Investing Rules for Binary Option Investors

By: IS
Date posted: 05.24.2016 (8:23 am) | Write a Comment

 

 

Investing in common stocks could sometimes requires lot of time and effort. I recently found a new investing vehicle enabling investors to start with little money and little knowledge; it is called binary options. Banc de Binary is a great resource to understand binary options.

Binary options explained

Binary options are relatively easy to understand. You need to create an account with a broker that will give you access to their investing platform. All options are listed with the expected return if you make a successful trade. You then select an asset and decide if it will go up or down within a defined time frame. The expiry time frame could be a small as 30 seconds and the amount invested could be as small as $1.

Rule #1 know what you trade

Since most binary option expires in a very short time frame, it is crucial to understand what you are trading. Selecting the right type of asset is crucial. You can select assets you understand and know how they will react to events on the stock market. This is the most effective way to invest in binary options. Conducting further research is advised as you don’t want to gamble your money, you would rather invest it.

Rule #2 concentrate on a small basket of assets

If you are trying to trade on everything you can, you will invest, and more likely lose lots of money. Each asset type has their own characteristics and you should rather concentrate on a few of them to thoroughly understand instead of barely know how each asset evolves over time.

Rule #3 plan carefully

Typically, you earn very strong return on your investment while you will lose it all if you are wrong. For example, if you invest $100 in a binary option, you will either complete your trade with $185 in your pocket or $0 if you are wrong. This is why it is important not to invest too much money on a single trade and to know when it is the right time to cash your investment and stop trading. Don’t try to “make up” for a loss trade by taking additional risk on your next one.

One last tip

If you never traded binary options before, a very good idea could be to open a demo account. Most brokers offer you the possibility to open a real account with no money. You can then start making fictitious trades to see how you could be making money with this system. It will allow you get familiar with the platform and how binary option works. You can make your rookie mistakes within the demo platform and get ready for real investments afterwards. By testing your trading aptitudes and strategy, you can see if you could make money in the real world. This is probably the best way to initiate yourself to binary options.

New Trade: Long TripAdvisor ($TRIP) & Short Yelp ($YELP)

By: IS
Date posted: 05.12.2016 (4:02 am) | Write a Comment

Today I am opening my 13th trade of the year between 2 stocks that trade at similar forward P/E ratios. It is the exact same trade that I closed earlier this case which might look strange but that is one reason why I do use stop losses. It gives me the opportunity to revisit my options and I ended up finding that my best trade opportunity was one that I had just closed. As is always the case you can see the existing live trades here:

http://www.intelligentspeculator.net/livetrades

Let’s start off by looking at the numbers:

TickerNamePricePE RatioPE Next YearReturn YTDSales GrowthAnalyst ratingBook ValueBetaRevenue/ShareSales 5Y Avg GrowthEPS 5Y Avg Growth
TRIPTripAdvisor Inc65.6764.2229.51-22.4619.743.0710.051.4710.3619.33-6.2
YELPYelp Inc25.31N/A30.64-8.6145.63.479.171.227.3657.8-133.32

This chart certainly looks terrible for TRIP

TRIP_YELP_chart

But this one from Google Trends probably looks worse for YELP:

trends

$TRIPLong Tripadvisor (TRIP)

I have obviously been a big believer in TRIP and in many ways that has been a very painful position as the continues to struggle being down 22% so far this year. There are many different stories about what’s happening and I’ve obviously been paying very close attention as it is one of my 3 bigger tech stock positions (with FB and AAPL). As TRIP continues to roll out its Instant Booking platform, it has gained steam in terms of having major partners sign up but that has been translating into shorter term challenges as it sends business to its own less optimized, less profitable solution rather than getting compensated by the likes of EXPE and PCLN. In the end, TRIP continues to grow its community and is adapting better than competitors to mobile so I do remain very confident in its long term future.

TRIP_YELP_chart (1)

Next earnings: August 4th 2016

yelpShort Yelp (YELP)

In many ways, YELP has been unimpressive in my opinion. When you look at recent trends in revenues and other metrics, you could say that TRIP and YELP are both suffering but I think the explanations and overall strategy of TRIP makes a lot more sense. YELP is an extremely competitive space facing the likes of Priceline’s (PCLN) Open Table, AngieList, Google with other major players like Facebook and Amazon looking to also compete in the local listings space. YELP has struggled to adapt to mobile and in a world that is increasingly going mobile only, that is obviously a very problem. I did get burned being short YELP recently and that is a risk with any short position going into earnings season but I do feel confident that it will not happen again with YELP.

YELP_chart

Next earnings: July 27th 2016

Disclaimer: This trade on TRIP-YELP will be done on today’s opening. I am currently long TRIP.
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Closing 2 Trades (TRIP, YELP, PYPL, TWTR)

By: IS
Date posted: 05.10.2016 (3:41 am) | Write a Comment

$yelpThis morning I will be closing 2 different trades, one that has done extremely well and the other not as well!

#1-From March 7th, I had gone long Tripadvisor (TRIP) vs. Short Yelp (YELP) which currently stands at -33.94% mostly because of YELP shooting up following its most recent earnings.

TRIP_YELP_chart

$PYPL#2-April 1st: Long Paypal (PYPL) vs. Short Twitter (TWTR): I’m probably due for an update on my thoughts on Twitter but it’s safe to say that in the past few months, being short has generally led to good trades

PYPL_TWTR_chart

As is always the case, you can see the live trades of this year where the long & short portfolio stands at +10,35% (and past ones) here:

http://www.intelligentspeculator.net/livetrades

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How to Get Better at Trading Binary Options

By: IS
Date posted: 04.26.2016 (7:27 am) | Write a Comment

Binary options are a bit deceptive. On the surface, it looks like trading options should be relatively easy. After all, you’ve probably heard all about how binary options can do well in any market. You can also pick from a long list of underlying assets too, which is especially helpful for those who already have a background in investing. Therefore, if you haven’t seen any outstanding results yet from your time trading options, it can be easy to get frustrated. Before you give up, though, consider the following ways of getting better at binary options.

Consider Your Broker and Software

binary options, trading binary options, trading options, getting better at binary options

If your broker isn’t pulling their weight, you’re always going to be suffering from poor results when trading binary options. Due to the unique features of this type of trading, brokers are probably more important to those who invest in binaries than any other type of investor.

Likewise, the software brokers provide their clients will play a huge role in their success (or lack therefore).

As such, if you’re currently trading binary options, but not seeing the returns you had expected, it makes sense that you should take a good, hard look at your broker.

Learn More about Your Market

Still, it might not be fair to blame your broker. It could be that your lackluster track record with trading options is because you don’t actually understand the market you’re focusing on. This means not just having a grasp on the underlying asset you favor, but the market you’re doing your trades in. If you haven’t picked both of these yet, that’s definitely the problem.

However, even if you have picked an underlying asset and market to focus on, it might be time to hold off on trading while you study both of them a bit more.

Trade More

Provided that those first two issues are definitely not the problem, you may be surprised that the solution we recommend is to actually make more trades. After all, practice makes perfect. At the moment, if you’re not regularly trading binary options, it’s definitely going to take you a significant amount of time before you begin posting big profits.

How much trading is enough? That will really depend on your budget and schedule. Again, though, the more you practice, the faster you’ll improve.

Fortunately, you can sign up for practice accounts that allow you to trade like the real thing, but without actually putting up any money.

Manage Your Money Better

Be honest with yourself: are you currently seeing small profits because so much of your returns get mitigated by big losses? If that’s the case, you need to start managing your money better. Lower your monthly budget so you’re forced to make better decisions and can’t keep funding your investing when it’s clear you need to take a breather.

You can get help with this from a spouse or pick a friend to be your accountability partner. Tell them what your monthly budget is and then make sure you follow up with them regularly about your current status.

Until you’re able to manage your finances and stick to a budget, none of these other tips will do much for you. In fact, they may simply contribute to a situation that ends up costing you dearly.

Getting better at binary options is something that could take years. However, the financial rewards are worth it. If you’re currently trading binary options but know you could do better, apply the above advice to your situation and expect results.

For more information:

https://www.facebook.com/onetwotrade

https://twitter.com/OneTwoTrad

 

 

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Four Power Tips for Making Smart Investments

By: IS
Date posted: 04.20.2016 (3:44 pm) | Write a Comment

 

Investors are in the business of using money to make more money. Investors are not concerned with capital preservation (of course, they don’t want to lose money); rather, investors are more interested in capital multiplication. However, to double, triple, quadruple, or grow your trading capital, you’ll need to step out of the comfort zone of making conservative investments to the not-so-comfortable zone of making speculative investments.

is1

Many people are scared of making speculative investments because they are afraid of taking on risks. However, you can still take on speculative investments without fears if you have diversified the investments in your portfolio. Diversification simply means that you should not put all of your investments eggs in the same basket. This article seeks to explore four simple things every investor could do in order to have a diversified but balanced portfolio.

Variety is the spice of life

To start with, a diversified investment portfolio is a portfolio that has different kinds of investments. If you put all of your money in stocks and the stock market crashes; you’ll lose all of your investment – many people had that experience during the 2008 global financial crisis. Now, gold is the best performing commodity in the market. It has 17% gains in the YTD and many investors are putting all of their money into gold – it is highly risky because they could lose everything if gold crashes.

A diversified portfolio should have a mix of stocks, bonds, real estate, speculative plays, international investments, and cash. In broad terms, you should have a mix of conservative and speculative investments.

Conservative investments include mutual funds, stocks of blue-chip companies, and precious metals among others. Binary options is a good way to start investing in speculative plays that could deliver exponential returns on investments – you should look for a recommended binary options broker. You might also want to learn more about futures and options as other type of speculative plays that promises massive returns.

Asset allocation should take proper planning

In diversifying your investments, you should also figure out a way to determine how much money you should put in your different investments. Asset allocation is the concept that ensures that your portfolio is weighed and balanced with different kind of investments. You’ll find many rules about asset allocation – some experts will suggest that you subtract your age from 100 and put the remaining percentage in stocks and bonds.

One of the commonest asset allocation rules you’ll find in the market will suggest that you invest between 25% and 50% of your money in stocks, 5% in bonds, 10% in REITSs, 10% in real estate, and the rest in other speculative plays.

However, I think asset allocation should basically be between allocating money between speculative investments and conservative investments.  I suggest that that you should subtract your age from 100 – put your age in conservative assets and put the rest in speculative assets. You can also check Finpari Broker Review to get started on speculative trades and investments

Diversify within the same category

Smart investors diversify their investments between different assets class and they go further to diversify the investment within the same asset class. It is good to diversify between stocks, bonds, binary options, precious metals, mutual funds, and real estate among others. However, you should also endeavor to diversify within the same asset.

For instance, while buying stocks, you should buy a mix of tech stocks, bluechips, financials, industrials, and healthcares stocks among others – of course, you should understand the business of the underlying company before you buy the stock. However, if you don’t have deep pockets, diversifying within the same category could cost you a lot of money in the form of transaction costs & fees.

However, you might want to consider “index” funds, EFTS, and mutual funds as a means to diversify within an asset class. Nonetheless, it is important that you conduct extensive due diligence, examine the past performances of a fund, and gather insight into its future performances before you put your money into any fund or before you commit your money to any money manager.

Balance risks with expected returns

The main reason you are being advised to diversify your investments is that diversification spreads out your exposure and it reduces your risk in any single market sector. However, diversification should be a tool for reducing risk but not a tool for locking yourself in an investment prison. There’s no point in putting all of your money in conservative investments without making speculative plays.

One of the mistakes that investors make is that they forget that the risks and rewards are blood brothers – low risk investments yield low rewards, medium-risk investments bring medium rewards, and high-risk investments often deliver high rewards. When diversifying your portfolio, pay attention to how much risk you are willing to take and buy up investment vehicles accordingly.

 

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Should You Lock Your Mortgage?

By: IS
Date posted: 04.20.2016 (5:06 am) | Write a Comment

Everyday, there is something to say about the economy. Since the 2008 market crunch everybody has their take on what is going to happen next. It has created a huge point of interest.

At the end of 2015, the FED raised their daily interest rate for the first time since the beginning of the crisis back in 2008. Even though, it was a small increase, it was enough to put several financial journalists and financial analysts in their seats to write some forecasts on their laptops (it’s funny to think that they don’t need to find a financial topic to write about… they are given by the 6pm news 😉 ). Now we are told that we should consider locking in our mortgage rates.

Interest rates don’t rise overnight

I don’t know if it’s because we are overloaded by information, or because the media business model is not very lucrative so they try to become more sensational, but I don’t see how interest rates could suddenly increase by 5%!

In fact, with global economy going sideways, resources prices going up and down each day, the FED eyes all macro-economic data and will proceed with caution. During the latest meeting in March, they decided to keep rates where they are until they see strong sign of economic growth. Therefore, we will more likely see another raise of the short term interest rate by the end of 2016, but don’t expect an important raise by any means.

So should you lock-in your mortgage rate?

We will all have someone around coming back with the stories of the high interest rate period of the 80’s and claim that we could see the prime rate at 7% in no time.

The thing is that you probably won’t pay your mortgage off over the next 5 years (if you will, then perhaps it’s a different game). And over the life of your mortgage (25 to 30 years), it has always been advantageous financially to keep a variable mortgage rate, (provided you can still sleep at night!)

You can probably lock in your fixed rate home loan rate for 5 years at 4.00% right now. However, if you stay with a variable rate, you are paying between 2.25 and 2.75%. So, worst case scenario: you are still paying 1.25% less than a 5 year fixed mortgage rate.

Therefore, if you are about to lock your mortgage rate at 4.00%, I have a prudent suggestion for you:

Calculate your payment at 4% and make this payment on your variable rate mortgage (that is currently much lower). You will then create a buffer and pay off your mortgage faster. You will protect yourself from a rate increase while benefiting from the lowest rate on the market.

Finally, the best move you can do is always the one that will make you sleep well at night. If you keep your variable rate and can’t stop worry about it, maybe you should consider to lock in your rate.

 

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