Top Five Books About Binary Options
- Exotic Options Trading by Frans de Weert
- Binary Betting by John Piper
- How to Trade Binary Options Successfully by Meir Liraz
- Strategies for Directional and Volatility Trading by Alex Nekritin
- Binary Options Trading Strategy by Pascal Pierre Zambou
To any beginner, trading binary options, be it the process of opening an account or placing an order, would look quite simple. On the contrary, any experienced binary options trader would vouch for the fact that trading binary options is as complex (if not more) as trading vanilla options. There cannot be any ifs or buts in the strategy employed thereby making it quite difficult to achieve consistent returns.
Even though large financial institutions have been using exotic options for a long time, an ordinary
The following is a partial list of books suggested for both beginners and professionals to gain a head start in this profession.
Exotic Options Trading by Frans de Weert
The book titled exotic options trading was authored by Frans de Weert who worked as a trader in Barclay’s capital. The book shares the practical knowledge acquired by the author during his tenure in the investment firm. The author had succeeded in his primary intention of providing option traders, economics students and interested individuals the necessary tools to understand exotic options. Additionally, the book serves as a manual for a trader to manage price and risk of both simple and complicated exotic options.
To succeed trading in binary options, a trader should be able to quantify the risks associated with each and every kind of binary options contract and the levels at which the Greeks change sign. The book precisely provides an answer to the same. Each and every kind of binary options contract is approached from four different angles namely:
- Reason for investor demand for a particular binary options contract.
- Risk behind a binary options contract and its impact on the pricing.
- Best way to hedge the Vega and Gamma exposure embedded in a binary options contract.
- The skew exposure for a binary options contract.
Through a systematic approach, the risk is assessed and the trading strategy is determined for every kind of binary options contract in this book.
The book not only discusses conventional options, digital options, barrier options, cliquets, quanto options, outperformance options and variance swaps but also structured notes embedded with exotic options.
The book deals with numerous real life examples of trading different kinds of options contract. Thus, a trader will have no doubts in applying a suitable mathematical formula for a particular scenario. All the options Greeks and
Additionally, the author has set aside a separate chapter for volatility skew (difference in implied volatility between
The book suits both beginners and professionals who wish to have an
Binary Betting by John Piper
The book is written by the UK based author John Piper. He is an accomplished derivatives trader who participated in the market actively in the mid 80’s. In an effort to share his trading experience spanning two decades, the author started the newsletter named “The Technical Trader” in 1989. The author describes his approach to market as “
The book is divided into two parts. The first part consists of three chapters which deal with personal likes and dislikes of the author, theoretical approach (points to remember – money management, entering at cheapest price etc.,) to binary options trading and different kinds of bets available for trading. The theoretical approach explains four different kinds of strategies namely:
- Buy near certainties
- Buy very cheap
- Buy low and trade the position
- More complex strategies.
The author discusses all the methods in detail along with three different approaches (systematic, indicator based, opportunistic) to them.
The third chapter gives practical examples for financial bets including up/down, barrier, one touch, and high/low options.
From the perspective of a wannabe binary options trader, part II, which is all about trading strategies, is the most important part in the book. The trading strategies section teaches a trader to make entries in such a way that there is no need to place a stop loss order. The techniques also ensure that a trader will make money even if he gets the trend wrong. However, the author warns that not all trades will be successful. A success rate of more than 70% is quite easily achievable by following the strategies. The second part of the book also teaches a trader to capitalize on the news based price movement.
The book is a treasure cove for traders who have ample basic knowledge about binary options but struggling to create a profitable trading system.
How to Trade Binary Options Successfully by Meir Liraz
The book was written by multifaceted author Meir Liraz. Apart from being a writer, the author is an entrepreneur, small business management expert, binary options trading professional and a personal finance specialist with over 31 years of experience. To his credit, the author has 12 publications covering trading, business and finance. The author has adopted a
There are totally 10 chapters in the book. As discussed earlier, the first chapter cautions about fraud brokers in the business and suggests techniques to identify them. The second chapter explains what binary options are and history behind them. The third chapter describes the choice of inputs (type of asset, investment, expiry time and variety of trade) available to a trader before entering a trade. Within the trade varieties
The fourth chapter talks about the advantages and disadvantages of trading binary options. The fifth chapter provides important tips for risk management. The sixth chapter explains the need for a trading system and the importance of technical analysis with a brief introduction about moving average and relative strength index. Additionally, the chapter also insists how important it is to have a charting facility with
The eighth chapter is dedicated to the basics of technical analysis (identifying support and resistance with moving average, drawing channels and the different kind of price representation on charts. The chapter preceding the last one deals about the process of creating a trading system with various indicators such as RSI, Williams %R, MACD and moving average
The book is primarily intended for beginners who are looking for an introductory guide to binary options trading. However, after going through the book, a professional may feel that the position of the chapters (or some part of it) should be interchanged for better understanding of the concepts. For example, the description about price representation on a chart (bars, candles, lines etc.,) should have come earlier. Similarly, the pros and cons of binary options trading should have been provided at the last.
Strategies for Directional and Volatility Trading by Alex Nekritin
The author Alex Nekritin is a professional trader with more than a decade of experience in Forex trading. Additionally, he is also the founder and president of a Forex introducing brokerage firm. He is known for his skills in risk management and trading system development. He is also the author of a popular spot Forex trading book.
The author has written the book with both beginners and professionals in mind. To a beginner, all the basic concepts including the difference between exchange traded options and OTC based options are explained diligently. On the other hand, the first few chapters will act as a refreshment guide for a professional trader. The later chapters include
The book consists of seven parts and sixteen chapters. The first two parts, which include three chapters, explain the basics of binary options trading. The last chapter also describes the manner in which a trader should read the option chain. The third part begins with a detailed discussion on vanilla options. The author then proceeds to discuss about expiration of binary options and the mechanics of a binary options short trade. The fifth and sixth chapter explains the manner in which trades are executed and settlement is done at expiry. The seventh chapter provides practical examples of how binary option trades are made.
The fourth part of the book deals extensively with trading strategies. While the chapter eight teaches how to select strike price and take advantage of the price volatility to enter a long/short trade, the chapter nine explains the option Greek ‘delta’ in detail. The next two chapter switches back to trading strategies based on support, resistance and news.
The fifth part of the book teaches the process of developing and testing a binary options trading strategy. The chapter thirteen in the fifth part of the book deals with emotional aspect of trading. The next chapter offers suggestions about risk management and positions sizing.
The sixth part of the book describes the process of managing a trading account. This includes an
The book is ideal for both beginners and professionals who wish to have an
Binary Options Trading Strategy by Pascal Pierre Zambou
The author Pascal Pierre Zambou’s main aim of writing the book is to provide traders with a single trading strategy which could be employed at all times. The author also cautions traders that using multiple systems would only aggravate losses and not increase profits. Thus, a reader of the book can very well understand the reason behind dedicating a book for a single system using four indicators.
The book straight away goes into the trading strategy without explaining the basics of binary option trading. However, there cannot be any complaints as the author categorically says that the book is intended for those who are in search of a proper trading system. At the outset, the author says that the proven system is valid only on 5-minute charts. The author then begins to explain the strategy by giving a detailed description about the four indicators (RSI, Bollinger Bands, moving average & slow stochastic oscillator) used in his system. The details about each of those indicators are quite elaborate with numerous charts. In the final chapter the author explains with examples the protocol for entering a trade.
The book is suited only to those individuals who are in dire need of a workable trading system. Even though the book achieved its objective of providing a comprehensive trading system, the author could have made the publication more attractive by including more details about binary options trading.
Those who wish to take binary options trading as a profession should seriously consider reading the books listed above. It will not only clear the doubts that may arise during trading but also assess each trade in totality. Such a process will enable a trader to raise the level of performance at a rapid phase.