I've looked into middling strategies for binary fx markets over the last week or so. It looks good!!

It's just a simple middling strategy

You bet under a certain line and over another and hope you land in the middle often enough to turn a profit.

Binaries have their own pricing format, it's done on a scale of 100. If you take 75, that means you are risking 75 to win 25 (100-75)

If you take 32, you are risking 32 to win 68 (100-32)

This evening I saw a few interesting opportunities on the aud/usd pair

Over 0.74875 56
Under 0.74883 43

That was actually an arb middle, if you add the two levels you get, 56+43 and if it's less than 100 you have an arb. Arb opportunities like that exist, so there can definitely be some $$ made

Anybody ever spent time middling/arbing//value betting fx binaries?

nope. seems interesting though. obviously both on different platforms right?

Yep, both different providers.

from what ive seen, it appears that when volatility is in the middle range then the providers prices start to differ.

ive taken bets on the currency to be in a middle, ive also taken the wings too.

taking the wings would work in a situation such as
take price of 40 for over 0.74883
and take 40 for under 0.74875

if currency falls between the levels you lose 80 (2*40). if it falls outside you win 20 (60-40)

What work have you done to assess the probability of hitting?

Not a lot

I'm just getting started..... so plenty do do

Obviously calculating the required payout is the trickiest and most important part. If you are a guru at that you may as well just trade options.

I've looked and traded some 5 min and hourly binaries

I've simply been looking at the previous largest 5min/hourly movements and doubled that (could go that much up or down). That's how I get the range and then simply compare my range to the historic range to get required price.

I've also been avoiding the opening and closing times of large share markets and avoiding fines where economic data is due to be released

I've found second by second data for the last decade or so..... I'll be looking over that at some stage. Hopefully run a regression using something like lagged standard deviations to predict current volatility.

But..... I have found arb gaps and some ridiculous prices.... so this is possible without too much thought about volatility estimates

What two platforms are you using?

The only two 0-100 binaries I know of are Nadex and Cantor Exchange. Nadex is okay. Spreads are a bit wide.

The liquidity on Cantor sucks.

Im only using CMC and IG markets.

Its quite a hard thing to do perfectly (may only have half a second or so to take both sides), especially trading 5minute binaries. Im assuming at the small time frames an exchange wouldnt work. Far too much to think about without worrying about liquidity. Its hard enough just watching the two prices jumping around.

Is cantor exchange similar to bet fair, i.e. another punter takes the other side?


Im still quite new to all this, ill definitely be opening more accounts as I become more enlightened. A lot to learn in the meantime!!!

I just took two binary bets on AUD/USDexpiring at 1am AEST.

buy (over) 0.74415 67.2 (i.e. I lose 67.2 if currency closes on or under 0.74415, win 32.8 otherwise)
sell (under) 0.7445 53.7 (i.e. I lose 46.7 if currency is above 0.7445 (0.7445 is a win), win 53.3 otherwise)

placed at 12.38am (22 mins to expire)

it pays $4.678 (+478)

in the 1hr prior to the trade the AUD/USD had fallen from 0.745 it hit 0.744 and I got on at 0.74452 (outside my range.

prior volatility had a range of 0.001 (0.745-0.744). with my gap being 0.00035 (0.7445-0.74415). Implying it lands in my range about 35% of the time.

One issue here is the currency was actually outside my range when I placed the bets. it would be expected to close above my range over half the time. That volatility range was taken over a 90min period, but ive only got 22mins until expiry.

So one reason to think my 35% is too high and another to think it is too low

its taken a while to type this....... 12.58 now and the currency is at 0.745, thats the top of my volatility range and what seems like a few hundred km from my target range.

currency finishes at 0.7448ish and I take a small loss.

Do the same platforms offer buy and sell? What difference does that have to an exchange (in this instance - Cantor?)

Are you pretty much paper trading (micro trading) to test this arbitraging model? Is it purely arbitraging that you're doing to create the middle opportunities?

What do you estimate probability for it to hit the profitable range based on what you're currently trading?

~

I used to do a lot of arbs and middles on line movements and incorrect pricings in sports. I just stick to value (+ev risk) betting now since I now have a roll to do so.

I'm yet to look at exchanges. Things can get quite frantic whilst watching currency and price movements. Having to make sure the exchange has required volume may be too much. I don't understand how exchanges would work here, binary markets are so much more volatile than sports. I don't see why punters would ever have bets sitting there, any major currency movements and they would get eaten alive.

I'm trying to profit by short term imbalances in the binary providers models, arbs exist!!!! So clearly there are many short term imbalances that can be exploited.

I betting with real $$, I've placed a few larger bets when it looks quite obvious that I'm getting the better end of it and when the market appears to have low volatility. When the fx market is jumping around or when I'm taking the outside range I've being placing smaller anmounts.

No, I'm taking any opportunity that appears profitable. The providers (I'm currently only using 2) offer a limited number of lines, so it is quite rare to find pure arb (lines need to be the same). Mygoal is to primarily take middles and take arbs as they appear.

Estimating the probability of hitting my range is quite tricky. I know that if the recent past was volatile then the future will be too. Currently I'm just looking at previous trading ranges and assuming the future trading range will be similar. A lot more work to do in that!!! As I get around to it the plan is to get a live feed of fx prices pass those into Matlab or similar and generate some type of volatility indicator and then use that to determine probability of landing in my range.

I too have been quite successful in middling sports. But after having restrictions on my personal accounts and on the accounts of the 15 or so friends accounts I used, I'm looking for other ways to profitably gamble. I'm currently able to bet about 1/10 the volume I used to...... that's not enough to generate income.

Wonder how quickly the binary providers will limit my account/s????!?!?!?