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In my previous post Binary Option Trading I introduced a simple online trading platform Eztrader, where investors are allowed to trade hourly, dayly, and weekly call/put binary options on different stocks, currencies, indices, etc.

I have more words to say after posting that article almost half a year, and generating around 60% return, although still a small sum of money. A few personal advice:
1, binary option trading is riskier than equity trading. It is nearly a 0 or 1 game, you can double and empty your investment quickly than you thought. For example, a daily call option has a payout ratio of 81%, which means for a $100 trading, you earn $81 if you "bet" correctly the direction, and lose $95 if you are wrong. So don't trade unless you realize a clear pattern, I feel much better to wait for the next opportunity than to trade my luck;

2, since the hourly & daily options are too short to be analyzed and backtested, unless you can get access to high-frequency data, those momentum & trend following strategies are not useful for the binary option trading. Those strategies listed at High Probability ETF Trading Strategies on Stock and Quantitative trading strategies haven't found a place for me;

Binary option is a one of the simple &  common type of derivative, where the payoff is either a certain amount of prescribed cash, called cash-or-nothing option, or shares, called asset-or-nothing option. Intuitively, cash-or-nothing option holders receive cash if the option finishes in the money, asset-or-nothing option holders receive shares of asset if in the money, thereafter binary options are often named as digital options.

The pricing of binary options is straightforward under GBM framework, the widely used Black Scholes formula can be easily adopted for binary option valuation. Once we understand the principle and know how to price it, the next step probably is to trade binary options. There are several online option trading platform for an individual investor to choose, the one I'd like to review is EZTrader, who has revolutionized the way binary options are traded on the internet today, by supplying its customers with a simple, exciting, dynamic and highly profitable trading platform, very different from traditional option trading. Due to the simplicity and speed of our binary options trading system and the low minimum investment amount, it is able to reach investors with different profiles all over the world. Ranging from sophisticated investors that are looking for ways to hedge their positions in the traditional market, to amateur day traders looking for some "action" without risking large amounts of money, EZTrader developed a system suitable to most of everyone's goals.

EZtrader have taken the fear and uncertainty out of Forex trading to focus on an existing new kind of trade. At EZtrader you can trade Binary Options. With binary options you simply choose whether the stock price will go up or down by the expiration time and place you call or put accordingly. With EZtrader your winning return is fixed, you don’t have to leverage millions of dollars with every trade or setup complicated stop loss strategy. With EZtrader binary options everything you need is right in front of you.

Why do I select this online trading service? well, there are at least the following advantages of EZtrader I am aware of:
- A member is able to trade Nasdaq, Dow Jones and Commodities based options;
- Hourly trades;
- Open an account is free, absolutely No Fees;
- Members can choose to withdraw fund as they want;
...

Besides simplified trading process, EZTrader members are provided with a complete set of tools to help them optimize their trading. Tools include live financial news, references to financial sites and a wide variety of tradable options, and more. Check EZtrader home page regularly for new promotions that will help you to get the most out of your trades, for example, one promotion is: If you deposit a total of $550.00 today, Monday, February 22nd, 2010, you will receive a bonus of $250.00 (%45)Registration is totally free and there are no commissions to pay ever.

To start trading, first go to trading area after sign in, you will find a pool of options to choose

Choose an option to trade from the list of available options, then select the type of trade, either CALL or PUT, enter the amount you would like to trade. you can change the trade type from CALL to PUT or vice-versa even after entering an amount, finally click 'Trade' to execute your trade. Simple & new binary options trading platform, start applying your derivative quantitative skills directly at EZTrader.

Equity Option Calculator on Gphone was shared in this post. The author has published a binary option calculator for Gphone, as the author's webpage says:



To download, either search "Binary Option" on Gphone, or simply go to the author's blog http://jwdevg1.blogspot.com/2009/04/binary-option-calculator-published.html