Differences with Binary Options versus Forex

There are many differences when trading binary options versus forex.  As some traders will say, the profits are lower with binary options but so are the losses.  However, that is not the only difference.  Here is an example of another difference where the indicative price at expiration was simply one tick lower than the strike and the full profit was realized.

Differences with Binary Options

There were two binary signals issued for the GBPUSD on December 9, 2016.  One signal was issued at 1am New York time and the other came in at around 4am New York time.  Both had a minimum expiration of 3 hours, which means a daily expiration was needed.  Nadex Binary Options offers multiple daily expiration:  3 am, 7 am, 11 am, 3 pm, 7 pm, 11 pm (all based on New York time).  The binary signal price was to sell at or near 1.2598.  With so many strikes offered via Nadex, there is typically always a strike close to the signal price.  In this case, there was a strike at 1.2600 (two pips from the binary options signal).

The 60-minute chart in TradeStation with the TradersHelpDesk Trend Average True Range showed that the signal was still valid because although the red ATR stop (plus sign) was red and turned to blue, a white congestion dot formed.  Plus, the TradersHelpDesk Stochastics showed that price was making a lower high but the Stochastics was making a higher high (hidden divergence).

GBPUSD TradeStation Chart with TradersHelpDesk Indicators

Although I was late entering, by the 7 am New York time expiration, the indicative price index expired at 1.2599 – one pip under the strike price.  With Nadex Binary Options, the indicative price index could have expired equal to the strike (1.2600) and I still would have realized a profit of the maximum payout, $100 minus the risk I paid on entry.

GBPUSD Binary Option Daily Expiration