The binary options trading becomes more and more popular last time. Now you can try to trade binary options in the DukasCopy. But can you use your FX pairs strategy for the binary trading? Let’s see what minimum requirements are necessary for the profitable trading.
The advantage of the binary options trading is that we get fixed profit if we guess the direction of the price change. So, our strategy purpose is to guess the direction of the price change.
MODELLING OF THE PROFIT
Let’s imagine that we have the strategy with 50% probability of winning. The parameters of such strategy trading are:
- Win: 50.0%
- CAR/MDD: 0.0
- Net profit: 0.0$
- Profit Factor: 1.0
So, if we want to get the profit from the binary options trading, what probability of winning do we need?
I did several simulations with the help of simple python script where each simulation has 100 trades. The parameters of the simulation were:
- Winning probability – 50%