Trading Binaries at GFT
If you’ve just opened a Binaries account at GFT, you may have questions about how it works. You can view some of our most frequently asked questions here.
What is a binary?
With binaries, traders try to successfully forecast the outcome of a particular event. This can be anything, such as the closing price of the UK100 or Gold futures. When traders believe that a particular event will occur, they’ll buy a binary quote in the hope of profiting from that event happening. If they don’t think the event will happen, they will sell the quote.
Unlike other financial products, binaries have only two possible outcomes: either the event happens by a certain time or it doesn’t. This is called an expiration or expiry. To gauge how likely an event will happen by the expiry, binaries are priced on a range from zero to 100.
This price may change throughout the lifetime of the binary. For example, you may place your trade when the price is around 20. This means the binary has about a 20% chance of happening. Throughout the day, you may notice the price rises as the event becomes more likely, or it falls as it becomes less likely. If the event occurs before or at the expiry, the binary settles at 100. If the event doesn’t happen, the binary settles at zero.
I’ve heard someone comparing binaries to yes-no questions. Why is that?
It’s very easy to think of a binary as a yes-no question. If you’re trading on the UK100 and think the price will be higher by the end of the day, the yes-no question would be, “Do you think the UK100 will close higher by the end of the day?” If you do your research and make a decision to buy the binary, that would be like answering yes. If you decided to sell instead, that would be like answering no.
Which underlying markets can I trade using binaries?
At GFT, you can place CFD or spread bet binary trades on currency pairs, commodities, and stock indices. You can view our Binaries market information sheets at the links below.
CFDs
Spread Bets
How is a binary settled?
You can view how a particular binary is settled using the market information sheets at the links below.
CFDs
Spread Bets
Can I close a binary before the expiry time? Can I trade right up to the expiry?
You can enter and exit binaries as many times as you want. The last dealing time for a binary varies between markets.
You can view how a particular binary is settled using the market information sheets at the links below.
CFDs
Spread Bets
What strategy types are available in the Binaries module?
You can choose to trade one of five types of binaries at GFT: the up/down binary, the ladder binary, the one-touch binary, the double-touch binary, and the either-or-touch binary.
You can learn more about each of these binary types and see examples of how they would work in Binaries: A Quick Reference Guide.
What is an up/down binary?
An up/down binary reflects a trader’s opinion on both the direction and the volatility of the market.
As one of the most commonly used binary bets, traders use up/down binaries to determine if a commodity or stock index will close either above or below the central strike by the expiry.
If you believe the market will rise, you buy an up binary and/or sell a down binary. If you believe the market will fall, you sell the up binary and/or buy a down binary.
You can learn more about this type of binary and see examples of how it would work in Binaries: A Quick Reference Guide.
What is a ladder binary?
A ladder binary is similar to an up or down binary and is based around one strike. Usually, you place a ladder binary when you feel that the market will rise above a certain level and be above that level at time of expiry. For example, if you believe the Germany 30 will rise more than 100 points today, you’d consider buying the “Germany 30 Daily Ladder Up > 100 pts” binary. If you believe the WTI Crude futures will fall more than $1, you’d consider buying the “WTI Crude Daily Ladder Down > 1 pt” binary.
You can learn more about this type of binary and see examples of how it would work in Binaries: A Quick Reference Guide.
What is an either-or-touch binary?
An either-or-touch binary has two strikes: an upside and a downside strike. The market only has to trade at one of these strikes (either the upside or the downside) in order for the binary to settle at 100. If the market trades at neither of these strikes, the binary settles at zero.
You can learn more about this type of binary and see examples of how it would work in Binaries: A Quick Reference Guide.
What are one-touch and double-touch binaries?
A one-touch binary has a specific strike. You forecast whether the market will trade at a certain level at some point before expiry.
A double-touch binary is similar to a one-touch binary except that this type is defined by two strikes: an upside strike, which is higher than the current market level, and a downside strike, which is lower than the current market level. With this kind of binary, the double-touch binary will settle at 100 if the actual market trades at both of these strikes before expiration. If it only hits one or doesn’t hit either, then the binary will settle at zero.
You can learn more about this type of binary and see examples of how it would work in Binaries: A Quick Reference Guide.
What happens if an up-market binary expires exactly on the strike? How does it settle?
At GFT, if the market settles exactly on the strike, it is considered to have settled above the strike. If you have an up binary or up ladder binary, it will settle at 100. If you have a down binary or down ladder binary, it will settle at zero.
Can I set a default order size?
Yes. You can set the default order size by clicking the Settings button at the bottom of the Binaries module. In the pop-up menu that appears after you select it, you can click the Default Order Size checkbox and enter order size in the text box next to it.
How do I calculate the margin of a binary?
You can calculate the margin of your binary from your opening price and the size of the trade.
Let’s see this in action. We’ll say that you’re interested in placing a binary on gold. After doing some research, you believe that the closing price of gold today will be higher than its official close at 1550 yesterday. So, you decide to buy a ‘Gold Daily Up’ binary.
The price is currently 28; this means that gold has a 28% chance of closing higher than 1550. For our example, we’ll say that the size is £10 per point.
You can use these values to calculate your margin.
£10 × 28 = £280 margin
Let’s back up for a second. This time, we’ll say that your research leads you to believe that the closing price of gold today will be lower than its official close yesterday. So, you decide to sell a ‘Gold Daily Up’ binary.
For our example, we’ll say that the size is similar to before – £10 per point at 28. For this calculation, we’ll need to subtract the price from 100 (the point at which it would settle. In this case, the margin would be:
(100-28) × £10 = £720 margin
Can my binary positions be automatically liquidated due to insufficient equity?
No. Binary positions cannot be automatically liquidated due to insufficient equity.
How much money can I make on a binary?
Finding out how much money that you can make by trading a particular binary is very similar to calculating your margin. Because you know binaries will settle at either zero or 100, you can determine your potential profit and risk before you even place your trade.
Let’s say that you’re long the ‘Gold Daily Up’ binary at 28. If the event happens, the binary would be calculated as:
(100-28) X £10 = £720
You could potentially gain £720 from this binary.
If the official close of gold ended up being lowerthan it was the day before, the price for your binary would go to zero, so your trade would be calculated as:
(0-28) X £10 = -£280
You could potentially lose £280 from this binary. Incidentally, this is how much of your margin is required to maintain this position.
What is an attached order?
An attached order is a stop or limit order that’s linked directly to a parent order or to an open position. If you delete the parent order or close that open position, the attached orders are also deleted automatically by DealBook® WEB.
You may have only one attached limit and stop per open position or parent order. If you delete only one of these attached orders, the other attached order remains on your account.
You can place an attached order when you issue a trade by clicking the Attach Order checkbox in the Trade window. All contingent orders in a Parent and Contingent order (which are issued from the New Order window) are attached by default.
For more information on attached orders, see the Trading Binaries in the DealBook® WEB User Manual or the online help in the Binaries module in DealBook® WEB.
What is the difference between the Points option and the Price option when you place an attached order?
When you select the Points option, you can enter a specific number in the Stop and Limit text boxes and your attached stops and limits will be placed at that many points away from the opening price. When you select the Price option, you can enter a specific number in the Stop and Limit text boxes and your attached stops and limits will be placed at a specific price. No matter which you choose, your stops and limits must be at least 20 points away from the price.
Can I leave stops and limits on binaries?
In the Trade window, you can attach stop and limit orders to the market or direct deal orders you place by clicking the Attach Order(s) checkbox. This activates additional text boxes so you can specify settings for your attached orders.
You can also place stops, limits, order-cancels order (OCOs), or parent and contingents orders in the New Order window. You access the New Order window by selecting Place Order from the drop-down menu in the quoteboard or clicking the Advanced Order link in the Trade window.
You can learn more about how to place these types of orders in Binaries: A Quick Reference Guide.
Can my binary positions be rolled over?
At GFT, the binary trades with the longest expiry are those that expire at the end of the current day.
When can I place trades in the Binaries module?
You can place orders and monitor your positions in DealBook® WEB from 08:00 London Time on Monday until 21:00 London Time on Friday.
Can I suggest improvements to the platform?
At GFT, our goal has always been to give our customers the tools that they need to trade quickly, efficiently and securely. We are always looking for ways to improve the Binaries experience for our traders.
Many of the updates that we make DealBook® and our other products are based on suggestions from our customers. If you have a suggestion to change the module, click the Send Feedback button at the bottom of the Binaries module.
How do I open a Binaries account?
If you are an existing customer, click here for step-by-step instructions on how to open this. If you are new to GFT, you will need to complete and return this application.
Existing customers will be given new login IDs as this is a new platform and the accounts cannot be linked. If you have any questions about how to open a binaries account at GFT, please feel free to contact us at 0800.358 0864 or +44 (0) 207 170 0770. You are able to contact us 24 hours a day, 7 days a week.
Can binaries help me to trade volatility rather than direction?
Yes. When you trade binaries, you may be taking a view on both direction and volatility. For example, let’s say you’re selling the “France 40 Hour Ladder > 10 pts” binary. You may be selling this because you believe that the France 40 market will go down rather than up. Alternatively, you may believe that the market may move up, but there isn’t enough volatility in the market for it to move up 10 points.
The binary chart on the platform showed that the market touched the level but the binary did not settle at 100. Why?
Index binaries all settle basis the index cash feed. However, the price line printed on the chart is an indicative price feed used by GFT to price our binary markets. There will therefore be small differences between the two feeds which explains why in some situations the line will suggest that a strike has been touched but the “Touched” indicator never appears. Similarly, there may be situations when the line suggests that the strike has not been touched but the “Touched” indicator does appear.
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