Читать книгу Binary Trading - John Piper - Страница 52

Triangles are like coiled springs. The market moves in a tighter and tighter range and everyone expects a breakout but no one is sure in which direction. Our binary trader knows two things at this point:

1 That a breakout will come

2 That it has the potential to be a significant move

With these two factors in mind the trader will consider the action on the market he is watching and in particular look at:

 The length of time that the triangle has lasted. In the chart above FTSE was triangulating for around 5 weeks. This is a fairly short-term triangle.

 The maximum width of the triangle; as this provides a guide for subsequent action. In the chart the maximum width is about 800 points.

With these points in mind the trader decides once he can count fives waves for the triangle on FTSE that he will sell a 300 point Tunnel with an expiry approximately 5 weeks from here. The first chart above shows this and he logs onto www.BetOnMarkets.com and this bet is called an up and down and is listed under the heading boundaries. Alternatively he may go to www.BetsForTraders.com where the bet is called a one-touch range.

This bet will go to 100 if either boundary is touched. Our trader enters his chosen criteria in the relevant boxes and finds he is offered very low odds on this bet; in binary terms he has to pay around 90 for this trade which he considers far too high. In fact this is not unreasonable – a lot can happen in 5 weeks – in fact if you look at Chart 3.2 above you can see that the bet would have been an outright winner 3 or 4 weeks later.

One other factor which I might usefully mention at this point is that as the triangle continues to develop this will reduce volatility in the market. Volatility is a measure of how much is happening. If not much is happening volatility is said to be low and this is one of the factors that does affect binary prices. The up and down or one-touch range bets we are looking at here should be cheaper in a time of low volatility than at a time of high volatility.

Our trader decides to wait until he sees a breakout above or below the triangle trendlines. By doing so he can reduce the time frame and this will give him a much better price.

The breakout comes, see Chart 3.2 above, and he prices the same 300 point Tunnel but with an expiry only 3 weeks from now. He is now asked to pay 62 for this bet with an expectation of a 38 point profit if the market moves 300 points over the coming month. He bets at £10 per point so risks £620 to make a potential £380. He can also exit early either to reduce his risk exposure or to take profits.

2 weeks later he wins his bet – even though the initial breakout was a false break to the upside!

You will notice that he has chosen a 300 point move which is somewhat less than the maximum width of the triangle. He wanted a time frame equivalent to that of the triangle itself but had to settle for less to get the price he wanted.

As I wrote this the move was still in progress, but check the chart of FTSE for yourself to see the full move that came in from this signal – as we go to press late in 2008 it is still going!