Binaries versus Spreads


#1

I have been exclusively demoing nadex binaries with PP’s and other powerful entries. Going through some of the older posts on the forum it looked like the general consensus was to trade spreads over binaries because they are a little more forgiving. Most if not all of these posts were before PP’s were released so I was wondering if anyone who trades or has traded both binaries and spreads still prefer’s spreads to binaries. I wasn’t sure with the addition of PP’s if it is more ‘even’ amongst the 2 with success using the PP’s. I have never traded spreads before and have been doing ok so far with binaries using the PP’s, but didn’t know if I was wasting my time with binaries if spread’s are still a better all around option. Thanks!


#2

Nothing has changed. We still like spreads to start. The PPs are great and can be adapted to either. The spreads are a little closer to trading the actual futures contracts, and yes, a little more forgiving. The spreads can actually be more profitable than the binaries because, depending on the spreads width.


#3

Thanks so much @gcnish !


#4

In addition to gcnish’s helpful advice. something else to consider.

If you are going with OTM binaries… then the market will HAVE to move in the right direction… or they will be worthless if held until expiration.

Say I was buying the USD/JPY 112.50. The market will basically need to move 5 ticks up for me to make money. What if it only moves 3 ticks… then I lost the $33 (not including fees) Losing $33 stinks… but not its not the end of the world… But add 2 more contracts… and that $33 becomes basically a $100 loss ONLY because the market didnt moved far enough before expiration. :rage:

Taking a look at spreads

First… there is more time for the market to move in your direction… OTM daily binaries are a lot harder because they have to move even more…

But using the 3 tick example. With fees I would just end up losing a couple dollars per contract. With 3 contracts… it probably wouldnt be more than $10 total…

However… what if the market moves 10 ticks Believe in the training video it is recommended to set $90 take profits. So that is about $55 per contract… ($165 for the 3)

With the spread it comes out to about $6 per contract ($18 for the 3)

Basically it comes down to what you are comfortable with.


#5

This is great information thank you very much! I guess I’ve just been a little hesitant to go with spreads because I have never traded them and haven’t gone through the spreads course here at Apex, as well as reading that there is a little more of a learning curve with spreads in regards to proximity and premium.

And you hit the nail on the head, I am pretty comfortable with binaries and PP’s at this point which is why I’ve just been sticking to that but I am going to go through the spreads 101 course tonight. Thanks again!


#6

Anytime, With Scenario #1, that is the reason for Apex encouraging the use of Spreads when first starting out.