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  1. #1
    Administrator Martin Kay's Avatar

    Paper Trading a must do step before go live !!!

    Hi guys, Bogdan G has very interesting article, explaining why paper trading is especially important before you decide to start live trading with a real account. Check it out and share your views! Is it really important to paper trade before you decide to go real?

    Originaly posted by Bogdan G. For the whole article click here.

    What’s Paper Trading all about and how to use it?

    Paper trading is just that…paper trading. Yea, old school, I know but incredibly helpful. Get your sheet of paper, your favorite pen and sit in front of your computer, watching the market. When your strategy of choice tells you it’s time to place a trade, do not place it on the binary platform. Instead, write all the details of that potential trade on your piece of paper, including underlying asset, account balance, opening price and time, expiry time, amount risked and of course, if it’s a Call or a Put. Then keep watching the market or do everything just like you would do if you had a real trade. At expiry time, write the details again, including the new account balance which will be higher if you were right about your prediction and lower if you were wrong.

    My conclusion

    In my honest opinion, Paper Trading is the best way of testing trading strategies, improving your discipline and making you a better trader overall, but only if you use it wisely. You should always use a paper trading account with an investment amount similar to the one that you will use for your real account. If you want to invest $500 in a real Binary Options account, don’t paper trade with $10K because that will just give you a false sense of what to expect in terms of profits. Overall it’s the best way of gaining confidence in your strategy and your decision making skills, but be careful, it’s not the real thing… it takes out the emotions involved when trading real money. You will never bite your nails or have sweaty palms while paper trading. These are things that you have to deal with once real money is involved.




  2. #2
    Veteran Member uj.forex's Avatar
    this is EXACTLY what I did, but unfortunately AFTER I lost a substantial amount of sum in the beginning.... and yes, I didn't had my homework done and started trading but realized only after I lost my funds...oh well... anyways... this is exactly what I did and it really helped me because you this brings u the same feeling as if u are trading live account... Serious attitude and consistency is what is required here....

  3. #3
    Solid Member Peter Green's Avatar
    Bogdan again has a very good article, focused exactly where it has to be. Paper trading is the only way to receive some experience without burning your cash. I still paper trade and gradually improve myself. I am also very happy that I didn’t lose any cent and when start live will be prepared to save my hear earned money and increase them with as little as possible risk.

  4. #4
    Legendry Member willyw's Avatar
    Quote Originally Posted by Peter Green View Post
    Bogdan again has a very good article, focused exactly where it has to be. Paper trading is the only way to receive some experience without burning your cash. I still paper trade and gradually improve myself. I am also very happy that I didn’t lose any cent and when start live will be prepared to save my hear earned money and increase them with as little as possible risk.
    With paper trading you can try test many strategies and made corrections and modifications to suit your trading and pull to the right track but when you go into live trading there's no way to made corrections and you have to be very cautious.

  5. #5
    Junior Member
    My paper trading with GFT last summer was the only time paper trading worked well for me. It was quite buggy (sell function was nasty, I was pushing on sell @80 and getting the trade done @20). For this reason, during my paper trading I learned how and when to buy (unfortunately, on CAC 40, later removed, guess they knew why). I opened account at the minimum equity possible (1000, in euros), and I traded with almost the same caution as for real. And it was the only time on paper trading that I felt the edge forming.

    One part of the problem is, I think binary option/forex traders don't feel the edge forming on paper trading, and, though reluctant, open live accounts and blast them up. The other part of the problem is the very possible non-existence of the edge, since 99% of binary option brokers offer only "buy-only" bets that return a fixed yield (edge on forex is a totally different thing - but I don't have a forex edge, I can't tell about that). It is extremely possible that the industry overall, to have found the perfect mix on making money: aggressive marketing and low-yield bets offered (not binary options, actually, since binary options are instruments, that circulate between broker and trader, both ways) addressed to a huge number of wannabe traders with no education on options.

    It is extremely disturbing to see that options, that have their pricing completely subjective as opposed to forex or regular underlying instruments (whose pricing comes from the market) are marketed by brokers that are NOT QUESTIONED BY ANYONE, including BOTS.COM on how they make their pricing - ya, who says it should be 70% yield, or 80% yield - (excluding already the fact that their so-called "binary options" are stripped off all the features that the book-letter instrument "binary option" should have, which should be priority zero for a binary option whistleblower such as BOTS.COM).

    Come to think about it, roulette players can't make it with a 3% house edge, while in binary options it has about 15% range between brokers and a probably house edge of 15%-30%.

    If you're being ripped off this way, how could you expect to find an edge while on Paper Trading ? And if you can't find it, is there any reason to trade live?

    I fear that what this community doing is nothing but picking the best from the worst, instead of whistleblowing and putting a high pressure on both sides, brokers and regulatory bodies. The deception has gone too far, and for many years! It's time that BOTS take attitude against it (because certainly CYSEC is playing along, we'll see what JSEC decides).

    But, question is, what's the industry influence over BOTS.COM ? If they write articles and push the general talk away from the concerning aspects , then nothing good is gonna come from that. Brokers will always want to sell you their product, and you'll be always trapped between them. Here, in Romania, when Basescu wants the public opinion to forget about important matters, he throws away smoke screen subjects to the press. I think this could be happening here too. It's either that concerning aspects are not known, or they are not to be talked about. Both cases are bad, but the first is correctible. Until it's gonna happen, educate yourselves!

  6. #6
    Master Member Bogdan G's Avatar
    So recommending new guys to paper/demo trade is just throwing a smoke screen? WHAAAATT?? ...Really? You must be joking because I am laughing. And come on, stop whining about mainstream brokers not letting you Sell options. So what? Don't trade with them and stick to the ones that let you sell. It's that simple.

  7. #7
    Specialist Member marvel's Avatar
    Quote Originally Posted by fxeconomist View Post
    Come to think about it, roulette players can't make it with a 3% house edge, while in binary options it has about 15% range between brokers and a probably house edge of 15%-30%.
    I think the same fxeconomist.. if we have 75% return and let say 10% refund we have cumulative 85%, the other 15% goes to brokers as their edge, so is it possible at all to trade with such a strong edge against us? In forex the brokers edge is slipage, spread and a lot more, but I think it is below this 15% in all casess.

  8. #8
    Junior Member

    Demo on a ripoff is useful ! (???) !!!

    Quote Originally Posted by Bogdan G View Post
    So recommending new guys to paper/demo trade is just throwing a smoke screen? WHAAAATT?? ...Really? You must be joking because I am laughing.
    While not being wrong, it is a smoke screen. Of course you don't realise it. You couldn't, at least now. You know it's absolutely necessary in other forms of trading, like forex or stocks. Why not in binary options ? I did it and it was useful to me. If you don't know the pricing, the real chance to win the game, demoing is pointless. At least I have two quotes: I can watch the pricing. If I don't like it, I don't trade. But you don't know the pricing. Is like gambling on a poker machine with demo coins in the beginning. The fact that you are given a demo to hone your skills on it, and in the meanwhile get some addiction, has nothing to improve the situation: the machine is rigged to take your money! It's as simple as that!

    And the psychological effects are pretty perverse. Then the trader will indulge himself. Will say "Ok, I was reckless on this trade, I didn't pay attention on that trade, I've been just unlucky on that one, never mind... I'll do well when I'll be live!". Still doubtful, but wishful thinking, opens account and blasts it up.

    Quote Originally Posted by Bogdan G View Post
    And come on, stop whining about mainstream brokers not letting you Sell options. So what? Don't trade with them and stick to the ones that let you sell. It's that simple.
    There is no other broker to allow selling except for GFT and SaxoBank. Ok, there are some GFT IBs (same platform, same pricing). And that's it. Barely breaking the ice. Now you have to understand that I didn't mean only selling. [B]But they have to let you buy the opposite option. Means, that for me the binary option is an instrument that exists, not just a bet

    I don't necessarily want to Sell. However, I want to at least have the opposite option able to trade until the expiry.
    Like, for instance, Now is 12:00 and DAX is 7480. I buy now a "DAX to touch 7500 until 13:00", say at 10, if I see DAX at 7495 say at 12:25, I want to Buy a "DAX to No Touch 7500 until 13:00", say at 30. Total game, I win 100 and payed 70. It was like I bought and I sold the One Touch. But, even without the use of a Sell, I still did the same trade.

    You don't have this, because your binary option is gone at the next tick. There's just another bet available. Say you buy a "Call" for DAX to touch 7500 at 13:00. Well, at 12.25, you will be offered by your casino "Put" for DAX to No Touch 7515 until 13:00. So the game costs 200. If it doesn't touch 7500, you make 170 (Put wins, net loss 30). If it touches 7500, but doesn't touch 7515, you make 280 (net win 80). If it touches 7515, you make 170 (Call wins, net loss 30). Is this mimicking the behavior I described, where I rode the option value, by using buy twice to take advantage of changes in option chance? (because it's a single event involved, the touch of the 7500).

    (But what if I'm mistaken and at 12:25 you are offered "Dax not to touch 7530 until 13:25" ? How do you close your trade then?)

    Would anyone play a roulette that pays out 70% instead of 100% on Red/Black or Odd/Even ? You know why no roulette player would play Dozens or Columns? Because they cover 12 numbers out of 37 positions and pay out 2 to 1 instead of 3 to 1! They have a huge house edge and any normal gambler would avoid them!. Yet the game with nowadays binaries is like Dozens and Columns, but it's more perverse because at least if you play that you know the house edge!

    You can't just play a game for which you can't estimate the winning probabilities. On the other hand, they are very sure on what they take when you push the button.

    There is someone that has to establish some rules. And if the regulatory bodies don't give a damn, then our voice must be heard. Because it's our money!

    Are binary options implemented for institutional clients the same way? Institutionals not knowing the pricing? Are they the same like for us, on Fenics Exotics, Vcap, SDX, Merlin?

    Why did the Frank-Dodd law stipulates that SEF facilities be created for institutional clients? Why do they need simultaneous pricing from a few banks for the same option? Not for getting the best bang possible for the buck? Why the retail bang is as big as the broker decides ? So, you read that well, when you request an option, you will get bid/ask quotes from a few providers that will STRIVE to give you best pricing (unless there is no cartel pricing!) Why that, if demoing is more important than the fairness of the product itself? Now you understand why all subjects are smoke screens compared to concerning matters?

    Would have nice to have some output from Kolyo on this...

  9. #9
    Master Member Bogdan G's Avatar
    Ok so what I get from your long post is that you think Binary Options trading is a losing game where the broker has a huge edge...Here's the deal: if a trader paper trades BOs and comes to the same conclusion, then he can decide for himself if it's a losing game like u say and can stay away from it, hence the crucial importance of paper trading.

    P.S.: I don't know what Dozens or Columns means...I don't gamble.

  10. #10
    Moderator Kolyo's Avatar

    Lightbulb !!!

    Quote Originally Posted by fxeconomist View Post
    Would have nice to have some output from Kolyo on this...
    Hi, guys! You are running interesting discussion and I am sure it will give all of us very useful insides on the binary options industry. Bogdan G is absolutely right that paper trading is a must do step for all novice traders, in order to check their abilities in the market and search their edge. I am relatively new to the binary options, as I came from forex and commodity markets, but I could say that it really looks fxeconomist, you have deeper understanding of the options industry and your ideas for their regulation are also on the right way. I think we have long way before they will became as regulated as others brokers are.
    As you are options specialist, fxeconomist some of your thoughts are difficult to understand from non specialist persons. I will appreciate very much if you try to explain your ideas more understandable for the general public. I think you are right that in some cases like short term trading and scalping, which I suppose is your stile, binary options are not very suitable. We have a lot of discussions and reviews on that subject and most of the fellow traders came to the conclusion that very short term like 60 sec or few minutes trades are more like a gambling, but if you trade binaries with daily and weekly expirations they have even some advantages compared to vanillas as they could be better priced in some cases I think.

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