Читать книгу Binary Trading - John Piper - Страница 34

It is important to research betting ideas to give yourself better odds of success.

As an example I will look at a fairly high priced bet which would be expected to come good. I include the Dow 100/100 Tunnel in this category. This bet goes to 100 if the Dow stays in a range 100 points either side of the prior close. It goes to zero if the Dow touches those extremes.

But how often does it do this?

This is a good example of something you can test for yourself. Get hold of daily data on the Dow going back a year and work out how often the Dow will stay in this Tunnel. You will find it is well above half the time.

What is the price of the bet?

It will vary from day to day but what price would you find attractive? Once you know that, all you need to do is monitor the market and then take the price when it becomes available.

Conversely, the 60/60 Tunnel on the Dow will be taken out far more often and if you trade these instruments you need to be aware of the statistics. If you know that the Dow or FTSE has a less than 25% chance of exceeding a range and you have bought a Tunnel with that range it will make far more sense to hold to expiry as the Tunnel will close at 100 if the market does stay within the range. But if the odds are nearer 70% that would be an entirely different matter.

(I have given partial answers to some of the questions raised by the above in the Appendix. There is also more information in Chapter 10.)

It is important to check out such data yourself as this could be the foundation stone of your trading system. If you are going to become an expert in your system you need to put in the groundwork.

One of the reasons why so many fail at trading is that they simply do not do the background work. You need to decide on your style of betting/trading and then research every aspect exhaustively.

In Chapter 6 of Binary Betting I gave as an example a high bet on the Dow. Here too some simple research can give you extremely valuable information. How often will the Dow close in a range between 60 and 80? It is not difficult to find out and once you know you can judge whether this bet gives you an edge.