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  1. #1
    Solid Member ionone's Avatar

    Binary.com : how do they compute revenue percentages? !!!

    for those who don't know Binary.com, it is bnaries but with a twist : you can select Call or Put as always but the revenue changes over time : at 2 min period, the revenue sometimes goes above 100% while the opposite bid is at around 70%, and it changes every tick. sometimes it reverses in 2 ticks, sometimes both sides are at 90%...

    I'm trying to figure out how do they compute these percentages. Do they try to predict prices?, Or do they look for the "trading style" of the player (is he always clicking > 100% ? or the opposite?)

    more insight on Binary.com might give a good strategy with that broker.

    thanks

    Jeff

  2. #2
    Solid Member ionone's Avatar
    Quote Originally Posted by ionone View Post
    for those who don't know Binary.com, it is bnaries but with a twist : you can select Call or Put as always but the revenue changes over time : at 2 min period, the revenue sometimes goes above 100% while the opposite bid is at around 70%, and it changes every tick. sometimes it reverses in 2 ticks, sometimes both sides are at 90%...

    I'm trying to figure out how do they compute these percentages. Do they try to predict prices?, Or do they look for the "trading style" of the player (is he always clicking > 100% ? or the opposite?)

    more insight on Binary.com might give a good strategy with that broker.

    thanks

    Jeff
    also what is not cool is if the price is the same as the entry point, it is counted as a wrong prediction! this is their green spot ! And i noticed the price has to move quite a lot to get out of the center line, so a LOT of times the price stays at the middle and you lose.

    i think that's not fair. At Ayrex a least, you do not win nor lose when the price is the same as the entry price.

    their are mdern day thieves if you ask me

    Jeff

  3. #3
    Junior Member Sharon1987's Avatar
    In my opinion, it works just like bookmakers! If there are 10 people betting UP and 1 people betting DOWN, then the return will be 10 against 1 so you get 10% payout if you bet UP and 100% payout in you bet DOWN.

  4. #4
    Legendry Member Michael Hodges's Avatar
    It's pretty complicated, and set up so that it is harder to make money on short term options. What expiry are you trading? The payouts are great you just need to find a signal that will provide a movement that will get the strike price above/below the spread. The spreads are part of why payouts are larger, if payout is larger risk must be larger, you can't have one without the other.

  5. #5
    Rookie Member BSB Zio's Avatar
    Good morning,

    This is a great question I receive since most binary option brokers price payouts statically (i.e they are fixed at between 60-85% depending on asset).

    Binary.com uses a variant of the Black Scholes option pricing formula, which looks at time to expiry and market volatility (implied volatility) to determine a payout percentage. This is actually how real options are priced in the market.

    So you may experience a sharp drop in EUR/USD and if you wish to go CALL very short term, as the probability of a short term retracement is generally high, your payout on a 2-3 minute expiry at Binary.com may just be 50-60%. However, trend trades are rewarded; so if you trade in the opposite direction betting that the price will fall even further, often the payout is 80-100%.

    At night, typically post 6-7pm GMT you will get sharp reversals owing to a general drop in liquidity. As spreads generally increase in the OTC FX market, Binary.com accommodates by reducing payout percentages especially on 'spike' moves, if you are betting on the spike reversing (which normally happens).

    Hope that helps,
    BSB Zio
    Last edited by BSB Zio; 04-24-2016 at 08:55 AM.

  6. #6
    Moderator Kolyo's Avatar
    I still don't know how exactly the binary options are priced but you may be right. Actually this is the model used for all options pricing. Althought it is not perfect and you can benefit of it, especially from the time decay of the option value but that's other story
    "The goal of a successful trader is to make the best trades. Money is secondary." - Alexander Elder

  7. #7
    Legendry Member milos's Avatar
    Its usually payout 70-85% return on investment.If you lost trade you lost 100% investment for that trade.

  8. #8
    Rookie Member BSB Zio's Avatar
    Quote Originally Posted by Kolyo View Post
    I still don't know how exactly the binary options are priced but you may be right. Actually this is the model used for all options pricing. Althought it is not perfect and you can benefit of it, especially from the time decay of the option value but that's other story

    Hi Kolyo,

    Exactly, the implied volatility and time decay all go into the pricing of a the option (a real option). In Binary.com it goes towards pricing the payout %. While this is good from a financial theory standpoint, platforms that offer fixed payouts can be exploited for the very same reasons .

    BSB Zio

  9. #9
    Rookie Member Chocolate Mousse's Avatar
    In a nutshell Binary.com changes the payout rate based on the winning probability of the option (for a more technical explanation see BSB post above).

    I normally trade strategies based on mean-reversion, and every time the price reaches a line of resistance (and it's likely to reverse) the payout in the direction of the reversal drops to 60-70%, while in the other direction it rises to 100%.

    This broker is not suitable for short-terms trades, due to the fact that a tie is treated as a loss. Also with some currencies such as EURUSD the price is expressed with one digit less than the other brokers, making it even easier to finish the trade at the same spot of the entry, and lose it.

    On the other hand it's in my opinion a good broker for longer expires, due to the option-building capabilities that it offer. They also never ring you up to bother you with some offer, and their withdrawals are processed promptly.

  10. Thanks Martin Kay thanked this post

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