Hey everyone, this is Kirk, here again atoptionalpha , where we show you how to make smarter trades. And today, we've gotan awesome tutorial tutorial for you: Breaking down trading math, and specifically, optionstrading math. And it's basically a 101 course on why we have the methodologies that we doabout the markets and about trading. So, welcome back to statistics class. Andyou're probably thinking, quot;Oh.quot; But don't worry. Undoubtedly, more important than understandingthe Black Scholes model for pricing which we purposely don't cover in any tutorial tutorialthat we have because it's pointless to cover, you don't need to know it to be successful.But besides that, your ability to understand
just basic statistics and probabilities isparamount to your ability to be successful in this business. So, if you don't get the math behind the trades,here's my promise to you: You will fail at trading options longterm if you don't understandthe math behind it, and more importantly, the statistics and the probabilities behindit. You can make a couple of trades here and there and be successful. But to do this longterm,to generate consistent monthly income longterm, you've got to understand the math. So, swallowyour pride, head back to school with us as we talk in depth about standard deviations,probabilities, and statistics in this advanced
tutorial. But before we do that, let's first have atalk about one real quick thing, and that's market efficiency. So, this whole idea aboutmarket efficiency is really important, and you probably heard us talk about it in theother tutorials that we have to trade liquid products and liquid underlying stocks. Butthis whole idea of market efficiency is this concept that the markets are superefficient,and especially in the US markets where there are millions and millions of different marketparticipants, all with their own individual ideas.
The markets are incredibly efficient and incrediblyfast. Data or information that anybody receives on a stock or a company is immediately pricedinto the market. And as a guy who's been on both sides of the Chinese wall, basically,I was an MA analyst in New York for Deutsche Bank, and so, I was on the private side, dealingwith mergers and acquisitions. And then, I was on the other side of the Chinese wallin Tysons in DC and dealing with the retail side as an analyst. So, I've been on bothsides of the wall, and I can definitely tell you, the markets are incredibly efficient.There's no edge that you can get a knowing information about a company in advance orhaving some sort of insider knowledge.
In most cases, most CEO's have no clue wheretheir stock is going to go or how it's going to react to the market, regardless of howwell they think they might be doing. So, to that end, we have to understand that. As wesaid before, we have no clue where a stock is going to go. And nobody else does either.Myself included, I have no idea where a stock is going to go in the future. I might havean assumption, an opinion. But at the end of the day, we're all no better than 5050on our guesses. So, what this leads to then is to this probabilitydistribution. And what we call a normal distribution or you probably have seen before as a bellcurve. Now, this is really important because
this is how distributed, or this is how aefficient market distributes its returns. So, basically, what you have here is you havemost of the returns are probably somewhere around even or par. And that's basically whatthis kind of zero line here is. But it's saying that most of the time, the distribution ofreturns will be within a certain confidence range or within about one standard deviation.This is what this one standard deviation is that I'm kind of highlighting here on thechart. So, this is saying that 34.1% of the timeup, and 34.1% of the time down, we might see this confidence within this given range. Andwe can define that range in stocks, in every
Should I Trade Binary Options Are They a Scam Binary options trading reviews Strategy
Should I Trade Binary Optionsé Are They a Scamé Binary options trading reviews Strategy Options trading 101 welcome to looking at the markets withDavid Moadel today we're going to talk about binaryoptions should I and should you trade binaryoptions well let's take a look bedding orgambling with binary options binary options in which you bet on whether acurrency or stock or commodity and so on we'll go up or go down or reach acertain price etc within a short time frame for exampleyou might make a bet that the US dollar will rise versus the euro exactly oneminute from now
so why are traders tempted by binaryoptions binary options might seem tempting because oftentimes you canstart with a small amount of money and brokers sometimes offer signup bonuses but if you read the fineprint you might find that there's a catch forexample you might be required to trade a large amount of money before you canwithdraw your funds so trading or gambling personally I don't claim to be able topredict where any stock currency or
commodity will go within the next day not to mention the next hour or the nextminute I find such a shortterm price movements to be essentially random besides as you'll see in the next slidesthe house which is the broker has built as a builtin advantage that will mostlikely cause you the trader to lose money over a largenumber of trades let's take a look at these screencaptures I've collected from various places around the web
various for binary options websites this one has more offers an eightyonepercent pay out and if that sounds like a lot I mean that's actually pretty good forthese binary options brokers but think about it what that means is that iflet's say you bet a hundred dollars on the direction of the euro versus the USdollar alright so if you're right then you win 81 dollars if you're wrong
then you lose a hundred dollars the hundred that you that you bet ok soif you keep making trades like this over a long period of time it's it's an uphill battle I I don't seehow anybody could really expect to to do well if every time you make a bet youevery time you win you get 81 dollars and every time you lose you lose ahundred dollars that just doesn't make sense to me here's another one and here the payoutis eighty percent
here's another one that boastseightyfive percent that's that's better but still if that sounds good to youagain I mean think about it how would you liketo have to deal with losing on average fifteen percent over a long period oftime it just doesn't make sense this oneoffers eightythree percent this one seventysix percent I mean that to me that's just terribleyeah if if if you if you're walking down thestreet and you met somebody and he says