but they also have some common points. So, many traders, more often beginners, remain disappointed with a small percentage of profit in comparison with what they were promised. Real profit, judging by the reviews, ranges from 20% to 40% per week. Practicallyall traders are unanimous in the fact that if you strictly adhere to the rules and the amount of investments, then it is impossible to drain the deposit, which can already be attributed to the undoubted advantages of the system. Often in reviews of the "Binary Gambit" they mention the simplicity of the strategy, which does not require special knowledge and lengthy training.